Pub sell offs now in play
Australia’s pubs market is in for a massive shakeup with the $300 million Australian Pub Fund now selling two of the portfolio’s largest hotels.
The pubs for sale are the Marlborough Hotel in Sydney’s inner-west Newtown and Kinselas Hotel in Darlinghurst.
Listed by Ray White agent Andrew Jolliffe, the expectation is they should together reap about $60 million.
Businessman John Singleton, former Qantas chief Geoff Dixon and investment banker Mark Carnegie, along with the portfolio’s financial backer SunSuper expect the market will rush to acquire the pubs.
“Prices for pubs are as strong as they have been for many years, particularly for good performing assets, which we have,” Mr Dixon told The Australian.
“We just felt we bought the portfolio very well; the market is strong so we want to take advantage of the strong market.”
The sale comes at a time when the Lantern Group has sold 12 pubs in NSW and Queensland at massive price premiums.
Pubs offloaded include the Five Dock Hotel in Sydney’s inner west and Commodore Hotel in North Sydney.
Lantern has also listed The Waterworks Hotel in Sydney’s Botany in the southeast. Its asking price is at around $17 million through CBRE.
At the same time, the Redcape Hotel Group, which operates 26 pubs and retail liquor stores, has plans to sell its portfolio. That’s been on the table since early this year.
According to the investment house run by Mr Carnegie, MH Carnegie & Co, the Australian Pub Fund strategy is simple: buy under-performing or financially distressed pubs in prime locations, renovate them to improve their food and entertainment, and increase their value for sale later on.
The fund was expecting to do an IPO and amassed more than 20 pubs for the float. But that fell apart when prices went through the roof. As a result, investors think they can get a better deal through piecemeal sales.
by Leon Gettler, November 24th 2016
