By Clyde Mooney – editor Australian Hotelier
The high-rolling Riversdale Group has divested its freehold ownership of Paddington’s Bellevue Hotel in the interests of economies of scale.
Now operating around a dozen pubs – most containing subsidiary venues – Riversdale CEO Paddy Coughlan told TheShout the sale is recognition that the historic pub is really too small for them.
Coughlan says the elegant Eastern Suburbs venue is one of Riversdale celebrity owner John Singleton’s favourites and the site of many post-Randwick racing parties, but is really an oversized restaurant to their management model.
“What it takes to manage such a small asset is completely out of whack with what it takes to run a bigger one,” said Coughlan. “And the bigger we get, the more conscious we have become of that.”
The Bellevue was bought by former Ferrier Hodgson consultant Peter Walker, who last year purchased the Fortune of War businesses in The Rocks in collaboration with former Coogee Bay Hotel GM Steven Speed, which the pair report are doing “far better than expected”.
“The Bellevue represents a good fit for the style of operations we have at The Rocks,” Walker told TheShout. “We wanted a freehold with a bit of heritage – good food & bev, and only a small gaming presence."
Walker and Speed have formed the WDS Group and have plans for further expansion, with Speed maintaining a tight rein on operations.
“We think there is a lot of upside in the Bellevue, with a more hands-on approach by a smaller group like us,” Walker revealed.
Handling the off-market transaction was Andrew Jolliffe – managing director NSW for Ray White Hotels – who speculates Paddington is the latest hot property in pubs, following the significant sales recently of both the Centennial and Paddington Arms.
“First it was Newtown, where we sold two quality freehold hotels, then Balmain, where we sold another two hotels late last year.
"Now Paddington, along with other CBD fringe suburbs, is certainly enjoying a renaissance of sorts, with established operators buying into the re-emerging market."
The sale, fetching over $5 million, represents around a 20 per cent accretion for Riversdale, which bought it in just 2011 for $4.2 million, and occurred due to an apparent lack of supply in what Coughlan says an “out of control” Sydney market.
“We think the real value opportunities coming up are in Brisbane, not Sydney,” says Coughlan.
“The Sydney property market is on an unbelievable upward trend. As we are freehold-only owners, this impacts us on pricing.
“We have bought nine assets in Sydney at the bottom of the market. The next round of opportunities will be in Brisbane.”