Popular Mornington hotel purchased for over $15M

A popular Mornington Peninsula hotel has been snapped up by local buyer buyer for $15.75 million on a 2.7 per cent yield – 140 basis points below the cash rate.

A low yield reflects strong underlying demand for an asset, with the acquisition of The Dava Hotel near Mount Martha setting a new return benchmark for pub investments.

The Dava Hotel attracted 18 tenders to purchase, all eyeing a slice of the 1.55-hectare ocean-fronting site on the Esplanade, between Mount Martha and Mount Eliza.

The property was marketed as one of the best land-banking opportunities on the Mornington Peninsula. It was also said to have high underlying land value and development upside.

However, full development of the site may take some time as there is more than 12 years remaining on the current lease to casino pioneer John Haddad’s Taverns of Victoria.

Chris and Peter Dash own the freehold and ran the hotel for several years before leasing the venue out for the past 18 years.
The Dashes paid $5.15 million for The Dava Hotel in 2001. It is highlighted by panoramic views across Port Phillip Bay from its rooftop deck, a spacious modern bistro, TAB, public bar, gaming room with 32 machines, outdoor kids play area and large drive-through bottle shop.

The new owners cannot as yet be identified, however, it seems they are big players.

Stonebridge Property’s Rorey James who was one of the facilitators of the sale said, they were “big property owners” on the east coast and that due to the low yield would pay with mostly cash and “without help from the banks”.

“To receive six offers reflecting yields sharper than 3 per cent speaks volumes of the markets’ medium and long-term confidence in the retail and hotel sector, particularly given the more than 12 years of tenure remaining on the lease,” James said.

Stonebridge’s Asia practice partner Kevin Tong noted the high interest from overseas investors, with said 44 per cent of bids received were from Asian-based investors and land bankers.

“We also received bids from investors backed by Indonesian, Chinese and Singaporean capital which further highlights the confidence this buyer profile has in the Mornington Peninsula market,” Tong said.

The Dava is one of several venues in the region that has attracted investor attention.

ASX-listed Endeavour Group struck a deal to buy the large-format Rye Hotel on the Mornington Peninsula for about $50 million. That sale is under review by the competition watchdog.

The peninsula’s St Andrews Beach Brewery, part-owned by cricketer David Warner, is also up for sale.

Jonathan Jackson, 16^th October 2023