The recent sale of four substantial New Zealand motel assets – including the land, buildings, and going concern commercial accommodation businesses – since the resumption of domestic tourism, is reflecting a strong long-term confidence in the economic sector according to a senior real estate figurehead.
Since New Zealand re-entered Covid-19 level three at the end of April, Bayleys Hotels, Tourism and Leisure team has concluded four sizeable transactions – one in Auckland and three in Taupo.
Headlining the quartet is the sale of Parklane Motor Inn on Auckland’s North Shore – bought for $11.5 million by an offshore investor with existing property interests in Asia, Australia and Europe. Negotiations for the three-storey 32-unit property on some 3,116 square metres of land began during Covid-19 level four restrictions.
Bayleys Hotels, Tourism and Leisure national director Wayne Keene organised for an independent hotel management company to undertake a due diligence report on both the property and accommodation business, in conjunction with the buyer’s local legal firm.
Keene said that with family-owned Parklane Motor Inn delivering a net profit of $600,000 to its former owner-operators during the last financial year, and with a robust building report, the purchaser felt confident to proceed with the transaction without physically viewing the property. In addition to accommodation, the 40-year-old venue also has three conference suites capable of housing between 12 to 50 people.
Keene said a second potential purchaser – domiciled within New Zealand – was prepared to make an offer if the first bid fell through. However, the second offer was not required as the contract was confirmed unconditional at the beginning of June as New Zealand transitioned into level one Covid-19 mode.
The high-value Parklane Motor Inn sale was transacted concurrently with three other campaigns signed off by Bayleys Hotels, Tourism and Leisure team during level three and two trading conditions.
The land and two-storey buildings housing the 24-unit Karaka Tree Motel in Taupo sold for $2.8 million. Sitting on some 2,555 square metres of high-profile freehold land near the corner of Lake Terrace and Napier Road, Karaka Tree Motel’s operator has a seven-year lease in place, paying annual rental of $214,104 with rent reviews every two years.
The property’s room inventory features a mix of 12 studio units, with 11 one-bedroom suites and a two-bedroom family unit. The transaction was negotiated in conjunction with Bayleys Hotels, Tourism and Leisure salesperson Leanne Bate.
Meanwhile, Taupo lakefront upmarket boutique motel business The Cove also sold – for a confidential value. It had been advertised for sale with an asking price of $940,000. The sale was purely for the commercial accommodation business, which has a lease on the site running through to 2047.
The Cove has 17 suites configured to spa, executive and studio room options. The rooms and common guest spaces were extensively refurbished in 2014.
Rounding out the Taupo motel sales trifecta, the land and buildings sustaining the 11-unit Executive Motel in the town have been sold for a confidential price equating to a yield of six percent. The accommodation’s operator has a 16-year lease in place.
Both transactions were negotiated in conjunction with Bayleys Hotels, Tourism and Leisure salesperson Brent Hannah.
Keene said the quartet of motel asset sales was a clear indication by both investors and operators in the future of New Zealand’s tourism accommodation sector.
“While there may be just a miniscule number of international tourists in New Zealand at the moment, and with little growth in that niche of the tourism sector forecast for the remainder of the year, it has been a different story for domestic tourism numbers,” said Keene.
“Kiwis, by default, are certainly travelling internally in great numbers. If you have nowhere else to go on holiday, then ‘local’ is a great option. As a consequence, there have been strong occupancy rates seen in the likes of the Bay of Islands, Taupo, and Rotorua’s motels since the country entered level one Covid-19 conditions. For the meantime, the market is ticking along nicely for those with quality stock and management practices.
“This is the new benchmark for occupancy rates and revenues. The re-emergence of international visitor numbers, whenever that occurs, will see a further improvement in balance sheets – so the long-term scenario is looking much healthier.
“All of which is attractive for both investors and owner/operators.”
Keene expected Bayleys Hotels, Tourism and Leisure would be announcing further sales before the end of winter – including some larger hotel transactions of 100-plus room properties.
Bayleys Hotels, Tourism and Leisure business entered the market earlier this year just as New Zealand went into Covid-19 level four lockdown – with Bayleys acquiring tourism broking agency Resort Brokers Ltd including its sales and management personnel, Wayne Keene and business partner Gordon McGregor at the head of the organisation.
The accommodation business and real estate sales specialists now operate out of Bayleys offices throughout New Zealand – with representation in the Bay of Islands, Auckland, the Central North Island, Hawke’s Bay, Nelson, Christchurch, Queenstown and Dunedin.
“Introducing the new Bayleys Hotels, Tourism and Leisure team into the market has certainly paid rapid dividends – showing there is a place in the sector for an agency that can sell all commercial accommodation asset classes, produce quality market information and deliver sales results in a timely manner,” said Keene.