By Clyde Mooney
After an extended buying spree that has snared some of the most heavily discounted pubs in the country, the Riversdale Group is satisfied with its portfolio and enters a period of consolidation.
Speaking with TheShout, Riversdale’s Patrick Coughlan said the company had been able to execute its whole strategy and achieve its acquisition targets but refused to rule out further bids for distressed assets.
However, Coughlan said the vital element to running the rule over troubled venues was to isolate situations where the vendor was distressed, not the asset.
“This is a key component,” he said. “The upward cycle of the industry can mean a vendor is over-geared.”
The Riverdale Group has recently bought five pubs according to this criterion through a $50-100 million pub fund, averaging around half the price paid the last time it changed hands.
Backing includes John Singleton and the Lazard Carnegie Wylie fund as shareholders, as well as Coughlan’s childhood friend Rodney Kelly, and will likely see the purchase of more freeholds.
The venues purchased are pubs with big trading upside opportunities, with 12+% yields, and underpinned by property values.
Coughlan suggests that a common mistake made by publicans is too much reliance on gambling revenue, and more attention should be paid to defining target patrons.
Riversdale specifically looked for venues in suburbs that love their pubs, such as Glebe, Balmain, Paddington and Surry Hills, with their latest acquisition the Unity Hotel in Balmain.
Each venue is now the focus of its own re-branding, with Riversdale busily executing cap-ex works and re-positioning the public faces of the recently purchased Toxteth Hotel, Kinsellas, Peakhurst Inn and Bellevue Hotel.
The buying group claim expertise and over 30 years’ experience in business management across the hospitality sector, including pubs, hotels, registered clubs and bottle shops, and intend to run the properties themselves.
Hands-on experience in turning around pub businesses has become the crux of what Riversdale is today – a consultancy business specialising in revitalising and restructuring pubs.
Kelly is the operations part of the business, working at the venues, while Coughlan is the face of the company dealing directly with creditors and partners.
Once the group reaches its initial target of $100 million their plan is to take the fund public, with the backing of their consortium and investors.
“Any really good opportunities that come along, we’ll pick those off as we see fit,” said Coughlan.