Administrators FTI Consulting have swung into action, listing five of Jon Adgemis’ Public Hospitality venues at once, individually or in one line.
Formerly a high-flying dealmaker for tax advisor KPMG, Adgemis hopped on the hotel bandwagon in the late teens, looking to ride the perceived gravy train by purchasing undercooked pubs thought to have potential and lifting their game.
But the rapid rise to two-dozen hotels came to coincide with comparable rises in construction costs and then interest rates, burdening the ambitious scheme with escalating debt, multiple mortgages on properties and assorted parties, including suppliers and employees, seeking recompense.
Under a barrage of media attention and creditor assuagement, in May the group secured $400 million in fresh finance, although it was expected some assets would have to be sold.
This wasn’t enough to stop creditors taking control of the Kurrajong Hotel in Erskineville, currently closed for renovation, and the former Rose Shamrock & Thistle in Darlinghurst, housing El Primo Sanchez, subsequently listed for sale.
Privately owned New York-based lender Muzinich & Co fronted more than $100 million to Public, secured against five pubs and the relevant operating companies.
In September the lender pulled the pin again, calling in receivers on all five.
On Tuesday these all hit the market, on behalf of Joseph Hansell and Vaughan Strawbridge of FTI Consulting as receivers and managers.
The Exchange, on Oxford Street in Darlinghurst, was an early purchase for Adgemis, the group then known as Jaga, picked up in 2015 for about $4 million. It has been undergoing redevelopment and is currently closed.
The bulk of the properties came in 2021, when after four decades at the helm industry legend Adella Wright-Young sold the Camelia Grove Hotel of Alexandria to “Sydney publican-developers”.
The same year, the Gravanis brothers’ Oscar’s Hotels sold the Strand Hotel in Darlinghurst to Adgemis for around $17 million, and amid pandemic lockdowns, Public also picked up former AVC venue the Norfolk Hotel in Redfern for around $7 million.
A notch above most of the collection, the Oxford House Hotel in Paddington was bought for roughly $30 million, also in 2021. This is one where Public has completed an uplift, remodelling it to be a 55-room boutique hotel. It is likely to find the greatest return in the sale process.
How proceeds from the sales will be distributed remains to be seen. A recent creditors’ meeting in September detailed Trea Street as holding more than $126 million in debt, secured against the operating company of the Camelia Grove.
The hotels are being sold separately, in tranches or in one line if the right buyer emerges.
An Expressions of Interest campaign is being managed by Colliers’ Matthew Meynell, Karen Wales and James Cowan, closing Thursday, 14 November.
