Large-format pubs attract big bucks for owners

07 September, 2017 by Vcavasinni

By Vanessa Cavasinni, editor Australian Hotelier

A Top 200 gaming pub in Sydney’s south, a western-Sydney developer’s dream site, and a Central Coast jewel, have all been sold in the last week by JDA Hotels, Iris Capital and Laundy Hotels, respectively.

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Private equity arrangement

Sitting at 140 in New South Wales’ gaming rankings, the large-format Allawah Hotel has been sold for around the $30 million dollar mark to private equity interests. As part of the sale agreement, JDA Hotels have retained an ownership percentage and entered into a management agreement with the buyers of Allawah Hotel.

“This is uncontroversially a very strong A-grade gaming hotel sale, and consequently is indicative of a transaction which required a different approach than that typically deployed. With the sale taking on the amalgamated complexion of a hard asset changing hands, a significant equity refresh event and the implementation of a Management Agreement. Accordingly, we are seeing our skill set engaged upon these more detailed deal structures and we envisage more of this type of transaction will enjoy currency in the future,” explained Andrew Jolliffe of Ray White Group, who negotiated the off-market sale.

John Feros, speaking on behalf of JDA Hotels, said that the non-traditional deal worked well for the group.

“We had owned the Allawah Hotel for over a decade and decided the time was right to recalibrate the capital stack.”

“Whilst not a traditional exit event for the hotel space, we were confident we could find a deal structure that works and hence engaged with Andrew to deliver an outcome. Suffice to say, we’re very happy with the deal that has been concluded, and look forward to working with our new investor group to reposition the property so as to seek new value accretion opportunities.”

Laundy divests Bateau Bay

In another off-market sale, CBRE Hotels’ Daniel Dragicevich and Ben McDonald have delivered a $13 million sale price for the Bateau Bay Hotel on behalf of Laundy Hotels. The large-format Central Coast hotel was sold to a NSW-North-Coast based hotel group, which owns several hotel assets in the area.

Laundy Hotels owns three other pubs in the Central Coast region – Settlers Tavern at Gosford, Long Jetty Hotel and Chittaway Bay Hotel – but decided that the time was right to divest the Bateau Bay venue. Arthur Laundy also co-owns the Crown Plaza in Terrigal with the Karedis family.

“It’s been a solid business but given we’ve got a few projects on the go at the moment we thought it was the right time to sell,” stated Arthur Laundy.

“We wish the owners the best of luck with their acquisition.”

Besides Laundy, several Sydney operators have turned to the Central Coast for investment in the last 18 months, including Patrick and Angela Gallagher, Andrew Lazarus and Mark Malloy. Dragicevich expects this trend to continue.

“Positive demographic trends, discretionary spending margins and the future economic outlook in areas such as the Central Coast is as positive as that of metropolitan Sydney – therefore there is no shortage of astute publicans continuing to invest in such markets.”

Big bucks for Parramatta Crown jewel

On Wednesday, Sam Arnaout, director of Iris Capital, announced the sale of the Crown Hotel site in Parramatta to Coronation Property for an approximate $50 million – a deal that he had facilitated directly.

The 1082sqm site has two street frontages, including over 30 metres of frontage on Church Street, the main dining and entertainment thoroughfare in Sydney’s second CBD. But it’s the development opportunities available that have fetched Iris Capital such a hefty price tag.

“The super prime site has Gateway approval for a high level concept including 45 storeys of residential, 1,100sqm of retail and basement car-parking. It’s a fantastic location, which has over a 50-metre frontage on Church Street, also known as Parramatta’s ‘Eat Street’ and benefits from immediate proximity to the river and future light rail,” explains Arnaout.

Joseph Nahas, director of Coronation Property, stated that the developers intend to continue running Crown Hotel as part of the planned development.

“As with 8 Phillip Street, which combines world-class operators such as the QT Hotel  Resorts, Sake and Rockpool Dining, with premium residential apartments, so too will we bring our unique brand of lifestyle-enhancing amenity to this new site on Church Street.”