Pub reshuffle speeds up
More than $25 million worth of pubs have changed hands in the past week as investors return to the once-troubled sector.
The deals have been done by well-known and experienced pub operators, which helps ensure longer-term success.
Previously, investor buyers have overpaid and then overcapitalised on renovations, subsequently being forced to sell at large losses.
Two of the biggest sales were in Newtown, which experienced a changing of the guard along the busy King Street strip.
The Marlborough Hotel was sold through Mike Wheatley of Knight Frank for $12.17 million to the Riversdale pub fund, aligned with John Singleton, which now has seven hotels.
The hotel, on the corner of King Street and Missenden Road, was offered for the first time in 27 years.
Cooley Auctions director Damien Cooley said the sale of such a landmark hotel was extremely encouraging for the market and a sign of good things to come this spring.
It was one of two hotels being sold by owner Chris Crawley, the other being Jacksons on George in the city. Mr Crawley's widely reported court-case loss to industry publicans the Short family, along with financial pressures, led to the sale.
The Marlborough Hotel is a 24-hour-approved hotel with 30 gaming machines and sits across the road from the soon-to-be-reopened Newtown Hotel, the first project of the Keystone Hospitality Group in a post-Short-family incarnation. The latter hotel is undergoing a renovation costing $6 million and is set to reopen before Christmas.
The chief executive of Riversdale, Patrick Coughlan, said the group's portfolio was now worth $85 million and he was targeting $150 million before looking at a public float.
''The purchase of the Marlborough continues our strategy of securing the best pub, in the best position, in some of Sydney's best suburbs,'' Mr Coughlan said.
In addition, the Bank Hotel has been sold by private owners to the Solotel Hotel Group for a price believed to be about $10 million, by Ray White Hotels, below replacement considering it was the subject of an $8 million renovation only a few years ago.
Also in Newtown, the Zanzibar Hotel remains on the market and the Sandringham Hotel is being sold at present by the receiver Ferrier Hodgson, further changing the landscape.
The national director of pub investment sales at Jones Lang LaSalle Hotels, John Musca, said: ''If anything, the two sales highlight how bespoke and selective buyer approaches can be to hotel assets even in the same locales, with the Marlborough attracting spirited bidding and the Bank selling at a discount notwithstanding its exceptional attributes and presentation. On the back of the Australian Leisure Holdings portfolio acquisition and the Goldman Sachs consortiums National Leisure & Gaming purchase of 24 hotels, the pub market has been particularly active this year, sparking the first-time offering of a top-50 gaming hotel for sale publicly.
''The Guildford Hotel - with a 24-hour approval, 30 gaming machines, occupying a large site area with parking and adjacent to Coles - is to be offered for sale by public tender.''
Mr Musca, the selling agent, said that more than 66 per cent of the state's top 50 gaming hotels now resided with institutions or large private hotel groups that never sold down assets, so the opportunity to buy businesses such as these was notably rare.
Ray White hotel broker Andrew Jolliffe sold the Bank Hotel on King Street. He said it had been operating at the same location for more than a century and had sold for the first time since 1969.
''The sale of the hotel highlights the second King Street, Newtown, property we have sold in recent times and represents the compelling attraction of the city fringe hotel market,'' Mr Jolliffe said.
''Like the Caringbah Inn, the Bank Hotel was operated by the same family for over 40 years.
''Newtown is a robust investment arena for hotels, comprising major transport interchange investment, a hospital, university and burgeoning retail strip.''
Ray White Hotels is in discussions with other buyers regarding separate Newtown hotel assets.
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Source: The Sydney Morning Herald, 10 September 2012
