09 Oct 2019
Words Larry Schlesinger Australian Financial Review
Mackay buyer sees 'good value' in regional hotels
Sydney-based Mandala Asset Solutions has lifted the value of its regional hotel investments to more than $50 million after acquiring the Mackay Marina Hotel in central Queensland from the marina's developer, the Port Binnli Group.
The 79-room hotel and an adjoining development site, with an approval for an additional 120 rooms, changed hands for just under $10 million.
This is less than half the $20 million price tag the hotel came with when it was offered for sale in 2013 as the Clarion Hotel.
Mandala principal John Zeckendorf said he saw really good value in regional accommodation assets right now.
“We’re always on the lookout for quality properties in regional Australia and this is definitely one of the best properties in Mackay,” Mr Zeckendorf said.
“I know the region has endured some tough economic times of late, but we see a definite upside in Mackay. Even without mining, it is a big regional centre with a population of around 113,000,
“Like Townsville to the north, we see signs of life in the Mackay economy and we’ll be well positioned to make the most of this turnaround.”
The Mackay hotel is the 16th regional hotel acquired by Mandala, which currently owns $43 million worth of assets spread across two hospitality funds.
The Mackay Marina will join Mandala's Trinity Accommodation Regional Hospitality Fund, which owns around 10 assets including the Mercure Albury on the Victorian border, the Lincoln Downs Resort in Batemans Bay on the NSW South Coast and the Cullen Bay Resort in Darwin.
The closed fund with 65 investors targets a 10 per cent income return and 5 per cent capital growth rate per annum.
The sale of the Mackay Marina Hotel was brokered by ResortBrokers managing director Trudy Crooks.
“This sale highlights the fact there is a genuine rise in investor interest in counter-cyclical mining and resources markets like Mackay which are starting to bounce back,” said Ms Crooks.
The eight-level hotel was built in 2005 as part of the marina developed by Port Binnli Group, whose directors include Malcolm Hall-Brown, the chairman of the Queensland state government's Ergon Energy.
The hotel stands on a 6,407sq m prime waterfront site offering views over the Coral Sea.
Regional property investments have been growing in popularity with another fund manager, MPG launching its own regional property fund last year, targeting commercial property in regional hubs such as Newcastle, Bendigo, Armidale and Maryborough.