By Vanessa Cavasinni, editor Australian Hotelier
In what has become a trend for 2016, another pub fund is placing its entire portfolio on the market – in this instance the Australian Pub Fund, which runs its twelve venues through Riversdale Group.
Image courtesy of Greg Chilton.
The pub fund is run by Geoff Dixon, John Singleton and Mark Carnegie, who filled their portfolio with under-performing venues in attractive locales in Sydney and Brisbane. It now comprises 12 pubs.
In what has been deemed a bullish market, the powers-that-be behind the fund have decided that now is the time to cash out, with the pubs valued significantly higher and performing much better than when they were purchased.
The first to be placed on the market are The Marlborough Hotel in Newtown and Kinselas Hotel in Darlinghurst. Both are in suburbs just outside of Sydney’s entertainment precincts, and as such are not subject to the lockout laws. Both areas have seen an increase in traffic due to the dispersal of patrons looking for late-night entertainment.
This is not the first time this year that a pub group or fund has placed their entire portfolio on the market, with Redcape engaging Goldman Sachs to sell their portfolio, and Lantern Hotels Group’s stakeholders approving the sell-down of its hotels. Keystone was also placed into receivership and has had the majority of its portfolio sold to Dixon Hospitality, the Jamie’s franchise restaurants to be sold back to Jamie Oliver, and the remaining venues still on the market.
Andrew Jolliffe of Ray White Hotels, who has been engaged to head the Marlborough and Kinselas sales campaigns, explains why hotel portfolios are attractive.
"Hotel portfolios are unmistakably scalable business models, for which many revered examples exist within the asset class."
Talking specifically about Riversdale assets, he added: "However equally, and whilst identifiably scalable, amalgamations of A grade hospitality assets such as those enjoyed by Riversdale are not arrived at easily, or cheaply; hence they deserve to enjoy a premium."
Interest in Riversdale assets is expected to be high.
"Clearly these Riversdale sponsors have formed a view that the investment cycle for their capital deployed in this vehicle is maturing. Accordingly, and indexed directly to asset quality, we believe interest will be robust," stated Jolliffe.
TheShout has contacted senior management at Riversdale Group, who have not replied at time of publishing.
Jay Beecroft, group operations manager for Riversdale Group, declined to comment at this time.