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Hospitality company Feros Group will soon go from tenant to owner of Highfield Caringbah in south Sydney, following an expressions of interest campaign run by Ray White Commercial NSW.
Feros already operates the venues Public House Highfield, The Botanical, Ugly Pizza and Huxley's on the 32 Banksia Rd property, which it recently snapped up for circa $15 million.
The property was marketed by the property agent's Sydney City Fringe Principals Kristian Morris and Justin Rose.
Morris highlights strong interest throughout the campaign and notes the final sale price represents a sub-four per cent yield.
"This was a well-executed campaign with 85 direct enquiries, 15 different groups inspecting the property and multiple parties interested close to the four per cent yield mark," he says.
"Buyers saw the value in such a long lease (15-years plus options totalling up to 60 years with ratchet clause in favour of the lessor) and strong covenant.
"Hotel assets that are subject to such a long lease don't come up very often and this resulted in such a tight cap rate."
The property has a 3,072sqm building area and 1,024sqm land area, is on the northern side of the Kingsway and has street frontage to Mackay Street, Banksia Road and Hay Lane.
"It's rare to have such a long and secure lease to a group that's committed to the area, and it provided the right buyer with an investment seldom offered to the market," says Rose.
"These freehold subject-to-lease (FSTL) opportunities are rarely available and it offered a stress-free and hassle-free annuity income stream, with the tenant paying 100 per cent of the outgoings and running costs.
"It's close to the Caringbah Town shopping centre and major retailers such as Coles, Woolworths, McDonald's and is just 150 metres to Caringbah train station."
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