Carpe Diem and RedHill Hospitality have collaborated to create an offering in the highly attractive asset class of regional motels.  The first three funds have exposure to 8 properties totalling 420 rooms across NSW, QLD and Victoria.  They are invested into attractive high yield investments such as the Peninsula Nelson Bay Hotel and Apartments NSW which has been acquired for $7.5M on a double digit investment yield and the John Hunter Muswellbrook Motel acquired on an 18% yield.

Regional tourism has grown consistently for the past decade.  Restrictions on international travel translated into a domestic travel boom post OCVID which has not abated.  RedHill Hospitality have extensive track record in the ownership and management of motels.  Our hands on in-house motel management expertise is a key point of differentiation vs other investors in this space.

Motels are a typically non institutionally owned asset class due largely to their small individual investment size.  A similar factor previously occurred with caravan and tourist parks (lifestyle parks) however significant value was added by aggregating large institutional portfolios which in some cases are now listed on the ASX.

Additionally, motels tend to sell for high yields and for well below replacement cost, protecting them from new supply.

The motels we target for investment are often owned and run by under capitalised and unsophisticated managers.  There is strong profit leverage potential from increasing occupancy or increasing room rates.  Increasing occupancy is a key target, and as such we tend to focus on motel opportunities which are underperforming but which can benefit from light upgrades to rooms, and the adoption of on line booking strategies.

Key investment focus points include;

• Targeting of markets with stable or increasing demand and limited new motels supply
• Underperforming assets which can quickly benefit from improvements
• Focused Value Creation Plan
• Compelling Consolidation Opportunity
• Attractive yield and meaningful discount to replacement value to limit downside risk

Sophisticated and detailed due diligence of assets is a core capability.  We have reviewed and assessed many assets throughout NSW and in other states and maintain a deep list of opportunities.