By Annette Shailer

A spate of recent sales in the hotel sector may indicate a turn-around for the NSW pub investment market after a few tough years.

In recent weeks, CBRE Hotels has negotiated five separate pub sales totaling more than $20m, with many of the buyers established market investors taking advantage of sales generated by receivers and managers.

An additional $21m in sales have been agreed, amid signs that buyers are showing a renewed appetite for well-positioned hotel investment opportunities.

CBRE Hotels director, Joel Fisher, said existing publicans were driving the revival, such as well-known hoteliers, Patrick Gallagher (owner of PJ Gallagher's in Drummoyne and Parramatta and the Union Hotel in North Sydney) and fifth-generation hotelier William Ryan, former owner of the Cauliflower Hotel in Waterloo.

“While institutional owners are slowly returning to the sector, traditional pub owners and hoteliers are back in force,” Fisher said.

“The changed hotel gaming tax arrangements recently announced in the NSW budget have given hotel buyers more certainty and are contributing to a much more optimistic outlook for the state’s pub sector.”

ING Entertainment Fund recently sold the Empire Hotel in Annandale for $4.9m. The Sydney pub, which was operated by the Feros Group under a long-time lease agreement, was purchased by the D’Agostino family, owners of Nowra’s Bridge Hotel.

Other pubs to change hands recently include Surry Hills’ Norfolk Hotel for a rumoured $3m, the re-developed Harold Park Hotel at Forest Lodge for $2.95m and the leasehold of the St Patrick’s Tavern in Sydney’s CBD for $2.9m.

The recently renovated Harold Park Hotel was purchased by William Ryan ahead of the imminent redevelopment of the adjoining Harold Park Paceway site.

Renowned publican Patrick Gallagher recently acquired the leasehold of St Patrick’s Tavern from Melbourne-based Aussie Leisure Group, owner of the Tea Gardens Hotel at Bondi Junction.

Fisher said the increased hotel sales activity coincided with the recent budget gaming tax rate revisions. The changed arrangements include a $200,000 tax-free threshold on poker machine revenue, which will result in around 60 per cent of NSW hotels with gaming machines paying less or no tax.

“The June budget announcement with regard to poker machine taxation has been met with optimism by those in the pub sector,” Fisher said.

“The revision should encourage newcomers to the industry as the fairer conditions will benefit smaller and regional hotels and pubs. Publicans and would-be hotel buyers are now looking to the future with a lot more certainty given that these taxation levels are locked in until at least 2013.”

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The Shout Team

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