Harvest Hotels wants to raise $48M to buy four large format pubs

Harvest Hotels is attempting to raise $48 million to purchase four large-format pubs in regional NSW. 

Money will be raised through its Harvest Pub Fund 2.

The fund has a cash yield target of 9 per cent paid quarterly, with an annualised internal rate of return of 19 per cent over the fund’s three-to-five-year life.

According to Harvest Hotels, the population in regional areas was increasing while supply of pubs was decreasing.

The company, founded by former pub operators Fraser Haughton and Chris Cornforth, buys established pubs and then makes improvements.

It told investors that two years ago NSW had 831 pubs in regional areas but by the end of March this year that number had dropped to 718. 

The $48 million raised will target strong economic growth areas with limited pub supply.

Harvest Hotels is on the search for assets with diverse revenue including from gaming.

This leaves the group with approximately 254 pubs to choose from. 

Harvest Hotels’ previous raise netted $58 million which delivered 11 per cent in annualised cash distributions in the 2021 financial year. 

The internal rate of return (IRR), a metric used in financial analysis to estimate the profitability of potential investments, is expected to be 21 per cent and terminal value, (TV), the value of an asset, business, or project beyond the forecasted period when future cash flows can be estimated is expected to be $58 million.

Irit Jackson, 4^th October 2021