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Buyers eye standout investment motel complex for sale on Rotorua’s ‘motel mile’

The Italian-styled Tuscany Villas motel has been a popular feature of Rotorua’s busy visitor accommodation scene since the purpose-built complex opened in 2005.

Located at 280 Fenton Street, around a kilometre from the CBD and lakeshore and eight kilometres from Rotorua Airport, the property encompasses a 28-unit motel plus a conference facility and three-bedroom owners’ residence.

An investment in the ground lessees’ interest in the buildings is now on offer, in what real estate representatives say is a rare opportunity to secure a high-yielding investment with a long lease in the city’s tightly-held motel market.

The Tuscany Villas property generates net rental income of $300,000 plus outgoings and GST per annum, backed by personal guarantees, with built-in two-yearly market rent reviews. The current lease runs through to 2035, with a further 30-year right of renewal.

The leasehold property is now being marketed for sale by private negotiation, through Bayleys’ specialist Hotels, Tourism and Leisure and International Sales teams.

Salespeople Wayne Keene and Millie Liang said the well-presented motel sat on approximately 2,052 square metres of commercial-zoned land, which is subject to a ground lease to Rotorua Racing Club.

The ground lease is for a period of 99 years from March 2005 and has 83 years remaining on the term.

“The lease of the buildings to the motel operator requires the tenant to pay for all outgoings, including the ground rent, and to fully maintain the property as required, refurbish all units and paint the exterior at fixed intervals,” said Keene.

“Built in 2005, this is a standout two-level motel on Rotorua’s main arterial route. The complex incorporates 28 well-appointed motel units in various configurations suitable for corporate clients through to families.

“A conference facility on level one caters for groups of up to 40 people, with a servery to a kitchen, male and female toilets, a break-out room and storeroom.

“Other utilities include a motel laundry and storage area, motel kitchen and administration area. A spacious three-bedroom residence for the lessee adjoins the reception at the front of the complex,” Keene said.

Situated on the eastern side of Fenton Street, the main route into the city from the south, the site includes 29 off-street car parks for guests.

Liang said Tuscany Villas was a proven business which had operated successfully in Rotorua’s competitive accommodation market for 16 years, during which it had enjoyed consistently good occupancy and solid revenue.

“The tenant is an established and experienced motel operator who has built a significant business asset value. The lease document also offers personal guarantees from both directors for the remainder of the tenure, making this an investment to seriously consider.

“Motel investments in general are normally difficult to secure as they are well sought after and tightly held. Like most motel investments, this one offers the prospect of good returns with stable income from a single tenant on a long-term lease.”

Liang said Rotorua’s popularity among domestic visitors and proximity to North Island population centres including Auckland, Hamilton and Tauranga had stood its motel market in good stead in the post-COVID environment.

Click here for more information on the listing.

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