Union Sale Comes Together
After the 20 years respected industry stakeholders and long-time hoteliers, the Gallagher family have sold the Union Hotel in North Sydney for $20m.
JLL Hotels & Hospitality Group Managing Director John Musca and Senior Vice President Ben McDonald negotiated the off-market sale on the same day that the family also sold their interest in the Royal Hotel, Top Ryde to ex-Wallaby, Bill Young for circa $37m.
The Union Hotel was sold to Sydney operators GoodBeer Company who were recent vendors of the DOG Hotel in Randwick sold to Justin Hemmes Merivale for $32.2 million. Good Beers’ portfolio currently also includes the Commodore Hotel, McMahons Point and the KB Hotel, Surry Hills.
Long considered a North Sydney Pacific Highway landmark The Union occupies a 784m2 site area with two floors offering over 1200m2 of trading footprint, 21 PME’s, three bars, restaurant, function rooms and large office ideal for trade conversion. (STCA)
“It’s the longest held hotel in the family and we leave with feelings of ambivalence, sad to leave friends but looking forward to new ventures,” said Patrick Gallagher.
John Azar of Goodbeer Co said “we are very excited about bringing the Union into the group and to servicing the North Sydney community, creating a special hospitality experience for locals. We thank the Gallagher family for passing custodianship of the asset to us”.
With easing of COVID hotel trade restrictions surrounding nightclubs, singing, dancing, weddings & funerals on March 30th, the sales momentum continues unabated across swathes of the pub asset class with transactions reaching liquidity levels not seen in over 15 years.
Mr Musca suggested “we are experiencing a rare conflux of compelling investment metrics, differing capital profiles and some form of latent post-COVID exigence that is driving an extraordinary level of transactional activity, in what remains a highly regulated and protected asset class”.
The sales come in the lead up to the highly anticipated demerger of the ALH Woolworths-owned Endeavour Drinks Group. The mooted IPO or potential $10 billion+ trade sale to potential suitors like global investment firm Carlyle Group, is expected to resolve by June with speculation high amongst sector stakeholders as to the potential effect the outcome will have across the industry nationally.
Testimony to the market is that JLL have over $250 million of hotels currently in various stages of contract or negotiation nationally, evidencing the strongest Q1 activity witnessed for the asset class in 15 years.
“In all the market enthusiasm there remains a broad yield range evidenced across the state for hotel transactions recently and acquisitions are not being approached indiscriminately, so the lessons of 2005/6 are not completely forgotten”, Mr McDonald suggested.
29 March 2021
