White & Partners acquired the Property in December 2016 for $25.6 million, representing a passing yield of 9.6%, (or 10.5% excluding vacant land component).A key plan of the investment strategy is to identify the benefits of the significant land holding and hurdles associated with the 8,000m2 hotel building. The required amount of capex works to optimize the tired building and ongoing maintenance would have posed a daunting proposition to many publicans.
Following settlement, the Hotel was subjected to a number of improvements resulting in a jump from 8th to 2nd in the gaming rankings during the month of April 2017. The implemented measures included new management, more efficient staffing, new Electronic Gaming Machines (EGMs) and improved customer service resulting in a 13.3% increase in Gaming turnover over the previous year.
In order to address the hurdles set by the Hotels large size, White & Partners developed a scheme that will effectively demolish half of the Hotel, moving the motel component into the disused function space.
This strategy retains half the existing building and will also make the Hotel more efficient to operate whilst providing new amenities for patrons. The refurbishment works will modernize the Hotels existing shell and improve the gaming room, TAB and bottle shop, with the successful motel operation being relocated to the obsolete function rooms.
Once complete, this strategy unlocks 9,000m2 of land for redevelopment into a bulky goods offering to compliment the Hotel. The refurbishment and reduction of the buildings size will make the Hotel more widely appealing to future purchasers of the asset at the time of disposal.