Harvest Hotels is expanding beyond its regional NSW focus with the launch of its third pub fund in suburban Adelaide.

Harvest Pub Fund 3, which launched on Friday 27 May, is looking to raise $50 million in equity to fund the acquisitions of large format pubs in the outer Adelaide suburbs.

Harvest Hotels, founded by publicans Chris Cornforth and Fraser Haughton, is focused on acquiring underdeveloped, large format pubs in high growth centres.

Until now, that acquisition strategy has centred on the regional NSW centres of Tamworth, Dubbo, Wagga Wagga, Albury and The Central Coast, and Harvest Hotels currently operates $182 million of regional pub assets in NSW via Harvest Pub Funds 1 and 2.

Other pub groups making moves into South Australia include Victorian-based Black Rhino Group which last year added four South Australian hotels to its portfolio, Australian Venue Co. (AVC) which recently acquired the Saturno Group’s eight pubs and four bottle shops in and around Adelaide, and Endeavour Group which made two South Australian acquisitions in as many weeks in February.

Lower prices and gaming legislative changes, along with a stable, less Covid-interrupted trading environment, are among the factors driving interest.

“We commenced the due diligence process of entering the South Australian market over twelve months ago,” Harvest Hotels Director, Chris Cornforth said.

“Through our discussions with quality operators, suppliers, and locals we’ve gained a solid understanding of the market and its demands. We have identified how we can adopt our current operations to capitalise on the availability of high-quality pub assets in our key target regions.

“We look forward to expanding the Harvest operation into South Australia in the coming months.”

Cornforth told Australian Hotelier that Harvest Hotels had originally looked to regional South Australia but found a better business case in the suburbs.

“We found the population size and growth in regional areas didn’t offer enough tail wind, so we had a look at suburban Adelaide and found similar metrics to regional NSW.”

Cornforth said he’s been looking closely at a couple of pubs in Adelaide and expected to exchange on something in the coming weeks.

Harvest Hotels said it plans to grow Fund 3’s assets under management to $250 million over its 3-to 5-year life, which includes maximum leverage of 50 per cent. The Fund is targeting a cash yield of 8 per cent per annum paid quarterly to its investors and forecasting a 17 per cent equity IRR post fees.

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