27 Aug 2025
Words Su-lin Tan Green Street News

Deltine fund nabs second motel

Australia’s first wholesale motel fund has bought its second asset in northern regional NSW for $8.4m, Green Street News can reveal.

Deltine Capital, which launched the Deltine High Yield Motel Fund last month, has snapped up the 22-room Roseville Apartments in Tamworth at a purchase yield of 11%. The property sits on 4,087 sq m.

The forecast average income yield after management fees for the asset is 12.5%, while the forecast return with an expected exit at five years will be around 23.5%.

The fund’s first asset is New Crossing Place Motel in Victoria’s Seymour.

Institutional interest in Australia’s motel sector is on the rise, and RB Research estimates the market is worth $15bn.

Last week, Green Street News revealed the launch of Regional Motel Partners, another investment platform which invests in motel leaseholds.

Deltine and Regional see high investment returns for investors that can bring institutional management to the long-overlooked sector.

With Roseville Apartments, for example, Deltine could raise earnings and capital growth through building three more units, promoting the asset better, monetising storage units available at the property and increasing weekend occupancy.

Double-digit yields

Even without repositioning or redevelopment, the purchase yields of many such assets are in the double digits.

RB Research, the research arm of ResortBrokers, said in its inaugural Motel Report – released on Tuesday – that nationally, the median yield for freehold sales was 12.4%, while the median yield for leasehold sales was 32.1%.

The research group said there are about 3,586 motels in Australia, defined as short-term accommodation in a low-rise building usually adjacent to a parking area.

“Australian’s great love for holidaying, especially the road trip, may have predated the advent of the motel, but the proliferation of motels across the country gave it traction,” the firm said.

Many of Australia assets have between 11 and 30 room, while those with more than 50 rooms are rare. Crucially, average daily rates for motels in capital cities are on track for strong growth.

The capital city motel average daily rate is $238.97, but is set to grow 26.6% in 10 years. It is $255.28 in coastal areas with a roughly 50% 10-year growth, and in the regions, the rate of $208.41 will increase by 32.2% in 10 years, the report says. END