Stronghold Investment Management has acquired the freehold interest of the Grand Hotel Cairns and a neighbouring development site. The sale price was undisclosed, but is understood to be circa $13 million.
CBRE Hotels’ National Pubs Director Paul Fraser negotiated the sale of the landmark Cairns pub and two adjoining lots on behalf of private owner Oxford Hotels NSW.
Positioned on over an acre of land with three street frontages, the high-profile corner property is situated in the heart of the Cairns CBD directly opposite Cairns Central – the largest shopping centre in Far North Queensland.
The high performing, newly renovated pub offers 35 gaming machines and features a drive-thru bottle shop. The sale includes a head lease over the entire site and six adjoining retail shops, with the vendor remaining as lessee under an initial 10-year lease agreement.
Fraser said: “The opportunity for the owner to sell the freehold interest in the asset was undeniable in a market chasing annuity of income and long WALEs. Ultimately, the way we structured the lease meant that the owner was able to ensure continued high cash flow and profits year on year whilst also realising a high exit price which will enable Oxford to redeploy capital into other projects.”
The property has been identified as a trophy asset for Stronghold Investment, boosting hospitality assets under management to circa $70 million while providing a medium to long term development play.
“Cairns continues to be one of a handful of Queensland regional centres where the appetite for landmark sites remains incredibly strong,” Fraser said.
“This transaction also highlights the market appetite for structured deals that provide a beneficial outcome for both buyer and seller.”
Stronghold Investment Director Steve de Nys added: “We are delighted to finalise this acquisition on behalf of our investors in what has been a challenging transactional environment. In addition to the established hotel, the property includes circa 3,100sqm of land with development potential up to 14 levels. We look forward to working with local stakeholders and our tenant to maximise this potential over the medium term.”
Oxford Hotels’ Managing Director Jaz Mooney said the group had acquired the asset realising the pub’s prime location and significant potential, ahead of undertaking an extensive renovation.
“We completed the renovation nearly two years ago and the community embraced it immediately,” Mooney said. “However, I am not a developer, so it was never a long-term vision of mine to hold the land indefinitely. I am delighted that I can stay on as the lessee and that Stronghold has seen the opportunity not only for the short and medium-term but in the long term for this site prime Cairns CBD site.”