Hotels: New Year Sale Sets Market Off with a Bang
The widely reported and unprecedented level of A-Grade hotel sales over the past two years has continued with a significant sale already in 2018 in the form of Joel Fisher's Monarch Hotels selling the large format Banksia Hotel to Patrick Ryan.
Like so many in recent times, the sale of the 1,074sqm Banksia Hotel was conducted by Ray White's Asia Pacific Director Andrew Jolliffe on an off-market basis. Whilst Jolliffe would not be drawn on price, key industry sources have suggested the hotel, bought by Fisher's Monarch Hotels in 2014, has been sold for 26m.
The sale follows hot on the heels of the December 2017 sale of the adjacent Rocksia Hotel, for $36m at a reported yield of sub 8.00%, which was sold to Oscars Hotels by the Feros Group.
"We are proud and very successful managers of publicly marketed sale programs, however we also regularly enjoy the exclusive engagement of valued clients when a discreet divestment of a high value asset is required. Which is what we were tasked to do by Monarch Hotels in respect of this significant South Western Sydney property" advised Jolliffe.
Monarch Hotels is co-owned and run by its CEO and long term industry participant Joel Fisher, with the backing of high profile off shore U.S. investment funds Varde Partners and York Capital.
The Banksia Hotel, ranked 170 in the latest NSW Government rankings, was sold to Monarch Hotels in 2014 by the well-known Waugh family.
Media shy Fisher has slowly constructed an enviable portfolio over the last 6 years with the remaining Monarch portfolio featuring 8 assets spread across NSW and QLD, including QLD’s no 1 gaming pub the Acacia Ridge Hotel, Sydney’s Belmore and Lidcombe Hotels; as well as 2014 NSW AHA Hotel of the year in the form of the Central Hotel, Shellharbour.
Although he wouldn’t be specifically drawn on the plans for the remaining Monarch portfolio, Jolliffe did advise that numerous approaches had been made for the remaining assets, which offers successful suitors over 200 Gaming machines across eight separate venues.
"An unmistakably unique cluster of high quality assets in such a supply starved environment for the sector" is how Jolliffe described the potential availability of the Monarch portfolio.
Fisher has silently amassed the portfolio which this paper now understands is being offered for sale with a price tag in excess of $250m.
Fisher, although already well known in the industry, would not be drawn on details of the sale but did comment exclusively to the Sydney Morning Herald to confirm a transaction had occurred, and that was very happy for the incoming purchaser whom he has known and dealt with for a number of years. Fisher added that he was confident that the hotel would continue to go from strength to strength under the new ownership and direction.
In relation to the future prospects for his Monarch Hotels vehicle, Fisher is particularly buoyant about the strength and opportunities which exist in the marketplace.
“We will continue to assess all opportunities as they present themselves, both in terms of acquiring assets, and similarly divesting them subject to individual circumstances” Fisher concluded.
Well placed industry sources suggest those who are looking to acquire a rare portfolio of this size and nature would be a pre IPO Moelis/Redcape Australia, U.S. based monolith Delaware North, Charter Hall, Gresham Partners, Dixon / KKR and Woolworths hotel arm ALH.
Jolliffe, who last year sold John Singleton, Geoff Dixon and Mark Carnegie’s Marlborough, Peakhurst and Vic on the Park hotels for in excess of 75m, believes the market fundamentals remain strong in an active start to 2018.
“We found ourselves in the enviable position of working on deals right up to the end of 2017, and if the first 3 weeks of the New Year are a fair barometer of the foreseeable transaction runway, things appear particularly positive” said Jolliffe.
“The sophisticated equity behind several well credentialed domestic and international groups remains unsatisfied in terms of appetite, and the category performance is particularly robust and patently strengthening. In reality, this remains a very fragmented industry by comparison to several others, and the ability to seek scale in a prosperous and well-regulated asset class remains the firm objective of multiple long term and new entrants” Jolliffe concluded.
