John Singleton at the opening of his new pub The Malborough Hotel Garden Bar in Newtown with Riversdale Group executives Geoff Dixon (right) and Paddy Coughlan (CEO).1st May 2013Photo: Wolter PeetersThe Sydney Morning HeraldBusiness partners and long-time mates Geoff Dixon and John Singleton’s Australian Pub Fund is selling the popular Vic on the Park hotel in Enmore as part of the the ongoing strategy to divest non-core pub assets and reinvest the funds elsewhere.
Following its recent sales of Newtown’s Marlborough Hotel to Bruce Solomon and Matt Moran’s Solotel, APF directors said the large-format inner-western Sydney freehold hotel would attract a wide range of pub operators and owners.
This will mark the near completion of the pub selldown by APF, which has also included Kinselas, the Toxteth, the Peakhurst Inn, the Bristol Arms for $19.5 million and the Como for about $5.5 million.
Post the proposed sale of the 1247-square-metre Vic on the Park hotel, the APF Pub Fund will own and operate three freehold hotels; Balmain’s Unity Hall, and Brisbane’s The Elephant and Exchange hotels.
No price was disclosed for the Vic, but similar pubs have reaped about $20 million. Most recently, Justin Hemmes’ Merivale Group’ paid $21 million for The Collaroy hotel on Sydney’s northern beaches. Advising on the sale are agents from CBRE and Ray White Hotels.
“In terms of Sydney’s surging inner west, a revenue-producing commercial property holding situated upon in excess of 1200 square metres is both rare and attractive,” Ray White Asia Pacific Director Andrew Jolliffe said.
Paddy Coughlan, who bought the pub with his business partner Rod “Ned” Kelly for $6.95 million in June 2012, said the Vic held a special place in his heart.
“We used our dog Max as the original logo and it just always felt like a personal project,” Mr Coughlan said.
“I think we created a blueprint for a lot of other pubs since then, including the Lord Gladstone in Chippendale (which I currently own) … we had some special moments and held some pretty innovative events there for that time.
“The Vic was just a big run-down empty pub surrounded by a demographic change of seismic proportions that we tapped into and rode that change. We paid $6.95 million, which at the time we thought was expensive. I had to convince the board to support the purchase, thankfully they did.”
APF director Matthew Beach confirmed the continuation of the fund’s plan to recycle equity via exiting strategic hotel investments.
“We are by nature and in practice a private equity fund; and as such it is incumbent upon us as the fund’s custodians to manage assets in and out of our property portfolios when chronologically appropriate,” Mr Beach said.
APF’s chief executive, Andrew Gibbs, said the Vic on the Park Hotel operated as an “important member of the broader inner west community”.
Director of CBRE hotels Daniel Dragicevich believes the appetite for A-grade freehold hotels, particularly in mature Sydney suburbs such as Marrickville, continues to enjoy considerable depth.
“We’ve seen some significant sales transpire this calendar year in both Sydney and Brisbane, and the long-term fundamentals remain positive for irreplaceable properties such as the Vic on the Park,” Mr Dragicevich said.
“As an area, Sydney’s inner west has enjoyed the benefit of property value augmentation over the past decade, and will now begin to see the benefit of considerable State Government funded investment into proximate infrastructure projects,” Mr Dragicevich.
In other deals, Redcape recently sold the Livingstone Hotel, also in the inner west, for $7 million at a record 5 per cent yield in a deal negotiated by John Musca, national director of Jones Lang LaSalle Hotels.
“Although the Livingstone sale was not representative of the market as a whole, on the back of the recent $65 million sale of the Tiger Bar and Hunters Hill Hotels it had been a very robust year for transactions and JLL still have a pipeline of about $110 million of sales in various stages of divestment,” Mr Musca said.
The Vic on the Park will be sold via an international expressions of interest campaign concluding on September 28.