South West Sydney Gaming Freehold Sold

Following multiple large format hotels sales already this year, Asia Pacific Director of Hotels at the Ray White Group has announced the sale of the Allawah Hotel in Sydney's South West.

The Allawah Hotel, situated on a 1,274sqm* corner site adjacent Allawah Train Station, has been sold to private equity interests for around 30m.

It is understood that the vendors, parties associated with JDA hotels, had owned the property since 2007. Separately, it is understood that JDA hotels have retained an ownership percentage and entered into a Management Agreement with the new purchasing entity.

"This is uncontroversially a very strong A Grade gaming hotel sale, and consequently is indicative of a transaction which required a different approach than that typically deployed. With the sale taking on the amalgamated complexion of a hard asset changing hands, a significant equity refresh event and the implementation of a Management Agreement.  Accordingly, we are seeing our skill set engaged upon these more detailed deal structures and we envisage more of this type of transaction will enjoy currency in the future” advised Jolliffe.

Speaking on behalf of JDA hotels, founder John Feros agreed that the private equity style deal structure was something his group had done in the past; and would likely look to participate in again in the future where the opportunity presents.

"We had owned the Allawah Hotel for over a decade and decided the time was right to recalibrate the capital stack" advised Feros.

"Whilst not a traditional exit event for the hotel space, we were confident we could find a deal structure that works and hence engaged with Andrew to deliver an outcome" said Feros.

"Suffice to say, we're very happy with the deal that has been concluded, and look forward to working with our new investor group to reposition the property so as to seek new value accretion opportunities" Feros concluded.

The Allawah Hotel is ranked 140 in the State’s latest Top 200 gaming rankings; and follows recent sales by Jolliffe of other Top 200 gaming hotels in the form of the Coolibah Hotel ranked 64 for 40m, and the Tennyson Hotel which Jolliffe sold to the Justin Hemmes led Merivale group for $37.05m; and which is now ranked 59 in NSW.

Located only 35m* from the recently refurbished Allawah Train Station, the multi-storey hotel was sold by Andrew Jolliffe via a discreet, off market process. "Whilst on-market campaigns are still hugely popular, and very often the perfect prescription for maximizing an asset's exit event, some properties and their respective clients are best served by a wholly off-market process" advised Jolliffe. "Such was the case of the Allawah Hotel, where we were confident the geographical positioning to major transport infrastructure, residential development and Hurstville city centre would engender a deliberate response from specific parties" concluded Jolliffe.

Jolliffe, having sold John Singleton's Kinselas, Peakhurst, Toxteth and Marlborough hotels in Sydney over the past 6 months for 100m, is now selling the large format Vic on the Park hotel in Marrickville for the well-known ad man and his business partners ex Qantas CEO Geoff Dixon and private equity impresario Mark Carnegie.

The sale of the Allawah Hotel brings the total number of A-grade freehold hotels sold in Sydney in the past 18 months to 25, with Jolliffe confident of further market strength given the underlying fundamentals for the sector.

"A-grade hospitality property typically finds itself residing upon prime commercial sites, often situated on an area's high street, and almost invariably in close proximity to major transport and other commercial applications" commented Jolliffe. "With this underwritten value fundamental in mind, and when considering the cyclically low cost of funding, we can see sound argument for the continued strength of the sector and look forward to announcing further off-market sales in the near future" Jolliffe concluded.

*approx.

6 September 2017