Iconic hotel goes under hammer
landmark Waikato hotel is for sale following a $ 1.3 million renovation, with new leases in place that will provide the next owner with t woyearly six per cent rental increases.
The 1930sq mCommercial Hotel at 97 Alexandra St, Te Awamutu, i s located on a high- profile 1373sq m corner site in the town’s main street. There has been a pub on the site since 1876 and the present art deco- style hotel was built in the early 1930s.
It i s now for sale after a major refurbishment and the establishment of a new restaurant and bars. The property, excluding the business, goes up for auction in Bayleys Hamilton auction room on Thursday, December 8, unless sold prior, offering the purchaser an initial net annual rental return of $ 180,000.
Alex ten Hove, who is marketing the property with Bayleys Waikato colleague Mike Swanson, says the hotel has been integral part of Te Awamutu’s central commercial precinct for 140 years and has been given a new lease of life by Mike and Claire Gibson, who have owned the property since 2013.
“The couple used the expiry of a previous lease in 2015 to undertake a complete makeover of the ground floor. They have reconfigured it into a new family style restaurant capable of seating 120 people with its own bar, plus another large main bar area with separate lounges, including one for 18 gaming machines,” says ten Hove.
“It's an iconic pub and the owners have done a huge amount of work to make it modern and inviting while retaining its historical integrity. One of their main objectives was to bring back some of the art deco features as part of the interior refurbishment. The fitout has been completed to a very high standard, right down to the threaded bar stools , which spin to adjust height.”
Names have also been chosen that reflect the history of the region. The restaurant, which is open for lunches and dinners, has been called The Long Acre Grill and Bar after the practice of droving cattle to market and feeding them on the “long acre” roadside along the way, to have them at peak condition at sale time.
The main bar has been named the Peach and Porker in honour of the pigs that used to clean up the rotting fruit in the Waipa District.
The property also has a substantial commercial kitchen, chillers and cellars which service the restaurant and bars. The bars offer 18 tap beers and a cider tower with three choices.
“Between the Peach and Porker Bar and the restaurant, there is also a completely new toilet and ablutions block, which is a similar standard to what you would find in a 5- star hotel,” says ten Hove.
Mike Swanson says the highquality fitout and the hotel’s well established position as the largest pub in Te Awamutu has helped attract an experienced Auckland- based hospitality operator as tenant. They have taken a five- year lease over the ground floor with rights of renewal through until 2036 at an initial rental of $ 130,000. Upstairs, the 38- room accommodation component of the hotel has a separate lease until April 2018 that is producing current net annual rental of $ 50,000, with two four- year rights of renewal.
Both leases have stepped rental increases of six per cent every t wo years.
“This provides significant rental growth well ahead of the current rate of inflation,” says Swanson. “Longer term, there is potential to further increase the property’s income by refurbishing and remodeling the upper level to upgrade the standard of accommodation and capitalise on the shortage of visitor accommodation in the Waipa area.
“The current owners had planned to do this as the second stage of the building’s development but have now decided to sell because of increasing hospitality commitments in Auckland where they operate t wo wedding venues and a catering business. This leaves an add value opportunity for the next owner.”
Swanson says the building has been solidly constructed and had an Initial Evaluation Procedure ( IEP) seismic assessment undertaken before its refurbishment which showed it to be 81 per cent of New Building Standard.
Located 30km south of Hamilton on State Highway 3, a major tourist route, Te Awamutu is home to about 14,000 residents and is the administrative centre for the Waipa District which has a population of around 40,000 people.
It is a service town for the farming communities which surround it and has a large dairy factory.