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International property fund snaps up Sydney’s Republic Hotel

An Asian-based international property fund has moved into the booming Sydney pub market, acquiring the Republic Hotel opposite the Australian Stock Exchange, for about $35 million.

The off-market deal sees the fund taking its place alongside players like hospitality king Justin Hemmes who has been buying pubs with prices in the city soaring to extraordinary levels.

The four-level pub on the corner of Pitt and Bridge streets was acquired in a sale and leaseback deal with the Ryan family  which has been operating  top venues in the city including Ryan's Bar at Australia Square and the Orient Hotel at The Rocks.

The Republic spans three city streets, and recently underwent a multimillion-dollar renovation.

Under the deal, the operator will stay in place while the freehold property is sold with hotelier Patrick Ryan entering into an agreement to lease back the business operation of the asset after 17 years of ownership of the four-storey hotel.

Ray White Hotels agent Andrew Jolliffe, who managed the sale of the hotel on the corner of Pitt and Bridge Street in Sydney’s CBD, says investors are zeroing in on top-level properties in Australia’s gateway cities. Investor interest, he says, is robust.

“Sydney is enjoying a demonstrable surge in infrastructure investment,” Mr Jolliffe told the Australian Financial Review. “We expect that favourable market conditions will continue to underwrite strategic investment.”

With the prices on Sydney’s best pubs soaring, Mr Jolliffe said the Ray White Group was now averaging an exit yield of about 8 per cent for its clients.

And with the hotel sector performing so well, Mr Jolliffe says further yield compression remains likely.

The Ray White Group has been active in this market.

Mr Joliffe recently handled the sale of the Vic On The Park in Marrickville to the Hemmes-led Merivale Group. That deal is rumoured to have topped $20 million.

by Leon Gettler, October 20th 2017