Upper Hutt lodge lease adds value
An Auckland real estate manager is the new owner of a motor lodge in Upper Hutt.
The investor was attracted to Totara Lodge in Trentham as it had a 30-year fixed term lease. It was sold by owners Diane Horton and Brian Mudge for $3 million.
The sale includes the former Carvery restaurant, now trading on a sublease as Trentham Mess Hall.
Built 15 years ago to a design by Wellington architectural firm Hunt Davies, Totara Lodge offers the highest standard of accommodation in Upper Hutt, with most of the 26 units having been recently refurbished.
Gollins Commercial principal Chris Gollins, who marketed the property, said the lodge attracted offers from as far afield as Malaysia.
He believed most commercial property investors failed to appreciate the security of a motel or motor lodge freehold property, as opposed to the business itself.
The business is owned by Totara Hospitality.
"In this case there's revenue from 26 highquality units plus the rental from the restaurant." Chris Gollins Gollins Commercial principal
‘‘I’ve sold many freeholds over 25 years, but only once has one of them come back on the market,’’ Gollins said.
‘‘They’re really the only investment where the lease has value: lose a factory tenant and there’s no rent; lose a motor inn tenant and the freehold owner then owns a business they can on-sell.’’
Rental growth might be limited, but certainty of income for the usual lease term of 25 years or more appealed to many, Gollins said. ‘‘These certainly attract investors seeking peace of mind.’’
Wellington Hospitality Group, owned by entrepreneurs Andrew and Jamie Williams, runs Trentham Mess Hall, which had been an instant success since opening late last year, Gollins said.
It began on a five-year lease but within months extended to a 10-year fixed term with further rights of renewal.
‘‘In this case there’s revenue from 26 high-quality units plus the rental from the restaurant and bar without any responsibility to operate it,’’ Gollins said.