'Short Term' Let MLR businesses

'Short Term' Let MLR businesses

Brisbane CBD – ‘Corporate let’ businesses have largely had no sales recorded. This sector is taking longer to recover from the effects of COVID-19 pandemic and the Government restrictions and border closures. However, as state borders are now open, and the international borders are also opening we should see some further improvement in bookings, tariffs and occupancy during the course of the year.

Sunshine Coast

The Sunshine Coast market has been quite active for ‘short term/holiday’ let MLR businesses. The demand for businesses on the Sunshine Coast increased from the second quarter of 2021 and remains very active today. Although, multipliers did not necessarily increase in the first half of 2021 we saw the second half for good quality, well located businesses with strong trading records achieving increasing multipliers.

The ‘holiday let’ market has been very active during 2021 and into 2022. Accountants, Lenders and selling Brokers have reported that they have never been busier. This has been driven by a significant number of sales recorded in 2021 and 2022 which has been occurring in most income categories whether it is a small business with a Net Operating Profit (NOP) less than $100,000 to large transactions with Net Operating Profit over $750,000.

The sales activity for 2021 was in 2 halves where multipliers were in some instances affected by the ‘normalising’ of NOP for those sales pre June 2021, to increasing multipliers where businesses were sold on ‘actual’ figures.

Some significant sales include:

*Accommodation Module.

This confidence in the ‘holiday let’ MLR market flowed through all sectors with the $200,000 to $400,000 NOP range with multipliers of 4.75 to 5.65 times.

The sector for $400,000 to $600,000 NOP saw multipliers of 5.70 to over 6.0 times for ‘holiday let’ businesses.

The strength of the market and willingness of all major Lenders to finance these deals is in part due to the very good financial information which is being provided.

Gold Coast

The Gold Coast market is the largest market for Management and Letting Rights and has performed quite differently to other areas. Certain pockets on the Gold Coast at different times during the pandemic have performed well but other pockets it has been more difficult.

Since the borders opened and all other Government restrictions were lifted and in particular, mandatory testing for interstate travellers, businesses have now been recording increasing bookings and occupancy. Generally, the market here is in a phase of recovery however, we are very mindful that some businesses and areas have not been as affected.

As an example, the southern end of the Gold Coast has been performing reasonably well and there have been a number of sales recorded.

The above is very general only and the resultant multiplier will largely depend on the trading history of the business, location, quality of complex and units and other factors.

Regional Queensland

As mentioned earlier, some areas of Queensland benefitted from the lockdowns and border closures. In particular, Hervey Bay, Bargara, Agnes Water/1770 and Yeppoon markets capitalised on the ‘drive’ market from the south-east Queensland area of the state.

Yeppoon recorded a significant sale with NOP in excess of $900,000 at a multiplier of 5.50 times.

Other areas which have recorded sales during the pandemic is Airlie Beach including:

3 sales in 2020, 2 were short term/holiday let and 1 a ‘long term/permanent let’ business.

2 significant MLR sales in 2021 were recorded. 1 MLR at Cannonvale with NOP of $370,000 and a multiplier of 4.0 times. The other is Under a Contract of sale with a large NOP of over $500,000 and close to 4.0 times multiplier.

Further north including Cairns and Port Douglas have seen limited sales activity. There have been a number of smaller businesses change hands at reduced multipliers and more recently a significant sale at Trinity Beach with a multiplier over 4.50 times.

With trading increasing for this region, we would expect that vendors will be looking to get their figures back to pre COVID-19 levels with further sales then occurring.

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