Research and Reports

Motel leases with short remaining terms

16 Jul 2008

Resort Brokers Research

There is a growing problem in the motel industry with the number of leases now having reduced remaining terms.  It is now common for existing lessees negotiating with their lessors in terms of buying more years for their lease.  This has been driven by the perception in the market that short leases are considerably less desirable.

The general percepton is that the lease should have around 25 years remaining for it to be of strong interest to buyers and that as soon as you have less than 20 years they are very difficult to sell.  Well that is in fact true but not necessarily soundly based.

We have undertaken some research on this issue and created a spreadsheet which helps us all get a better understanding of the financial aspects of length of lease term and the results are quite astounding.

Please click on the reference for this spreadsheet and have a little play.  I would welcome any feedback on this as we want to continue to provide some useful feedback to the industry - email me on gordon@resortbrokers.co.nz