Private property developer Virtical has expanded its pub portfolio with the acquisition of two adjoining Sydney hotels in a combined transaction of $61 million.
Exchanging contracts with MA Financial Group, Virtical has purchased the Kinselas Hotel and Courthouse Hotel, both in Darlinghurst’s Taylor Square, taking its recent acquisitions to over $120 million in combined value.
Having recently acquired the Republic Hotel in Sydney and the Adelphi Hotel in Melbourne, Virtical has a history of purchasing assets with significant repositioning or redevelopment opportunity, and an existing portfolio valued at $500 million. Mark Toma, managing director at Virtical, commented on the transaction.
“We’re delighted with the acquisition. The addition of the Taylor Square hotels complements our broader strategy for the assets in our portfolio. We have a strong track recorded in the construction and development across various real estate sectors, including hospitality projects and we’re well positioned to realise the potential of the precinct.”
Initially, MA Financial acquired the two venues for a total $67m in December 2020 using its MA Taylor Square Fund, which sought to revitalise the site through the repositioning of its hospitality offering. Following the purchase, MA Financial took possession of the two venues in July 2021, prior to the second COVID lockdown.
Chris Unger, managing director of MA Financial’s hospitality platform, spoke about the decision to sell the assets.
“The original investment strategy was dependent upon favourable trading conditions emerging from the first COVID lockdown, and the anticipated resurgence of Oxford Street following the repeal of the city’s lockout laws. However, the precinct and surrounding area has taken an extended period of time to revitalise.
“While we are confident the precinct will thrive over the longer term, this combined with changes in the construction and funding markets has meant that timeframes associated with redeveloping the iconic site now sit outside of the fund’s target investment horizon. Accordingly, we have decided to sell the assets to Virtical, which has the opportunity to pursue its own repositioning strategy on a different timeline and as part of a broader portfolio.”
Nick Lower and Tony Bargwanna of Savills Australia brokered the sale of the assets. Lower, state director, commented on the acquisition.
“The sale of Taylors Square, comprising the iconic Kinselas and Courthouse pubs, underscores the appeal of well-located operational pubs within solid property fundamentals.
“Virtical’s acquisition of this prime property showcases their commitment to enhancing Sydney’s hospitality scene. Their reputation for adding premium opportunities to their portfolio is a testament to their vision and expertise.”
Commenting on the transaction, national hotels sales director Bargwanna explained that it shows a clear indication of ongoing confidence in Sydney’s pub market.
“It reflects the strong demand for assets that offer both operational success and the potential for future growth. Kinselas and Courthouse have long been cherished by the local and surrounding community, alike. This transaction ensures the continuation of their legacy under Virtical’s capable stewardship.”