19 Feb 2021
Words Renee Valentine The Newcastle Herald
Demand for regional accommodation assets ‘overwhelming’ as investment fund snaps up Hunter Valley motel
One of the Hunter Valley’s premier motels has changed hands with a specialist regional accommodation investment fund adding the Hunter Gateway Motel to its national portfolio of properties for $8.5 million.
The freehold to the high-performing property was sold exclusively through ResortBrokers to the Trinity Accommodation Regional Hospitality Fund (TARHF), run by Mandala Asset Solutions, which has accumulated 18 properties in regional Australia with a total of $110 million in assets under management.
The Hunter Gateway Motel, located just off the New England Highway in Rutherford, has 63 rooms and conference facilities along with a development application for more units.
“The demand for quality accommodation assets in regional areas is verging on overwhelming and enquiries and offers are coming in from all types of buyers who are looking to build their portfolios, including purchasers who have never looked outside of major CBD locations,” ResortBrokers Managing Director Trudy Crooks said.
“We’re now operating in a new environment where the buyers are back in force and they’re becoming more confident with the new normal,” Ms Crooks said.
“For the accommodation assets that traded well during coronavirus, prices have held up really well and that’s a trend that should continue. The Hunter region has done really well during COVID-19 and the local economy is buoyant.”
The purchase of the Hunter Gateway Motel is part of Mandala’s strategy of investing in income-producing regional accommodation-driven assets with operational and property upside. The company says its target rates of return are 8 percent per annum, over the medium term, paid quarterly along with between 5 and 8 percent capital growth.
“We’re always on the lookout for quality properties in regional Australia and the Hunter Gateway is well placed and in excellent condition,” Mandala Asset Solutions principal John Zeckendorf said.
“As one of the newer and better properties in its market, we see a bright future for the motel. While the business was initially affected by COVID lockdowns, it has bounced back strongly and is back to pre-COVID trading.
“As incoming landlords, the motel provides excellent stable returns and diversification with our other assets. We also see considerable upside in the property and like the region for its proximity to major cities and attractiveness to a diverse base of customers.”
Ms Crooks said the clientele of the Hunter Gateway Motel is a mix of corporate guests midweek and leisure visitors on weekends who travel to the Hunter Valley for wine tours and concerts, which is a major driver of revenue for the motel.
There’s also massive infrastructure investment underway in the mining industry which is expected to drive the economic development of the Hunter region. Research conducted by the NSW Minerals Council says economic benefits of all major mining projects underway in the Hunter totals over $2.7 billion in capital investment and will create around 3,700 jobs.
Mr Zeckendorf said his company was attracted to investing in the Hunter region because of its economic diversity which includes mining, agriculture and tourism.
“We are pro-Newcastle as it is an important part of the Australian economy for resources, leisure, industry and commerce. The beautification and regeneration of Newcastle, combined with the long established attractiveness of the Hunter Valley, make it an ideal bolt-hole from Sydney.”
The surge in domestic tourism in Australia, created by international border closures, has further driven Mandala’s strategy of investing in regional accommodation assets and the company aims to actively look for further assets to add to its portfolio.
“If anything, COVID has sped up Mandala's acquisition appetite,” Mr Zeckendorf said.
“Our background is as insolvency specialists and we are experts in crisis management and turnarounds. As asset managers, Mandala has become very attractive to investors who are now interested in regional hospitality and like our ability to handle whatever the market throws at the properties while adding value.”
ResortBrokers is also the exclusive agency for the sale of the freehold to the Francis Phillip Motor Inn & Serviced Apartments in Singleton which has a total of 45 units with 55 keys. It has an asking price of $10 million.