Following intense negotiations, Chris Feros has sold his monolithic Lone Pine Hotel to Bondi Asset Management for $26 million.
Feros listed the landmark Rooty Hill Hotel in July, relaying that the time was now right to pass the reins on the large-format pub to focus on the Group’s greenfield endeavours, such as the upcoming Kirrawee Hotel.
“[It’s] an impressive asset that continues to grow, but our group’s resources are focused on the new projects and we appreciate that there are operators better suited to optimizing this business then we are,” said Feros.
The Lone Pine boasts a 3am licence, with a public bar, TAB and wagering bar, bistro and bistro bar, function room, large beer garden, children’s play area, drive-through bottle shop and ample parking on a huge 10,000 m² block adjacent to Rooty Hill train station. It underwent a major renovation in the last two years.
The area is one of the State’s strongest gaming LGAs, and home to Rooty Hill RSL – Australia’s largest club, and home to 726 gaming machines, turning over $84m in revenue.
Lone Pine’s gaming lounge holds 28 machines, with just 15 in a ‘smoking solution’. The pub has climbed 30 places to rank #172 in the Liquor & Gaming list of top-performing hotels since June.
While the gaming business may further benefit from greater focus, the food and beverage aspects of the business are healthy, each growing 6.5 per cent in revenue in the past year.
Bondi Asset Management (BAM) is the hotel investment vehicle formed earlier this year by hoteliers Andrew Lazarus and Colin Parras, who together operate Eastern Hotels Group (EHG).
Lazarus says BAM can see the upside in several aspects of Lone Pine, but understands the big-performing f&b business may not suit everyone.
“We think there’s a lot of potential in the pub,” said Lazarus. “It has a huge block, in an expansive part of Sydney, with lots of development and population growth.
“Chris is a great operator, but we’ll come in with a fresh pair of eyes, and we’re looking forward to repositioning and putting our spin on it.”
Lazarus says there is definite potential in a residential development, and noted that all the investors BAM took into the Vauxhall Hotel have come on board at Lone Pine.
JLL Hotels’ director John Musca marketed the pub, and echoes that its location and land holding offer plenty of possibilities.
“The asset had some exceptional investment attributes, not the least of which was its attractive 1-hectare Local Centre Zoned landholding and its location opposite the Rooty Hill train station.”
BAM, armed with its EHG operations alliance, is representative of the kind of sophisticated investment vehicle bringing fresh dollars into the sector, and Musca says the argument for the approach makes good sense.
“The sale exemplified the continued rational approach to hotel transactions where a circa 500 basis points spread between cost of debt and earnings levels continues to see capital flow to the market.”
Musca reports circa $100m of sales being finalised by JLL Hotels this quarter.
