The pub market is regaining its froth in a big way with some of Sydney’s best known watering holes hitting the market. A flurry of transactions has occurred in just the last few months as the sector enters positive territory marked by strong yields generating interest from the full gamut of investor types. Regional properties are also making a strong showing alongside metro offerings.
Atop highest profile offerings is Paddington’s Light Brigade Hotel in Sydney’s east. Prominently located on the corner of Oxford Street and Jersey Road, it is being off-loaded by hoteliers the Bayfield family who purchased the site for $9 million after selling The Newport Arms to Justin Hemmes in 2015. The four-level 1200 sqm hotel is described by selling agents HTL Property as one of the suburb’s “most treasured watering holes” with a high cash flow and surrounded by comparable buildings that suggest a value in the realm of $17 million-plus. HTL Property’s Dan Dragicevich and Sam Handy are handling the sale with expressions of interest closing May 29.
Rare opportunities
The most recent transaction however is that of another much-loved historic Paddington venue, the Unicorn Hotel. The listing of the iconic P&O style building located at 106 Oxford Street in February this year was notable for the fact the freehold and leasehold interests were offered to the market for the first time in 15 years. Selling agents JLL Hotels and IB Property fielded a high volume of inquiries from established hospitality operators as a result, and family group JDA Hotels was announced this week (April 30) as the successful purchaser. The group, led by brothers John and Dean Feros, add their new acquisition to an impressive stable of NSW and Queensland pubs that includes the Mermaid Beach Tavern and Gold Coast Tavern.
The Unicorn also drew such keen interest simply because of the rarity of high-profile pubs coming up for grabs, said JLL’s Kate McDonald. “We are frequently asked for pubs in the Eastern Suburbs but the fact is there are very limited opportunities in that location especially at such an attractive price point,” Ms MacDonald said. “There has been a real consolidation… for good reason - these hotels are great businesses.”
Big bold moves
The Unicorn Hotel sale followed the largest deal of the year so far, that of the $70 million transaction between Redcape and Gallagher Hotels on the legendary Criterion Hotel on Park Street and western Sydney pub Crescent Hotel. It was brokered by JLL Hotels managing director John Musca and executive vice president Ben McDonald. The leasehold interest of the Criterion Hotel and the freehold going concern of the Crescent Hotel, Fairfield, were sold and purchased on behalf of the private Gallagher Hotels and Redcape groups respectively. As with other recent deals the play of the two assets was done to capitalise on an upswing in conditions, both groups capitalising on premium trading fundamentals in their respective geographical markets, selling agents said.
Greener pastures
Funds both large and small have also been particularly active. Up-and-coming entity Harvest Hotels which acquires, develops, and operates hotels in promising country areas, added The Jerrabomberra Hotel in the town of Queanbeyan to its regional NSW Pub Fund in early April. The acquisition was in line with the newly formed fund’s strategy of making targeted purchases after a lengthy period of evaluation. Harvest Hotels founder and managing director Chris Cornforth said his fund had been examining opportunities in the LGA for several years and had been found to meet all of the fund’s “required demographic metrics”.
“We’ve previously owned and operated pubs in the nearby community Yass so are well acquainted with the broader region,” Mr Cornforth said after the acquisition. Selling agent Sam Handy added that The Jerrabomberra Hotel was an A-grade regional venue that ticked all the boxes for astute investors’ thanks to displaying the full gamut of “intrinsic fundamentals”.