Ever considered buying a share in your local sports club? Here’s four reasons why you should

By Stronghold

October 10 2019
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Promoted by Stronghold.

The Not for Profit (NFP) club sector, comprising primarily sporting and services clubs has undergone significant rationalisation and consolidation over the last 10 years and further rationalisation is anticipated for the foreseeable future.

Buying a share in your local sports club

As with any industry, with change comes opportunity. Which is why boutique investment firm Stronghold have set their sights on acquiring some of the best performing assets in the sector, creating single asset investment funds for wholesale investors.

Head of Property Steve de Nys said there were four simple reasons why savvy, market leading investors were interested in taking a closer look at this sector.

Asset locality
Simplicity
Market demand
Long term leases

He said successful sporting clubs were generally located close to amenity and infrastructure, often with high exposure and good access.

“Similar to retail, a hospitality property in terms of its location and physical attributes is a strong driver of the club’s income and profitability. Because of the goodwill attached to the property, clubs rarely re-locate”.

“This contributes to the simplicity of asset management and unlike the commercial office market, incentives are practically non-existent in the hospitality sector.”

Mr de Nys said, there were very few fund managers specialising in the hospitality and accommodation sector.

Stronghold made its first foray into the hospitality and accommodation sector last year when it acquired the Brothers Sports Club in Bundaberg. Stronghold Hospitality Property Trust No 14 was launched in March 2018 to raise $7.5million in equity for the purchase of the club and associated land holdings.

The fund was oversubscribed in a matter of weeks and currently returns a cash return of 9.75% per annum, payable every 2 months.

Mr de Nys said larger clubs like Bundaberg with ‘critical mass’ offered quality food, beverage and entertainment product and have gone from strength to strength.

In addition, the development of accommodation adjacent to the club represented a value add opportunity for investors.

“The club often provides food and beverage services (including room service) to the hotel and costs for various services such as courtesy buses are shared,” Mr de Nys said.

“This creates a natural synergy whereby functions and entertainment generate demand for accommodation and accommodation generates demand for entertainment.

“The combination of entertainment and accommodation should, in theory, lead to yield compression because of a lower risk profile.”

Earlier this year, Stronghold identified an opportunity to purchase a similar hospitality asset in Melbourne - The Cardinia Club and land holdings in suburban Pakenham.

The Cardinia Club occupies a high profile site with excellent access.

The tenant, Pakenham Racing Club (PRC) was established in 1875 and today boasts approximately 17,000 members across two hospitality venues. The Club operates 165 gaming machines, employs over 160 people and is a major contributor to the local economy and community. PRC has committed to a 13 year lease over the property.

A proposed to 64 room Mercure Hotel is to be constructed adjacent to the Club with common access.

The fund currently has limited units available at 7.5% per annum payable every two months For more information visit https://www.strongholdinvest.com.au/ or contact Steve de Nys 0413 515 808 / This email address is being protected from spambots. You need JavaScript enabled to view it. . Please note this offer is for Wholesale Investors only.

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