Overview

Capitalise on the value-add consolidation potential of rolling-up well established motels. This Fund will invest in a diverse 50+ portfolio of high-yielding, high-quality suburban and regional motels to deliver superior returns from a fund with low risk characteristics.

This is a highly fragmented sector ripe for consolidation and optimisation. It is a sub-segment of the commercial property asset class that is overlooked by institutional investors resulting in attractive purchase yields.

As its a segment that differs from typical office, retail and industrial property funds, we believe such a unique commercial property sub-class can provide income and additional diversification benefits to private investment portfolios.

Contact us today to learn more about the investment benefits. Open now to sophisticated investors, $100,000 minimum investment.

Attractive Returns

Target > 20% IRR

Net per annum return for 5 years

The total projected return over the term of the fund is the addition of:

  1. Income distributions
  2. Capital growth (increases in room rates – inflation protection)
  3. Increased income – operational improvements and economies of scale
  4. Increased valuation from diversification

Target 9% - 11% Income Distributions

Net per annum, distributed quarterly

  • All motels purchased will have a track record of profitable operations and cash generation making them very attractive income investments.
  • Flexibility to change room rates on a daily basis provides excellent inflation protection.
  • The investment manager will use the cash generated to pay quarterly distributions.

Investment Highlights

  • 1. Attractive Returns - Income PLUS Capital Growth Upside

    Target total return of >20% p.a. over 5 years, including quarterly income distributions of 9.0% – 11.0% p.a.

  • 2. Multi-Asset Diversification

    Portfolio diversification across assets, towns, local economies and accommodation types

  • 3. Low Debt Levels

    Limited debt/leverage from tier 1 banks with a loan to value (LVR) target of 45%

  • 4. Simple, Transparent & Tax Efficient Fund Structure

    Simple equity + senior debt capital structure. Tax efficient trust structure with income and capital gain flow-through benefits.

  • 5. High Performance Team

    Experienced team with a track record of successful execution, institutional grade capabilities and sector knowledge

  • 6. Growing Macro Drivers

    Market growth underpinned by positive growth trends in domestic and international travel along with constrained levels of new supply

  • 7. Highly Fragmented Industry, Ripe for Consolidation

    Economies of scale, efficiencies through centralisation and operational upsides across both revenue and expense optimisation

  • 8. Outperforming Other Commercial Property Sectors

    The motel sector is currently delivering higher yields than office, retail and industrial commercial property

Why Motels?

We are attracted to motels as the sector provides the following investment benefits:

  • Good quality, long lasting buildings in great central locations
  • Impressive track record of profitable operations and cash generation making them attractive income investments
  • Available at purchase yields between 9% and 13%
  • Various achievable operational upsides are available
  • They are essential service providers for regions and have a diverse clientele
  • Geographic, room type and local economy diversification is available
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Capital Preservation - Low Risk Fund Characteristics

Capital preservation is core to the Fund’s strategy. Our primary focus is on ensuring income and capital security, which lays the foundation for long-term capital growth and wealth creation. Combining portfolio optimisation strategies and proprietary commercial property research, the team has identified very competitive returns despite the low-risk characteristics of the Fund. The key low-risk characteristics of the Fund are:

  • Property backing – equity owned, quality commercial property, in great locations.
  • Low LVR – target 45% LVR debt levels ensures high serviceability and interest coverage.
  • Diversification across geography, regional economies and accommodation type.
  • Resilient operations with strong operating track record:
    • The motel sector has withstood both Air BnB disruption and Covid lockdowns.
    • Select motels with quality on-site management with good track record of generating cash.
  • Independent Trustee oversight and AFSL:
    • Focus on compliance, risk management, thorough diligence, and investors’ best interests.
    • High standards of expertise, professionalism and ethical behaviour to safeguard investors.
  • Excluding high risk properties – no ‘new build’ developments, no single asset exposure, no turnarounds, no pubs or gaming.
  • Contingency planning – cash reserves and funding with re-draw facilities will be built into fund and asset level cash management planning.

Keep Your Savings Secure & Working Hard For You!

Investment Timing – Why Now?

We believe it’s an ideal environment for commercial property investing given the following macro indicators:

  • High interest rates put downward pressure on asset prices making acquisitions more attractive (higher financing costs reduce the capacity to service debt, resulting in lower demand and decreased asset prices).
  • High construction costs defer new builds and therefore constrain supply.
  • Volatility from global events and high inflation defers new investment decisions, reducing demand.
  • Being at the peak of the interest rate cycle we expect decreasing interest rates for several years ahead which both increases investor confidence and provides cheaper debt. In turn, this creates more demand and, therefore, increases prices for assets in the portfolio.
  • Motels are currently selling at valuations that are below replacement cost, which is further discouraging new supply. Purchasing at a discount to replacement value also minimizes downside risk.

  • Low debt - LVR target of 45%

  • Multi asset diversification

  • Tax efficient and transparent structure

  • Property backed, simple capital structure

Disclosures

*Past results are no guarantee of future performance.

Deltine Motel Managers Pty Ltd (ACN 680 562 574) is a Corporate Authorised Representative (1311686), and David Toomey is an Authorised Representative (1311688), of Bentleys (QLD) Advisory Pty Ltd (AFSL 274444). Deltine Motel Managers Pty Ltd has been appointed as the Investment Manager for the Deltine High Yield Motel Fund.

The Deltine High Yield Motel Fund (Fund) is an unregistered managed investment scheme available for investment from wholesale investors only. An investment in the Fund carries risk. As the Fund invests in commercial property it carries the usual risks associated with investing in property funds. Risks can impact the distribution and capital returns over the term of the Fund. It is important that you read the IM and understand the risks of investing. Deltine Motel Managers Pty Ltd and its associates will receive fees in relation to an investment in the Fund as disclosed in the IM. Investment in the Fund is subject to risk including possible delays in payment or loss of income and principal invested. Neither Deltine Capital Pty Ltd or Motel Managers Pty Ltd does not guarantee the performance of the Fund.