Realising Value

Acacia Ridge Hotel

Acacia Ridge, Queensland

Acquisition Date December 2016

Acquisition Size $25.6 million

Equity Investment $14.4 million

Acquisition Yield 10.5% (excluding surplus land)

Asset Class Hotel, Motel, Bulky Goods

Investment Strategy Acquire, Manage, Re-develop

Project Highlights
  • Secured new equity and debt funding
  • Implemented new management
  • seeking to redevelop property to unlock land value

White & Partners acquired the Acacia Ridge Hotel in December 2016 for $25.6 million representing a passing yield of 9.6%. The Hotel occupies 18,740m2 of land fronting Beaudesert Road, a major arterial road connecting Brisbane with the southern growth corridor. White & Partners were drawn to this asset due to multiple factors including:

  • Operational upside
  • Higher and better use of land with the potential for a bulky goods retail development

White & Partners identified the value in the excess land and proceeded with formulating investment strategies to best exploit this whilst not inhibiting the valuable Hotel operation. The Investment Strategy is being implemented on a short and medium term approach.

The short term approach focuses on operational upside. Following the introduction of Monarch Hotel Management (MHM), our experienced hotel partner, 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 and improved customer service resulting in a 13.3% increase in Gaming turnover over the previous year. Moving forward MHM will commence a rollout of Electronic Gaming Machine (EGMs) upgrades and continuing to focus on utilizing existing facilities to enhance the customer experience.

In the medium term, White & Partners is evaluating a number of redevelopment schemes to exploit the underutilized land. The favoured scheme would involve the construction of a new hotel building fronting Beaudesert Road, and transfer of the business from the existing building. This scheme would have minimal impact on existing business operations during the construction phase, and once transferred, reduce operational expenses for the business due to a more efficient building layout. The demolition of the obsolete building, would unlock the development potential of the remaining 16,000m2 of land.