Salisbury pub owners call last drinks
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Salisbury pub owners call last drinks

The booming pub sector has attracted sales of more than $100 million in the past few weeks which has enticed the private owners of the popular Salisbury Hotel, Stanmore in Sydney's inner west to test the market.

It comes as new public listings are in the wings, including the proposed Moelis Australia Redcape pub float, said to be in November.

The Redcape Hotel Group has assets of about $1 billion and since Moelis bought the business last year, about half of the Redcape portfolio has been independently re-valued as a requirement of its banking facility.

Salisbury Hotel in Sydney’s inner-west suburb of Stanmore.

Salisbury Hotel in Sydney’s inner-west suburb of Stanmore.

Photo: supplied

The revaluation process has seen a $73 million, or about 12 per cent uplift.

The newly-minted HTL Property, which has sold in excess of $100 million worth of hotels in the past month, has been engaged to sell the Salisbury Hotel. No price was disclosed but similar assets have sold for about $11 million.

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HTL Property, formed by Andrew Jolliffe and Dan Dragicevich a month ago, has recently sold Redcape’s Belrose Hotel for $22 million and the Vauxhall Inn Hotel, Granville for $40 million.

The directors said the inner-west pub market has seen a flurry of activity in recent times as its popularity and patronage has skyrocketed as a result of the 2014 Sydney CBD lockout laws.

''On average 36,500 people visit the Newtown area on Saturday nights, revealing a 65 per cent increase since 2012 according to City of Sydney officials,'' the directors said.

''Latest published train statistics point to a similar trend where there has been a 383 per cent increase in traffic at Newtown train station since the implementation of the lockout laws.''

The Salisbury is a three-storey, 1900s art deco freehold hotel, on a large 800 square metre corner block which underwent about $3 million in renovations in 2016. It is expected to attract local and interstate investors and owner/occupier pub operators.

HTL national director pubs, Dan Dragicevich said the Salisbury Hotel presents an ''outstanding opportunity for the astute investor to purchase a substantial commercial property holding, with a reliable cash flow business and clear operational upside''.

''Assets which present such compelling investment fundamentals in attractive locales such as Stanmore are rare and we expect significant buyer interest,'' Mr Dragicevich said.

HTL Asia Pacific director Andrew Jolliffe believes the broader sector is well represented by sale activity ''eschewing geographical boundaries, and encompassing investors seeking assets across the full hospitality spectrum''.

''We've highlighted the strong market fundamentals of cost and availability of capital, prosperous revenue generation across all departments, and sensible regulatory administration as being key to the continued strength and yield compression being experienced in both regional NSW as well as the Sydney metro area,'' Mr Jolliffe said.

''Our blended yield over the past two weeks and across nearly ​$200 million worth of contracted hospitality properties is about 7.25 per cent, and accordingly we maintain and restate ​our view that yields are and will continue to contract for AAA grade hospitality assets.''

Reflecting the strength of the pub market, in the past year a number of high profile freehold and leasehold sites have changed hands including John Singleton's sale of the leasehold of the Icebergs Dining bar and restaurant on level 3 of the complex at Bondi Beach in Sydney to the O'Brien family for about $15 million.

Hospitality giant Solotel, owned by celebrity chef Matt Moran and businessman Bruce Solomon, is selling the leasehold of the popular Clovelly hotel in Sydney's upmarket eastern suburbs beach precinct.

Pointing to market depth, HTL manager pubs, Blake Edwards said HTL had sold an equal number of regional hotel properties to those sold with Sydney metro addresses in the past six months.

''Calendar Year 2018 has seen in excess of eight regional hotels traded by our Sydney office, and the yield spread between metro and regional hospitality properties remains at a 300-basis point delta, even when taking into consideration the sharp contraction Sydney metro has experienced,'' Mr Edwards said.

Carolyn Cummins is Commercial Property Editor for The Sydney Morning Herald.

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