Sydney, 5th December 2024 — In a bold move that sets a new benchmark in the Australian property investment landscape, Deltine Capital today announced the Deltine High Yield Motel Fund, a first-of-its-kind wholesale commercial property fund focused exclusively on acquiring and operating regional and suburban motels across Australia.
Spearheaded by seasoned investment professional David Toomey, the Fund is targeting more than 50 high-quality motel assets valued over $500 million, aiming to deliver strong, stable income and capital growth to sophisticated investors. The Fund forecasts a targeted pre-tax total return of 20% per annum, including quarterly income distributions of 10% (net of fees).
“The motel sector represents one of the last truly untapped frontiers in Australian commercial real estate,” said Mr Toomey, Founder and CEO of Deltine. “Institutions have largely ignored this asset class due to its smaller ticket size and regional footprint, but we see clear potential to consolidate, optimise, and institutionalise this overlooked sector.”
Mr Toomey brings a distinguished background in investment management and executive leadership to the venture. A former Chief Investment Officer of a major family office fund and clean tech company executive, he has stepped sideways in his successful corporate career to pursue the vision of transforming Australia’s motel industry to form a national, branded portfolio.
On the ground, supporting this vision is Chief Operations Officer, Michael Jones. With an extensive career in premier hospitality and resort management, (including the $100 million development and successful launch of Ardo, Townsville’s first luxury hotel,) Jones says his excitement is due to Deltine’s unique modelling and strategy in this sector:
The Deltine Fund adopts a low-leverage model (target LVR 45%) with 100% equity ownership of freehold going concern properties. “We will own both the motel property and businesses to ensure investment in both is aligned” Jones explains, adding that “the strategy blends property backed stable rental income with operational upside, backed by experienced centralised management to deliver efficiency, technology innovation and economies of scale.”
A Unique Asset Class in a Robust Market
According to IBISWorld, Australia’s motel sector consists of over 2,400 motels generating $2.8 billion in annual revenue. Despite strong long-term growth trends in regional tourism and increasing average daily room rates (ADR), the sector remains highly fragmented and undercapitalised. Motels often offer purchase yields above 10%, significantly outperforming traditional office, industrial and retail yields.
The Fund’s “buy-and-build” strategy aims to unify a patchwork of independent operators into a scalable, tech-enabled network that delivers superior guest experience and cost efficiencies. With a focus on towns with strong economic drivers — such as airports, hospitals, infrastructure, and tourism corridors — Deltine is positioning its portfolio to benefit from sustained demand and limited new supply.
Risk-Aware, ESG-Aligned Investment
“Capital preservation is at the core of our strategy,” said Mr. Toomey. “We’ve deliberately avoided high-risk developments, single-asset exposures, or assets with large food, beverage and gaming operations. Our investors benefit from geographic and operational diversification, backed by physical property ownership and professional oversight.”
Deltine is a signatory to the UN Principles for Responsible Investment and incorporates ESG considerations across acquisition, operations, and community engagement.
A Timely Opportunity
With interest rates expected to ease, new supply constrained due to high construction costs and domestic travel trends growing, Deltine believes now is the ideal time to acquire motel assets that are still trading below replacement cost. The Fund has already identified a pipeline of acquisitions and is now accepting commitments from wholesale investors, with a minimum investment of $50,000.
“Motels are essential infrastructure for regional Australia, serving a diverse range of business, event and leisure travellers,” Mr. Toomey concluded after reflecting on his early career years auditing regional motels and growing up in a regional area himself. “We’re not just investing in properties — we’re investing in communities and building a new standard for regional accommodation.”
-ENDS-
Media Contact:
Catherine Smibert | Group Marketing Manager | E: cath@deltine.com.au |
W: www.deltine.com.au |
About the Deltine High Yield Motel Fund
The Deltine High Yield Motel Fund is a commercial property investment vehicle focused on acquiring and consolidating high-yield motels across Australia and New Zealand. By consolidating a fragmented sector, the Fund aims to deliver a diversified portfolio generating superior income and capital growth through operational improvements, economies of scale, technology upgrades and long-term strategic exit planning.
