Private equity firm Fortitude Investment Partners has sold its successful GM Hotels portfolio over the last 18 months for total proceeds of $160 million.

Fortitude, which acquired the portfolio from Quadrant Private Equity in 2015, ran a series of sales processes for individual venues and sold the portfolio of leasehold and freehold assets to a range of local and national buyers including ALH, Harvest Hotels and RD Jones Group.

Fortitude partner and director of GM Hotels, Nick Dignam, said the sale would deliver a return to investors of greater than 2.0 times multiple on invested capital over the investment period.

GM Hotels was established by Fortitude in partnership with industry veteran Greg Maitland, to acquire a portfolio of 10 pub venues in South Australia in 2015. The portfolio consisted of a mixture of leasehold and freehold assets, and all venues had diversified revenue streams across food and bar, retail, and gaming.

Maitland will continue to operate his personal six-venue pub group which includes four of the portfolio’s venues that he’s taken owenership of: St Francis Winery, Paradise Hotel, The Valley Inn and The Whitehorse Inn. Outside of the fund pubs, Maitland also owns The Republic in Norwood and the Pier Hotel in Glenelg.

Fortitude’s exit included the sale of the Emu Hotel in Adelaide’s southern suburbs to ALH and Charter Hall for $32 million, a record price for a South Australian pub. The final two GM Hotel assets are under contract and due for settlement in April 2023.

Dignam said it had been a privilege to partner with Greg Maitland, Hugo Burton and the GM Hotels team over the last seven years and deliver strong returns to investors.

Under Fortitude and Maitland’s ownership, GM Hotels invested significantly in renovating and upgrading most of the venues, divested portions of surplus land and modernised the offering to accommodate a broad range of consumers. The group’s earnings grew by more than 50 per cent during the investment period, which enabled the group to pay out a consistent distribution to its investors of more than 10 per cent per annum.

Greg Maitland said he was grateful to his team after a very busy couple of years, transacting approximately $240 million of hotel properties, making his operation the biggest player in the Adelaide pubs market. The publican is bullish about the South Australian pub landscape.

“I’m really positive about it. There’s been some good investment in South Australia. It’s always been a harder market than the eastern seaboard, but it’s also been a market that – if you look at the AHA awards – it’s always outperformed itself. It’s been very strong in the last couple of years, and there’s some resilience in it from external buyers like ALH, Charter Hall, Harvest Hotels, Black Rhino Group and AVC.

“There’s been a number of players into the market and some generational change there. I’m excited about it – pubs in SA form a great part of the community.”

Maitland told Australian Hotelier that he plans to significantly grow his personal portfolio of hotels over the next decade, and isn’t ruling out another fund play.

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