By Clyde Mooney

Last week some of the country's leading pub real estate agents gathered to discuss the state of the market with publicans.

Leading national brokers, John Musca from Jones Lang LaSalle (JLL), Dan Maley from Gilchrist Business Brokers (GBGB) and Andrew Jolliffe from Ray White Hotels (RWH) spoke of their recent transactions and wisdom gained from industry developments.

Musca opened proceedings with the observation that today’s market is the reverse of the top-heavy dynamic he was experiencing pre-GFC, with the sub-$2 million range now attracting many more buyers than higher-end assets.

He warned that today’s complex environment is producing “a wide variance in pricing and yields” with larger groups seeking to release equity and take advantage of interest rates rationalising under-performing assets, “providing opportunities for niche or hands-on operators”.

GBB specialise in non-metropolitan hotels, and Maley spoke of a “price correction” over the last few years due to smoking legislation and the ‘Wilkie effect’ causing effective value drops of 30-50 per cent from those seen in 2006.

Maley said buyers have fallen into distinct categories of asset-based investments of distressed properties, and investment-based transactions on hotels showing very good returns, with leaseholds of about 50 to 80 per cent return per annum.

Jolliffe referenced figures and graphs from the Office of Liquor, Gaming & Racing (OLGR) and demonstrated a disparity with the price of poker machine entitlements and their importance to gaming as a revenue stream.

He showed how this revenue has almost returned to the peak levels enjoyed in 2006 but the value of entitlements stands somewhat below that high point. He said the repeated entry of the same venues in the OLGR's Top 200 gaming list demonstrates its consistency as a revenue stream and is indicative of underlying value.

AHA NSW CEO, Paul Nicolaou, spoke of the importance of a coordinated front by the hotel industry, and invited the forces of politics and finance – some of whom were present – to further discussions on key issues such as the definition and ongoing management of the three-strikes legislation.

The Shout Team

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