GM Hotels portfolio in Adelaide sold for $160M

Fortitude Investment Partners is selling its Adelaide GM Hotels portfolio for $160 million.

The private equity firm is looking to capitalise on current positive sentiment for the pubs market.

The Brisbane-based firm sold the 11-strong portfolio over a 12-month period to various buyers including ALH, Harvest Hotels and RD Jones Group.

The sale included the Emu Hotel in Adelaide’s southern suburbs, which was acquired by ASX-listed fund manager Charter Hall for $32 million.

The sale set a record price for a South Australian pub. The leasehold went pub operator ALH.

Other assets included the Christies Beach Hotel, the Beach Hotel, the Tower Hotel, the Paradise Hotel and the Whitehorse Inn.

Two final assets are expected to settle in April 2023.

The completion of the sale will deliver Fortitude investors more than two times multiple on invested capital over the investment period.

Fortitude partner Nick Dignam was director of GM Hotels, which was set up with hospitality industry veteran Greg Maitland, who acted as CEO.

In 2015, Maitalnd and Fortitude set out to build a portfolio of pub assets in South Australia. The portfolio was acquired from Quadrant Private Equity and consisted of leasehold and freehold assets with diversified revenue streams across food and bar, retail, and gaming.

“We felt that pub values were peaking or not far off the peak so we decided the time was right to divest,” Maitland said.

Most venues were upgraded or renovated and the group’s earnings grew by more than 50 per cent during the investment period.

“Pubs are high quality assets and through good times and bad times they trade well,” Maitland said.

“So, demand for freehold and going concern pubs is there but I think that will come back with the cost of money and will prices will return to a more normalised level.”

Jonathan Jackson - 16-2-23