Australian hospitality group TPG Hotels has acquired the freehold interest in the Pacific Hotel Cairns.
CBRE Hotels’ Wayne Bunz and Hayley Manvell negotiated the sale on behalf of the Perth-based Pacific Hotels Group following a discreet off-market expression of interest process.
“The sale was negotiated by CBRE Hotels following our client’s approach in mid-January, allowing us to target select investors capable of completing the transaction prior to the commencement of the client’s proposed refurbishment program. This delivers another result for our client, Pacific Hotels, following the sales of the Pacific Hotel Brisbane and Coral Cay Mackay,” Mr Bunz said.
The 4-star Pacific Hotel Cairns is positioned on a 3,570sqm CBD site. The 11-storey hotel offers 207 rooms and suites complemented by a range of guest facilities including an award-winning restaurant, a guest lounge, a swimming pool, and ample car parking.
The asset also includes four retail tenancies, which are currently occupied by two long-standing tenants, Destination Cairns Marketing and Flamingos Tiki Bar.
Having opened in 1982, the hotel has benefited from a range of refurbishments and upgrades. In 2018, 31 new rooms were added and over FY22/23 the guest rooms and hallways from levels four to nine were renovated. Notably, levels 10 to 11, occupied by 44 rooms, are currently offline due to a fire in 2021.
Prior to the sale, the hotel was owner-operated under the Pacific Hotel brand, however vacant possession was available upon completion allowing ultimate future operational flexibility.
“The sale represents an initial yield of 4.3% and a stabilised yield on a three-year basis of 7.25%. This demonstrates the demand for Cairns’ accommodation assets with genuine upside,” Mr Bunz added.
“Infrastructure improvements and a lack of new hotel supply is underpinning investors in Cairns, with the supply constraints expected to support the continued recovery of the city’s limited pool of assets. This has already been reflected in increased room rates and revenue, with ADR and RevPAR 41% and 24% above pre-pandemic levels in 2023.”
The next test of the market will be the sale of the Pullman Cairns International and the adjoining Village Lane retail and commercial arcade, which are being offered for sale via a CBRE Hotels’ Expressions of Interest campaign.
