By Vanessa Cavasinni, editor Australian Hotelier
Patrick Gallagher and John Daly have sold PJ Gallagher’s in Leichhardt for $14.5 million to respected hotelier Peter Walker.
The hotel, perfectly situated on the corner of Norton Street and Parramatta Road in the booming area of inner west Sydney, was the first venue co-owned by Gallagher and Daly, and has been sold in an effort to raise capital for a larger joint project.
Gallagher and Daly completed a three-year, $2 million renovation on the hotel last year, including on the large function space within the venue. The hotel also has 28 gaming machines and a 5am trading licence.
John Musca, national director of JLL Hotels & Hospitality, who handled the sale, stated that the interest in the hotel, coupled with other city-fringe venues, exemplifies the strength of the greater Sydney market.
“Much like the recent contested sales of the Royal Exhibition Hotel, Surry Hills ($19m) and the Duke of Gloucester Hotel, Randwick ($16.25m), PJ's is another quality city fringe hotel which deservedly attracted strong interest.”
Gallagher believes that the Leichhardt venue offers Walker something unique in the area.
“A lot of the interest in the inner-western hotels have been more around food and beverage, whereas this is a strong mix between beverage and gaming.”
The suburb of Leichhardt is expected to be resurrected, with apartment development in the area flourishing, and the Norton Street area once again becoming home to restaurants and retail outlets. Musca suggests that these sorts of development plans are now attractive to investors, rather than just looking at a venue itself.
“The cash rate/yield spread maintains capital market engagement with the asset class and, as the market continues to nationalise, boardroom strategies are now driving expansion and reinvestment beyond the traditional private ownership approach.”
Last month, JLL Hotels & Hospitality also sold the leaseholds in the Liverpool Hotel and Corner Pub for Gallagher Hotels for a combined $12.5 million, so that the group can focus on freeholds.
As for the Gallagher/Daly partnership, once the Leichhardt sale is finalised, the two hoteliers can start looking for a bigger project to sink their teeth into.
“We haven’t even started looking. We’re just putting this to bed and then we’ll start to have a look around,” said Gallagher.