Art Nouveau backpackers' hostel on Spencer Street sells for $10.75 million
A 1913-built Art Nouveau backpackers' hostel in Melbourne has sold for $10.75 million with an expected yield of more than 8%.
Previously known as the Sir Charles Hotham Hotel and the Hotham Private Hotel, the building on the corner of Flinders Street and Spencer Street was first listed for sale by the vendor in June 2010.
The property, 2-8 Spencer Street and 566-580 Flinders Street, last sold in 2006 to Australian Budget Accommodation Group for $6.15 million when offloaded by the Ivany family.
Current tenants All Nations Backpackers Hostel have a lease until 2018, after which the marketing suggests there will be redevelopment potential for the site.
The corner block has a land area of 883 square metres with a 20.9 metre frontage to Spencer Street and 40.2 metres to Flinders Street.
Property Observer understands the buyer is associated with private investor Peter Russell's Kurrawonga Pty Ltd, which was last in the news when it secured the London & Lancashire Building at 400 Collins Street for $7.5 million in 2009.
A Malaysian investor had been tipped to buy the property for $12 million in February this year but backed out after undisclosed issues.
Kliger Wood agents Russell Meerkin and Grant McKenzie had marketed the property for $12 million last November.
The current net annual rental is $885,586.
“The building is an older style Art Nouveau style four level and part five level structure which has three retail tenancies including a Seven Eleven store, a café and an entertainment facility on the street frontage with the upper levels and part of the ground floor including a bar and reception area are conducted by Nomads Backpackers,” Meerkin says.
“Most of the leases have further periods to run and allow annual defined rental increases and in most cases options to renew.”
When the hotel was first erected the daily press described as one of the largest in the city.
“The location commands the shipping trade, adjacent to wharves and Spencer Street Railway Station, Harbor trust offices and Railways Offices, fish market- proposed improvements to bring mail and other large freight right up to the City- all to benefit the hotel.”
“It includes cellar, ground floor with large public bar, private bar, billiard room, four bar parlours and offices; three storeys and open flat on roof; first floor has large dining room, and services, drawing room, reading and smoking rooms, nine bedrooms with linen press, bathrooms and lavatory accommodation; second floor has private sitting and dining rooms, bedrooms servants bedrooms and facilities; third floor has 14 bedrooms, servants dining room, modern kitchen; cellar one of the largest and best in Melbourne; passenger and goods lifts, electric lighting.”
Heritage documents say the building is a well preserved example of Edwardian Freestyle architecture in Melbourne.
“Sir Charles Hotham Hotel is significant architecturally as a large, well-preserved and successful corner hotel design in the Edwardian Freestyle, by the important architect William Pitt, and is a major part of a notable Edwardian and late Victorian-era commercial streetscape in both Flinders and Spencer streets, consisting mainly of hotels,” Australian cultural heritage consulting firm Graeme Butler says.
“Historically, Sir Charles Hotham Hotel is significant for its location with other Edwardian-era and late Victorian-era hotels near the wharves and railway that served them, underscoring the major means of travel at that time. The new Sir Charles Hotham Hotel was built during the state's economic recovery after the Great Depression of the 1890s and remains the largest Edwardian-era hotel built within the Central Business District.”