By Vanessa Cavasinni, editor Australian Hotelier

In an off-market deal, Gallagher Hotel Group has purchased the 888 Hotel in Sydney’s CBD from Iris Capital.

The hotel, based in Sydney’s Chinatown district, has a strong focus on sports and includes 30 electronic gaming machines. Having a strong relationship with Iris Capital – the two hospitality groups have transacted previously on a few hotels – the hotel was offered to the Gallagher Hotel Group, which seized the opportunity.

Gallagher Hotel Group purchased the hotel for roughly $7.5 million, and its CEO, Patrick Gallagher believes the hotel is a great fit for the group’s portfolio of hotels.

“It’s a city venue and gives us a presence in the CBD of five Venues; also it adds to the mix and variety of the portfolio, which fits with our current strategy to increase the mix of hotels in the group with a variety of revenue streams.”

Dan Dragicevich of CBRE conducted the transaction on the leasehold pub, which he believes  is a booming section of the hotel real estate market.

“The pub market is buoyant at present and this extends to leasehold venues which provide a more affordable entry point than freeholds and generally higher returns for experienced publicans. What has held back investment in this segment has historically been debt liquidity however this has changed with banks drawn to those same attributes that have underpinned interest from hotel operators.”

Iris Capital’s CEO, Sam Arnaout, was pleased with the transaction.

“This sale is another example of our overall corporate strategy to take advantage of both buy and sell opportunities in an increasingly liquid market. Although we are long-term hoteliers and view the sector as attractive and stable, it is only prudent to not be locked into a certain mindset.”

Patrick Gallagher was appreciative of the good relationship between the two pub groups.

“It’s worked well for us; I can only assume it’s worked well for them as well. They are fantastic hoteliers and I enjoy doing deals with them.”

The Gallagher Hotel Group has plans for the redevelopment of the 888 Hotel, however have chosen not to reveal them as yet.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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