This article is from the Australian Property Journal archive
QUEENSLAND-based hotel and property investment group Eumundi has acquired the historic Plough Inn Hotel in Brisbane’s popular inner city South Bank, in a deal worth $13.1 million.
The latest purchase in the frothing sector includes the head lease with a remaining term of 96 years over the land and buildings at the property.
The Plough Inn opened in 1885 and includes a large outdoor deck overlooking the Brisbane River and CBD and a beer garden with live music stage.
Open Arms Hospitality Group, owned and operated by Simon Gardner, former chief executive of Pegasus Leisure Group, and ex-Beer Deluxe partners Craig Shearer and Jason Sheather, operate the hotel business. They are currently also putting together the Riverland venue on the Eagle Street waterfront, which is earmarked for a November opening.
The will take a triple-net sub‐lease from Eumundi Property Group for an initial term of 15 years with three further 10-year options of 10 years each
Eumundi will be hoping that the purchase can further bolster its hotels division performance, which held up the group’s bottom line through the 2017 financial year.
The long lease purchase represents an initial net cap rate of 7.25%, with annual rises being the greater of CPI or 2.5%. Rent reviews come every tenth year to the then current market rent, and are capped at 3.5% and collared at 2.5%.
Eumundi chairman Joe gamin said it is anticipated the acquisition will make a net contribution of approximately $0.42 million to the pre‐tax result of the group on an annualised basis.
“This transaction is the result of patience and determination by the board over a number of years to find the right acquisition for the group. The Plough Inn meets the group’s stated objectives of targeting blue chip assets with substantial capital growth potential, minimal management and solid income backed by tenants of substance and proven capability,” he said.
The pubs and hotels market has seen a string of deals poured over recent months, but most have been focus in Sydney and through regional New South Wales.
A private investor picked up the freehold interest of the large-format Mansfield Tavern in Brisbane’s south-east for $14 million in March this year, and shortly afterwards the family-owned Pullos Group put the iconic Royal George Hotel in Fortitude Valley up for sale with expectations of around $40 million.
Australian Property Journal
