NEWS PROPERTY

Financial Review Rich Lister Arthur Laundy has picked up his second pub in regional NSW this year after partnering with publican Fraser Short to acquire the Illawong Hotel at Evans Head, south of Byron Bay, for about $15 million. The acquisition follows Laundy Hotels buying the Lennox Hotel near Byron Bay for more than $40 million in February. High-net-worth capital is pouring into pub real estate, including many venues in regional locations, amid a recovery in trading performance, an easing in restrictions and record low interest rates. The acquisition of the art deco Illawong Hotel was via a syndicate comprising Laundy Hotels, Mr Short’s Sydney Collective, Mr Laundy’s daughter Justine Tindall and her husband, Nick Tindall. Nick Butler and Steve Pursell from Pub Brokers & Advisory sold the hotel as a freehold going concern. The property’s freehold was offered by Janice and Kenneth Harper and the business interests by operator Daniel Simpson. The Illawong Hotel is the only pub in the coastal town of Evans Head, which lies an hour south of Byron Bay and 30 minutes from Ballina Airport. The building, set on a 2200sq m site, includes 15 gaming machines, 18 accommodation rooms and an attached retail store. “We think this is just a sensational coastal hotel in a town that’s already on a great trajectory,” Mr Tindall said. “Justine and I are excited to be partnering with [Sydney Collective], as well as her broader family.” Mr Butler said the Illawong Hotel’s strong hospitality business attracted the interests of the Laundy family and Fraser Short. Back in Sydney, the Gallagher family has sold its second Sydney hotel this month after divesting the Union Hotel in North Sydney for $20 million. The Union Hotel was sold to Sydney operators GoodBeer Company, led by John Azar. Good Beers’ portfolio currently also includes the Commodore Hotel, McMahons Point and the KB Hotel, Surry Hills. JLL Hotels & Hospitality Group managing director John Musca and senior vice-president Ben McDonald negotiated the off-market sale. Last week, ex-Wallaby Mr Young paid about $40 million to buy the Royal Hotel at Ryde, in north-west Sydney, from hotelier Patrick Gallagher. The Union occupies a 784sq m site with two floors offering more than 1200sq m of trading footprint. The hotel includes 21 gaming machines, three bars, a restaurant and function rooms. “We are very excited about bringing the Union into the group and to servicing the North Sydney community, creating a special hospitality experience for locals,” Mr Azar said. Mr Musca said post COVID-19 demand was “driving an extraordinary level of transactional activity, in what remains a highly regulated and protected asset class”.

High net worth investors splashed out $109 million in a couple of hours on pubs, childcare centres and service stations at a sold-out commercial property auction in Melbourne that highlights the depth of appetite for long-leased assets amid record low interest rates. Reserves were smashed by 11 per cent on average as 26 properties offered for sale by agents Burgess Rawson sold at a packed auction held at Melbourne’s Crown Casino on Wednesday morning. “The appeal of essential service tenants, long leases, reliable rent and strong land values is proving irresistible,” Burgess Rawson director Jamie Perlinger said. The agency estimated that demand for real estate was six times greater than what was on offer, based on the $633 million buying potential of registered bidders. A big winner on the day was ASXlisted pub landlord ALE Property Group, which sold all four of the venues it offered to investors at a more than 20 per cent premium to their book value. All were sold with leases until 2028 to the country’s largest pub operator, ALH, which is 85.4 per cent owned by Woolworths’ $13 billion IPO-hopeful, Endeavour Drinks. They included the Pelican Waters Tavern in Caloundra on the Sunshine Coast, which sold for $10.8 million on a yield of 4.15 per cent, more than $3 million above its $7.6 million book value. All four pubs sold on yields at or below 5 per cent. Another top result was a Carl’s Jr fast food outlet in Thomastown, Melbourne offering a 10-year lease, which sold for $6.4 million on a 4.6 per cent yield.

A 140-year-old Brisbane hotel, which once claimed a crocodile and a swearing parrot as residents, has sold for $4.6m as the country‘s largest pub landlord slims its property portfolio. An unidentified Brisbane investor has purchased the Kedron Park Hotel after it was auctioned off Wednesday by ALE Property Group. ALE also sold two other Queensland pubs – the Edinburgh Castle Hotel in Brisbane’s inner north and Pelican Waters Tavern on the Sunshine Coast – to Brisbane investors for $7.5m and $10.8m respectively. Pelican Waters Hotel had been valued by ALE at $7.6m, Edinburgh Castle Hotel at $7.5m and the Kedron Park Hotel at $3.4m. The pubs are leased to Australia’s largest pub operator ALH, which is on a 25-year term to 2028 plus four 10-year options to 2068. Burgess Rawson Queensland sales director Glenn Conridge said the hotels attracted strong bids from both local and interstate investors interested in picking up properties with a quality, long term tenant. ALE‘s Top Pub hotel in Morwell, Victoria, also was sold to a Queensland investor. “It is rare for such established hotels to hit the market,” said Mr Conridge. “And it interesting that all the buyers were Queensland investors, who love their pubs.”

Opportunity knocks for the likes of pub barons Jerry Schwarz or Justin Hemmes, with yet another of Sydney’s favourite watering holes set to hit the market. There are expectations “north of $10m” for Paddington’s Unicorn Hotel, which will be officially launched to market on Tuesday for a May 6 auction. The building, at 106 Oxford Street, is being offered fully tenanted – with Mary’s Group co-owners Jake Smyth and Kenny Graham still running the popular pub downstairs and interior designers Studio McQualter set to move into the office space upstairs. Sales agents Paul Grasso, Steffan Ippolito and Will Dawson of IB Property were tight-lipped on the property’s owner, though CoreLogic data shows a company linked to Mark and Rosemary Ingham bought the site for $6.1m in 2009. The building makes an average $500,000 net profit per year. The Mary’s Group has been operating the pub since 2015 and serves up classics such as Unicorn meat pies, chicken schnitzel and Mary’s Burgers. Studio McQualter is a very famous interior designer with a global client base, including Zimmerman. The landlord is doing a $150,000 refurbishment upstairs.

A resort in the Byron Bay hinterland co-owned by Olivia Newton-John will go up for sale this week, with agents Colliers expecting an “influx” of interest in the property. The Gaia Retreat & Spa, an internationally acclaimed lifestyle retreat overlooking Byron Bay’s coastline and situated in the town’s hinterland, will hit the market later this week. Colliers’ Karen Wales and Gus Moors have been appointed to market the retreat on behalf of co-owners Gregg Cave, Ruth Kalnin, Olivia Newton-John and Warwick Evans (‘G.R.O.W.’). The retreat itself offers 22 rooms, an expansive day spa and a restaurant set on over 8ha of land. The sale also includes two adjoining residential titles across more than 4ha with expansive district views.

Merivale has acquired tiki bar The Quarterdeck in Narooma, in its first venture outside of Sydney’s metropolitan area. Merivale CEO Justin Hemmes, said choosing the venue was a no-brainer as he has a close affinity with Narooma. He will receive the keys to the venue shortly and has not announced plans to alter any trade operations.

Former Wallaby and veteran publican Bill Young has boosted his asset base, outlaying $37 million for a key pub in Sydney, in a sign the sector has bounced back to life. The Gallagher family sold the Royal Hotel in Ryde to Mr Young, while the cashed-up Good Beer Company bought the family’s the Union Hotel in North Sydney for $20 million. The purchase will add to Mr Young’s growing pub empire, which includes the Concord, Five Dock and recently reopened Illinois hotels, taking his stable to six Sydney sites.

Jailed fraudster Craig Gore, and his late father, Mike Gore, each had audacious plans at various times to turn a 394ha Gold Coast hinterland cattle property into golf course-focused resort and residential project. Both schemes collapsed, turning into financial disasters, and the site at Canungra, known as “Saddleback,” has just changed hands once again. The current owner, a pastoral outfit, sold the site at auction last week for $8m to a local family intending to keep the cattle grazing. Elevated 550m above sea level, the property is considered one of the largest holdings close to coastal beaches and it affords spectacular 360-degree views. Even the Glasshouse Mountains are visible.