By Andrew Starke

A third pub in the failed Landmark Leisure Group’s portfolio has been put up for sale by receivers Ferrier Hodgson with bids in excess of $25 million expected.

The Vegas Hotel, once considered the flagship of Landmark’s hotel offerings, is situated on Darlinghurst Road, in the heart of the Kings Cross ‘Golden Mile’.

Jones Lang LaSalle Hotels have been appointed as agents for the sale with expressions of interest due to close on Thursday August 26.

Two of Landmark’s four key pubs have so far sold with the Peakhust Inn selling at auction last month for $10.6 million to a consortium led by John Singleton, the investment bank Lazard Carnegie Wylie and the hotel group Riversdale, while the Oxford Hotel in Darlinghurst sold earlier this year for $11.5 million.

A fourth property, the Mansions, also in Kings Cross, is likely to follow the Vegas Hotel onto the market.

Jones Lang LaSalle Hotels national director of pub investment sales, John Musca, suggested that astute owners of the best gaming businesses in the country will realise that the premium assets very rarely change hands, and the Vegas Hotel is an aspirational hotel within that class.

“Not since our sale of the Hurstville Ritz Hotel in July 2009 at the price of circa $40 million and a yield of 9.5%, have we seen a AAA Top 20 gaming hotel in NSW available for acquisition,” he said.

At the peak of the market in 2007, the Vegas Hotel was valued at $47 million when it reached No.4 in the NSW Top 200 gaming list.

The hotel was ranked 22 on the list in the March quarter 2010 and is expected to improve on that position in the pending June quarter.

The sale price includes 15 gaming machine entitlements and 15 gaming permits, although industry insiders believe expressions of interest will fall in the $25m to $30m range.

“With surety now around gaming tax legislation in NSW for the next 5 years, the completion of a smoking solution at the hotel, and the reinstatement of the hotels full trading hours, trade at the Vegas is trading back to 2007 levels,” Musca said.

The hotel zoning and floor-space ratio are also believed to allow for a further two floors of development for any form of mixed-use be it commercial, residential or backpacker uses, with a scheme mooted previously to build six studio apartments above the hotel facing both Darlinghurst Road and Kellet Street.


The Shout Team

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