Over many years, buyers, sellers and those simply want to make enquiries have asked many questions. First-time hotel owners would find this section most helpful. The most common questions have been listed below in order to assist you with any general enquiries you may have. These answers have been provided by people that have been in the Hotel Industry for many years offering a wealth of knowledge and experience to you.
1 - What is a freehold property?
A freehold hotel or property is one in which legal ownership of a property gives the owner unconditional rights and absolute tenure of land or property, including the right to grant leases, take out mortgages and with the freedom to dispose of it at will.
- What is a freehold investment property?
Where a property is already under a lease agreement, the building may be sold. The buyer purchases the building with the lease as part of the purchase agreement. The attached lease cannot be terminated on sale or purchase of the property. It remained fixed to the property ensuring the lessee their term of that lease. The new owner receives any monies from the lease agreement on a pro rata system. In conclusion, the building belongs to the buyer, the lease does not.
Question 3 - What is a leasehold property?
Leasehold properties are those that are bound or held by a lease or rental agreement. When purchasing a leasehold hotel, the prospective buyer is purchasing the lease only, not the hotel property itself. In some cases, different areas of a hotel may be leased separately such as the bistro, motel rooms, entertainment venues etc however usually; a leasehold hotel includes the running of the hotel in its entirety.
Question 4 - What is a Refundable Bonded Lease?
A Refundable Bonded Lease refers to Bonds that have their principal cash amount already held aside by the original issuer of the debt. A subset of the Municipal and corporate bonded classes, the funds required to pay off refundable bonds that are in escrow until the maturity date, usually by Treasury or agency paper..
Question 5 - What is a Perpetual Lease?
A Perpetual Lease is a lease which is renewable forever at the Lessee’s option. A lease without limitation as to term; a grant in fee, subject to a reserved rent.
- What is a Poker Machine Entitlement?
An entitlement refers to poker machines. With the introduction of the Gaming Machines Act 2001, hotels and registered clubs were issued with poker machine entitlements. Section 19 of the Act allows for these entitlements to be transferred between premises, ie. club to club and hotel to hotel. You may purchase entitlements as part of the purchase price however that is subject to the conditions of sale and should be outlined within the contract of sale. Entitlements may be sold separate to the sale of the business and also as an entity in itself.