Westralia's $10m resort sale marks new stategy

Embattled tourism property investor, Westralia Property Trust, has taken the first step in its portfolio restructure by selling the Kalgoorlie Broadwater Resort Hotel to PrimeWest Management Ltd for $10.15 million.

The sale will realise a $2 million loss for the trust, with the property valued at just more than $12 million.

Part proceeds of the sale will go towards retiring $5 million of debt, with the balance entered into other trust investment opportunities.

Broadwater Hospitality Management Pty Ltd will continue to hold the lease on the property.

Westralia’s parent company, Futuris Corporation Ltd, signalled its intention to dispose of its tourism assets last year, after failing to realise sustainable profits for investors and incurring a high level of debt.

The trust still owns 51 per cent stake in the Broadwater Resort and Spa in Dunsborough, and owns 36 out of 101 suites and the general facilities area of South Perth’s Broadwater Pagoda Resort Hotel.

In January, Westralia relinquished its role as responsible entity of the Dunsborough hotel property syndicate to Sydney-based Teys Property Funds, which has taken on the role of project manager for the syndicate and is moving towards winding up the scheme.

Futuris chief financial officer Peter Zachert said a formal announcement on the new strategic direction was expected in the near future, with the trust currently targeting a number of potential acquisitions.

“There are areas we are looking at but it would be premature to pre-empt a formal decision,” Mr Zachert told WA Business News.

He said the trust had appointed Savills, which brokered the Kalgoorlie deal, as agent for the sale of its Pagoda assets.

Teys is currently considering three options for the Dunsborough property after receiving valuation advice from agents Knight Frank.

It could sell the property as a hotel with vacant possession, sell the property as strata titled resort, or demolish the property and sell the subdivided blocks to enable owners to develop their own property.

Teys told investors late last month one buyer was very interested in the property, with several other potential buyers expressing interest.

Mr Zachert said that Futuris would support any “good suggestion” from Teys. 

“If they come up with a decent option we would support any plan,” he said.

But despite the poor performance of the property syndicates, occupancy rates at the hotels remain at strong levels.

For the year to date, Perth’s Pagoda hotel has reached occupancy rates in between 80 and 90 per cent, buoyed by the increase in business visitors to the state.

Occupancies at the Kalgoorlie Broadwater, the region’s only five-star hotel, have also consistently reached more than 90 per cent this year.

The sale also caps off a busy month for PrimeWest, which recently paid $57 million for Amcor’s Bibra Lake headquarters and plans to transform the 38-hectare site into an industrial park and office park.

The Perth-based developer was also involved in a $180 million purchase of a major stake in Huntlee, a large urban project in the New South Wales Hunter region, as part of the LWP Property Group.

LWP manages a number of developments both in Western Australia and interstate including Ellenbrook, The Walk at Aubin Grove, The Mews at The Vines and The Brook at Byford.