Adelaide Hotel Portfolio Comes to Market
In the largest pub portfolio offered to market in Adelaide in over a decade the GM Hotel Group is being offered for sale by Expressions of Interest. JLL Hotels & Hospitality Group have been exclusively appointed to manage the sale process closing on May 2nd 2019.
John Musca JLL National Director said “South Australia has one the lowest number of hotels and gaming machines per capita of any of the gaming approved states, has the preferred perpetual gaming authority model and no club culture to speak of and the group delivers an immediate large-format suburban pub network with substantial earnings”.
The portfolio includes two freehold hotels Christies Beach and The Lodge, Brahma, and four leasehold hotels subject to long term leases, being the Tower Inn, Crown Inn, Emu Hotel and Beach Hotel, spanning north and south in the Adelaide metropolitan area. With 203 electric gaming machines across the hotels and numerous top ranking venues, the group offers a significant immediate share of state gaming. In addition with seven retail liquor outlets, over 20,000m2 of site area and a large on-premise business the group delivers an underpinned balanced revenue spread. Many of the assets have had significant capital investment and refurbishment over the past 5 years with the award-winning Beach, Lodge and Tower Hotels setting new standards in the Adelaide hospitality space.
Not since the privately held Saturno hotel portfolio was sold to ALH in 2007 for a reported $110 million has there been a pub group of this scale available on-market for acquisition in Adelaide, where hotel assets are traditionally tightly held. The two most recent large hotel sales have been ALH groups’ acquisition of the Watermark Hotel for circa $25m and the sale of Lockleys Hotel for $16 million both on sub 9% cap rates, evidencing the ongoing market demand for the larger format hotels in the capital city.
South Australia has some for the highest barriers to entry of any jurisdiction nationally for new hotel developments with associated gaming approvals, so these capital city businesses become more coveted and irreplaceable with the passage of time”, Musca said.
The hotel portfolio space has been devoid of scale opportunities with notably the Zagame Hotel portfolio in Victoria being offered to market and the listed Redcape group courting the acquisition for a reported $240 million, despite the states much debated non-perpetual gaming model. In the meantime the Australian Venue Company, backed by a JV between Bruce Dixon and US investment bank KKR, completed the acquisition for the Coles and Spirit hotel group pubs nationally with plans to list the group in early 2020.
“ On the back of numerous direct approaches we’ve had for the group the timing seemed right for the stakeholders to divest as the businesses demonstrate a sound earnings trajectory and present well, and on the back of some significant recent sales in the local market, said GM Hotels Managing Director Greg Maitland.
“It’s an exciting and liquid time for the industry as stakeholders realise that ongoing aggregation and consolidation is tightening the supply of these sought-after assets in every state,” Musca suggested. JLL are experiencing this liquidity first hand with over $400 million of pub assets currently under agreement or negotiation nationally, 85% of which are transacting in an off-market format.
JLL Properties, 21st March 2019
