The Skyline Herald by Resort Brokers

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TING 32 RA YE EB

ISSUE #

SUMMER | ‘17

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SKYLINE HERALD We sold

193 Properties

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Developers drive Melbourne MLRs

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IN 2016

Sale of FV by GURNER breaks all records

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ONLINE EDITION & BLOG

AVANI BROADBEACH: A GAME-CHANGER

AFTER RESORT BROKERS AUSTRALIA’S RECORD-BREAKING GOLD COAST MANAGEMENT RIGHTS SALE TO GLOBAL GROUP MINOR HOTELS, AUSTRALIA’S FIRST AVANI-BRANDED RESORT IS SET TO OPEN AHEAD OF THE 2018 COMMONWEALTH GAMES. ON a recent visit to the $150 million The Beach Apartments Broadbeach construction site, Minor Hotels CEO Dillip Rajakarier confirmed it would open as the 219-key AVANI Broadbeach Residences in Q1 2018.

More than 90% of the 35-storey tower’s apartments have already been sold to a mix of local and international investors, with sales boosted strongly after the AVANI deal was sealed.

“We are thrilled by the response from local and offshore investors and anticipate the opening of AVANI Broadbeach Residences will also be met by great enthusiasm from visitors,” Mr Rajakarier said. “The addition of 219 keys to the Gold Coast’s hotel room inventory will have a profound impact on the city’s ability to cater to the swell

of tourists who visit each and every year.”

Resort Brokers’ Alex Cook, whose sale of the management rights to Minor set a reported Gold Coast off-the-plan per-key price record, paid tribute to the development team of Anthony Moreton Group, Pryde Group and Brookfield Multiplex.

“They were very astute in formulating the project from the outset with short-term holiday occupation in mind,” he said. “From the high-end design, to clever unit configuration and style of management agreements, the project naturally lent itself to a luxury holiday operation.

“This, combined with the upscale facilities and prime Broadbeach location, made it likely to attract an international

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AVANI BROADBEACH

- The Minor Hotel Group

operator of the calibre of Minor Hotel Group,” Mr Cook said. He said Minor's buy was testament to the appetite among international operators for high-quality, large-scale Gold Coast properties.

Minor Hotels already has a strong presence in Australia through its brand Oaks Hotels & Resorts, which the group acquired in 2011 and currently

includes 54 properties in its portfolio.

Mr Rajakerier said the Gold Coast’s investment potential was “undisputed” and Minor was actively pursuing expansion.

Resort Brokers is now working closely with the group to identify more opportunities and help it achieve its growth targets across Australia.

OPPORTUNITY IN BRISBANE’S NEW APARTMENT SUPPLY ASTUTE OPERATORS WITH A LONG-TERM VIEW AND AN EYE FOR OPPORTUNITY ARE UNCONCERNED BY A TEMPORARY SPIKE IN BRISBANE’S APARTMENT SUPPLY. SEASONED management rights operators, undeterred by reports of oversupply in the Brisbane apartment market, still have a healthy appetite for quality, well-located unit complexes — with good reason.

According to respected analysts Urbis, off-the-plan apartment sales

activity has slowed, indicating a market that is self-regulating and stabilising.

Developer pre-sales fell from a Q2 2015 high of 2,277 to 480 recorded in the December 2016 quarter.

Urbis Associate Director Paul Riga says Brisbane also saw another drop in potential apartment supply levels,

THE SKYLINE HERALD | RESORTBROKERS.COM.AU

with 19 new projects (approx. 3,600 apts) now expected to launch between October 2016 and June 2017. That’s a significant drop from the 31 projects and 4,856 potential new units predicted just three months earlier.

Particularly encouraging is an Urbis analysis of Brisbane’s inner city rental market where 60% of residents are renters. Urbis surveyed 23 new projects (4,246 apartments) and found an indicative vacancy rate of just 2.3%

(December Qtr 2016) compared to the total inner Brisbane rental vacancy rate of 3.6% (REIQ). That means the operators of quality new complexes are finding a ready market.

What’s more, tenants will pay a premium for the new units, with the median rent $55per week higher for new or near new 1brm apartments compared to existing properties, $30per week more for 2brms and $52per week higher for 3-bedders.

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"Quest Apartment Hotels and Alex Cook from Resort Brokers have been working together now for several years, and together have achieved numerous successful sales. Alex's dedication to providing a high level of service to his clients is commendable… he is always willing to go the extra mile. When combined with his extensive experience and superior analytical skills he really is the go-to agent in our books."

TESTIMONIAL

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FV -

STRONG OTP MANAGEMENT RIGHTS

GROWTH IN NSW

GROWTH OF THE MANAGEMENT RIGHTS MODEL CONTINUES TO SURGE IN NSW, DRIVEN BY A BROADER UNDERSTANDING OF THE OPERATIONAL BENEFITS AND A CONSISTENTLY STRONG RENTAL MARKET.

DAVID RIDGEWAY, QUEST APARTMENT HOTELS

Mantra's first 5-star Peppers in Brisbane

RESORT Brokers Australia national off-the plan (OTP) management rights specialist, Tim Crooks, says the industry has stabilised and grown as both developers and lot owners recognise its value.

“Legislation governing management rights has been tightened to protect all parties. Now lot owners need to agree to enter into the management rights structure at the first AGM and agreements can be struck for a maximum of 10 years,” he said.

“Still, demand is high thanks to strong rental demand that consistently absorbs new apartment supply.

The benefits of management rights are now promoted throughout the residential sales process so new lot owners appreciate its advantages, including having the security and support of a dedicated manager who maintains the property and handles letting.

“This growing appreciation of management rights is driving exceptional values for businesses selling off-the-plan,” Crooks said. “Developers who are supportive of the structure and process are adding millions of dollars to their bottom line, money that would otherwise have been left on the table.”

He also reassured developers who have already sold units without disclosing a potential management rights structure.

“We have been successful in selling the letting component separately, as a rent roll, at multiples of 2.5 to 3.5-times projected nett profit, depending on project size.”

Resort Brokers is currently marketing one of the first large-scale OTP management rights established in Sydney for over a decade – the 175-apartment One A Erskineville by Abacus Property and Linear Group.

SALE OF

FVby GURNER

BREAKS ALL RECORDS

GURNER’S LANDMARK 990-UNIT FV DEVELOPMENT HAS CLAIMED ALL RECORDS IN THE MANAGEMENT RIGHTS SECTOR. NOT ONLY IS IT THE LARGEST MLR BUSINESS TO SELL OFF-THE-PLAN, RESORT BROKERS AUSTRALIA’S FV SALE ACHIEVED THE HIGHEST PRICE EVER PAID OFF-THE-PLAN. AFTER lengthy negotiations, Resort Brokers' National Sales Manager, Trudy Crooks, and off-the-plan specialist, Tim Crooks, sealed the (now unconditional) deal with Mantra for a record-breaking price.

Mantra has confirmed it will establish Brisbane’s first 5-star Peppers within the striking trio of gleaming towers now rising on a prime island site in the vibrant Fortitude Valley shopping, dining and entertainment precinct.

“I can’t think of a better pairing of developer and operator, both focused on delivering first-class quality and a spectacular 5-star experience,” Trudy Crooks said.

“This is truly a magnificent mixeduse development, including stunning residential resort facilities. It raises the bar in the management rights sector in so many ways.

“In particular, the successful purchase by such a strong operator

and the introduction of the renowned Peppers brand, is an exceptional outcome for the lot owners.”

Featuring a statement design by acclaimed architects Elenberg Fraser, with construction by Brookfield Multiplex, the first two FV towers are due for completion mid-2017, and final tower by end 2018.

Master-planned to offer a new level of luxury and sophistication for residents and guests, FV comprises 990 one, two and three-bedroom apartments, approximately 2,000sqm of premium commercial space, and 3,000sqm of resort and residential amenity, just 400m from the CBD.

Bronze, silver and white glass towers incorporate an urban oasis where myriad facilities include a business centre, rooftop pools, private dining rooms indoor and out, podium level pools, lounges, health and leisure amenities, moonlight cinema, bars, restaurants and lush gardens.

SKYLINE HERALD | RESORTBROKERS.COM.AU

»

VUE -

Robina Group's next stunning project

MARKET ANTICIPATION BUILDS FOR NEXT ROBINA OFFERING

ROBINA GROUP HAS BEEN INSTRUMENTAL IN GOLD COAST GROWTH SINCE 1980, WHEN SINGAPOREAN INDUSTRIALIST, DR ROBIN LOH, ACQUIRED THE 20KM2 SITES HIS COMPANY HAS TRANSFORMED INTO THRIVING MODERN-DAY ROBINA, NOW HOME TO ALMOST 30,000 RESIDENTS AND A CIRCA 20,000-STRONG WORKFORCE. RESORT Brokers’ valued relationship with Robina Group began in late 2015 when the developer was searching for the right operator to buy the rights to Riverlily, a stylish boutique development of 71 townhouses next door to CBUS Stadium.

With completion just months away, Resort Brokers scoured their vast database to find the ideal contender.

Before long, a deal was struck with Keith Mouatt, an operator experienced in getting new management rights up and running.

That sale was quickly followed by Resort Brokers’ appointment to sell the rights to Boheme, Robina Group’s stunning new twin tower project of

130 largely investor-owned apartments opposite Robina Town Centre.

“After running a strong marketing campaign, we were able to present six offers at, or near asking price, all from experienced operators,” Alex Cook said. “It was simply down to Robina Group to interview them and make their choice.”

The nod went to Belinda and Stephen Pickwell who, with son Christopher, have long been successful operators on the Gold Coast, running numerous complexes including St Kilda on Riverwalk and Avalon Gold Coast.

The rights were sold for close to $2 million, along with a three-bedroom apartment for $599,000.

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GOOD THINGS

IN SMALL PARCELS

WHEN IT COMES TO MANAGEMENT RIGHTS OPPORTUNITIES, THEY ARE CERTAINLY NOT LIMITED TO LARGE-SCALE PROJECTS. BUSINESS-ONLY MANAGEMENT RIGHTS IN SMALLER SIZED DEVELOPMENTS ARE FINDING A READY MARKET.

MEET THE

'RIGHTS BROTHERS'

WE’RE NOT TALKING ABOUT THE LEGENDARY SOUL DUO OF UNCHAINED MELODY FAME OR PIONEER AVIATORS WILBUR AND ORVILLE. WHILE RESORT BROKERS’ ‘RIGHTS BROTHERS’ ARE TOP PERFORMERS AND DO ASPIRE TO BE HIGH FLIERS, THIS ‘BROTHER ACT’ BEGAN AS AN UNLIKELY MATCH.

WITH very different backgrounds, mostly spent on opposite sides of the globe, Alex Cook (above left) and Tim Crooks now find themselves professional colleagues, brothers-inlaw, and firm friends.

Together they are driving Resort Brokers Australia’s growth in the management rights market, with particular expertise in establishing and selling new businesses off-the-plan for some of Australia’s top developers.

Their families may have merged (Alex is married to Tim’s sister and Resort Brokers’ Marketing Manager, Carla Cook) and their careers converged, but these are two very different characters.

Fashion sense aside, consider their approach to business and negotiations, for example.

Hailing from the UK, Alex epitomises British reserve and restraint – ever cool, calm and collected. His

style is courteous, considered, organised and methodical. Cook is the name, meticulous service is his game.

Tim, on the other hand, is a ball of energy – tenacious, enthusiastic and not scared to have the hard conversations.

Brisbane born and raised, his style is bold, confident and direct. There is nothing that Tim likes better than the satisfaction of pulling together a complex deal.

Yet for all these differences, they are equally successful in their chosen specialist field of management rights.

And together, perhaps because they bring such different strengths to the table, they are a powerful sales duo.

Between them, this pair has set major industry benchmarks, with accomplishments including: » selling off-the-plan businesses for many of the nation’s top developers, including Aria, Metro, Mirvac, Abacus, Frasers Property, Robina

Group, Gurner, Asian Pacific Group and Galileo » setting a new record ‘per key’ price for a large off-the-plan short-term management rights » setting a then record management rights price with the 2015 sale of Soul Surfers Paradise to Mantra, and » then breaking their own record in 2016 by setting a new benchmark with the sale of FV, the largest management rights ever sold off-theplan; and »h andling some of the nation’s biggest management rights sales including Beach Haven Broadbeach and the massive 710-apartment Metro Brisbane portfolio.

So, whether your deal needs cool, analytical guidance, the flourish of an unabashed salesman, or the benefit of both, the ‘Rights Brothers’ of Resort Brokers definitely have you covered.

" Resort Brokers is a leading hotel and resorts sales agency in Australia and New Zealand, particularly in the sale of management rights. In my opinion it is critical that a specialised management rights agency is used to buy and sell management rights because of their unique nature. Tim Crooks and Alex Cook from Resort Brokers are leading Australian sales agent and I would recommend them to any vendor considering selling accommodation assets, particularly management rights."

TESTIMONIAL

DILIP RAJAKARIER - MINOR HOTELS

SKYLINE HERALD | RESORTBROKERS.COM.AU

“DEVELOPERS of smaller-scale residential projects can definitely boost their bottom line by selling management rights off-the-plan,” said broker Gareth Closter. “The key to success is carefully structuring the agreements from the outset to make them attractive and viable for operators.”

The option to buy business-only management rights, without any requirement to purchase real estate or reside on site, has found enthusiastic market support, he said.

These smaller management rights businesses suit a range of buyer profiles, including: - off-site operators who are able to bundle a number of smaller management rights to achieve efficiencies and economies of scale; - established on-site managers who want to build their unit inventory with ‘add-on’ businesses; and

- experienced operators reentering the industry.

“As a rule, business-only management rights suit projects of 30 units or more,” Closter advised.

“That is generally the size required to make it worthwhile for the developer in terms of set-up costs, and to produce an adequate body corporate salary to make the business saleable and appealing.”

To ensure these businesses achieve maximum value, it is imperative they are carefully and correctly structured from the earliest stage.

For example, including certain management duties in the agreements can be a deal-breaker, even though they might be small or unnecessary duties. If they make the operator’s role more onerous and the business less viable for an operator, it can tip the balance when it comes to saleability.

“We strongly recommend that developers consult us during the early planning stages.”

ANOTHER Off The Plan MLR SOLD

COORPAROO SQ 362 APARTMENTS

$7MIL + 3

DON’T BE SHORT-CHANGED ON SHORT-TERM ‘PER KEY’ PRICE

COMPLEXITIES IN PRICING NEW MANAGEMENT RIGHTS IN PROJECTS EARMARKED FOR SHORT-TERM LETTING COULD MEAN DEVELOPERS ARE BEING SHORT-CHANGED. EXPERT ADVICE IS CRITICAL TO SECURE THE BEST ‘PER KEY’ PRICE. PRICING off-the-plan (OTP) management rights businesses in buildings intended for permanent occupancy is relatively straightforward, explains specialist broker Alex Cook, provided you understand market conditions and industry standards.

But the task becomes much more complex in the case of shortterm (holiday and corporate) letting businesses, because so many more variables are at play.

Among them are tariffs, occupancy rates and operating costs – all of

which vary depending on competition and seasonal fluctuations.

Unlike permanent rental rates, short-term tariffs cannot be set at a fixed rate across a 12-month period.

“It would seem that historic ‘per key’ rates paid to developers by operators in the market for short-term OTPs have been somewhat arbitrarily set,” Cook observed. “It’s clear that, on occasion, developers have undersold these highly-sought assets.

“Per-key rates achieved for established short-term management

rights, in many cases, have been several times those accepted for new shortterm MLRs sold off-the-plan. We see large-scale established businesses on the Gold Coast often sell at $90,000plus per key, yet some developers have accepted only $25,000 to $30,000 in off-the-plan transactions done ‘off market’.

“That’s a heck of a lot of money for a developer to forego, and a massive windfall for the operator.”

Resort Brokers recommends developers engage a specialist industry

accountant to prepare propertyspecific income projections for shortterm businesses before selling off-theplan. Market multipliers are then applied to identify the correct price range and, depending on the number of units anticipated in the letting pool, the appropriate ‘per key’ rate.

“When prospective operators haggle, we have firm grounds on which to push for a higher ‘per key’ rate,” Cook said. “Backed by demonstrated comparable sales, we can quickly build a strong case.”

DEVELOPERS DRIVE MELBOURNE MANAGEMENT RIGHTS AFTER STRONG GROWTH IN THE MANAGEMENT RIGHTS RESALE MARKET IN VICTORIA FOR SOME TIME, SAVVY DEVELOPERS ARE NOW INCREASINGLY ESTABLISHING AND OFFERING MANAGEMENT RIGHTS FOR SALE OFF-THE-PLAN IN MAJOR NEW DEVELOPMENTS. TIM Crooks, national off-the plan (OTP) management rights specialist for Resort Brokers Australia, said the agency’s Victorian State Manager, Jim Chapman, had been a strong and effective advocate for management rights in the state for many years.

“Now, with so many of Victoria’s most successful developers also

undertaking big projects in Queensland, where the model has been so successful for so long, they are introducing the structure in their Melbourne developments.

“It is a move that will be the catalyst for exciting growth in the sector for years to come,” he said.

Resort Brokers Australia recently sold and settled the first large-scale OTP management rights to hit the Victorian market for many years — the 248-unit Ikebana Apartments developed by Gurner in West Melbourne. And the agency already has two more significant OTP properties under contract — MoPo located in Mooney Ponds, and Alexa Park Residences in Essendon.

Crooks advised developers that evaluation at the earliest possible

CLASSIFIEDS SOLICITOR

Trent Pevy of PEVY LAWYERS 0412 092 969 or trent@pevylawyers.com.au

COL MYERS { SMH } M: 0417 620 516 E: cmyers@smh.net.au

JOHN MAHONEY MAHONEY LAWYERS

TELEPHONE - 07 3007 3718

JOHN.MAHONEY@MAHONEYLAWYERS.COM.AU

LAGUNA & ST TROPEZ 424 APARTMENTS

FINANCE FINANCE

MIKE PHIPPS

Mike Phipps Finance M: 0448 813 090 E: mike@mikephippsfinance.com.au

Steven Burton PCS FINANCE

M: 0457 883 700 E: steve@pcsfinance.com.au Daniel Green - Green Finance E: daniel@greenfinancegroup.com.au P: 07 3193 0588

ACCOUNTANT

PETER SPRANKLIN

SAM HODGETTS

M: 0439 755 146

shodgetts@mcadamsiemon.com.au

SPRANKLIN LEGAL

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planning stage was vital to ensure the management rights structure and value is optimised. “We need to put everything in place before the first unit is sold,” he said.

There is a silver lining, though, for any developer whose project might be

07 3421 3421

more advanced.

“Resort Brokers can still boost your bottom line by around $5,000 per unit for every letting appointment secured by an incoming operator, on the sale of the rent roll alone.”

$5.173m

HOLMANS

trossiter@holmans.com.au

PH: 07 5430 7602

SO

LD

YOUR BROKERS

CONTACT US

Tim Crooks

VALUER ALISON SUN

AUSTRALIAN VALUERS M: 0416 181 285

ALISON.SUN@AUSTRALIANVALUERS.COM.AU

TOD GILLESPIE M: 0411 744 792 E: tod.gillespie@htw.com.au

Brett McCracken CBRE VALUATIONS

M: 0412 396 977

NATIONAL OFF THE PLAN SPECIALIST

0422 208 450 timcrooks@resortbrokers.com.au

Alex Cook

SENIOR BROKER BRISBANE & GOLD COAST

0467 600 610 alexcook@resortbrokers.com.au

or 1300 665 966 4