The record for the biggest pub transaction in Australia has been smashed by Moelis Australia after it entered into an exclusivity agreement to buy the Beach Hotel in Bryon Bay.
The deal, which was brokered by JLL Hotels & Hospitality Group’s John Musca, Tom Gibson and Tom Gleeson, remains subject to finalisation of sale and purchase agreements and puts the acquisition price at slightly above $100m, excluding transaction costs.
In a statement about the deal, Moelis Australia Hotel Management CEO Dan Brady said: “The Beach Hotel Byron Bay is an iconic Australian establishment located on irreplaceable real estate.
“The acquisition of both freehold and operating interests will enable the required capital investment to further enhance what has made the hotel iconic – that is, a great community gathering place with a fun, sociable, friendly and safe hospitality offering delivered by an engage and passionate team of local hospitality professionals.”
The deal includes both the leasehold and freehold for the Beach Hotel, which is the first time since 2007 those two assets have come under common ownership.
The freehold last changed hands in 2017, with funds manager Impact Investment Group purchasing the buildings for $70m 2017. The operating business, or leasehold, has been owned and managed by Melbourne’s famous van Haandel family since 2007.
JLL National Director John Musca said: “The broad profile of bidders, and robust, committed offers was a real testimony to the extraordinary place Byron Bay and the Beach Hotel holds in the national psyche and hospitality space.
“This was the first time in decades that a buyer had the chance to secure both the hotel business, and this iconic property in a stunning location.”
Both Impact Investment Group and the van Haandel family have worked to find the right custodian for the asset, considering both the community-oriented sensitivities and the best commercial outcome.
The pub is on a 4585sq-metre site with more than 100m overlooking the main beach in Byron Bay. As well as the large pub, beer garden, restaurant, bottle shop and function spaces the venue also has 25 luxury hotel rooms and a swimming pool.
There are no gaming machines in the venue after previous owners Impact removed them last year and terms of the sale include a long-term moratorium on poker machines at the venue.
Impact Investment Group Head of Property Darren Brusnahan said: “Understanding a buyer’s vision for the site and their community empathies are very important to us.
“The leading buyers’ acquisition proposals all included consideration of what locals and the 14,000 visitors to Byron Bay every day really want from the hotel.”
The van Haandel family are long time Byron Bay residents and John and Lisa said they were keen to pass the hotel’s legacy onto the right new owner.
“It’s really important to Lisa and I that the incoming party respects the townships needs and invests in the property and the many exciting new business initiatives and ideas that are available,” said patriarch John van Haandel.
Daughter Elke van Haandel who manages the complex added: “We were impressed by the way all bidders addressed the role of community in the future of the Beachie and are very excited about seeing its evolution from here.”
Moelis will establish an investment fund for the hotel, with its statement saying: “It is intended to establish a single asset investment fund that will provide sophisticated investors the opportunity to invest in the Beach Hotel, Byron Bay.
“Moelis Australia will manage this fund adding to its approximately $4.7bn of assets currently under management. Moelis Australia has deep knowledge of the Australian hotel market.
“It manages ASX listed Redcape Hotel Group and a single asset fund which owns the Grand Hotel, Rockdale NSW. It is intended that the Beach Hotel Fund will sit independent of the existing hotel funds.”
The acquisition of the Beach Hotel remains subject to finalisation of contracts with an expectation that negotiations will conclude over the coming weeks.
Moelis added: “If the transaction proceeds, the Beach Hotel will be managed by Moelis Australia Hotel Management, with the intention to retain the majority of the existing management operations and venue staff.”
Moelis are also expected to undertake significant initial investment and improvements in the property.
JLL said managing the enormously successful process had been a privilege to date but was not over, and now that Moelis has been selected it was in their hands to expedite the acquisition. “There are a number of really disappointed underbidders at the ready to step in should they falter for any reason,” the brokers said.