Melbourne-based Francis Venues is executing a sale-and-leaseback on its recently acquired Kings Head Tavern in South Hurstville, offering a freehold for an investor and growth capacity for the group.
Situated on a 1,334sqm corner of a major intersection of Kings Georges Road, the Kings Head is a well-rounded operation in a high-density precinct.
The family-owned Francis group kicked off in 1989, with one hotel operation – the Newport Family Hotel, now Newport Social Club. Third generation hotelier Tom Francis is now CEO and in the past six years has grown the outfit to ten pubs, employing more than 600 staff.
Mid-2024 they picked up the deeds and operation of the Hurstville pub from Redcape for around $26 million, with a view to divesting the freehold, and have spent a year settling in to the precinct and boosting business.
“Kings Head Tavern is a fantastic pub,” says Francis. “We just finished the renovation and it is flying!”
The Francis’ are pursuing a strategy based in underperforming hotel leases. In 2021 they secured four 60-year leases from Zagame group for $99 million. Expanding into NSW, last year they saw further opportunity in also buying the FGC of Redcape’s Wattle Grove Hotel.
“We’re looking to follow a similar model as in Victoria; grow the business, and sell the freehold on a lease of 60 years,” Francis explains.
“I can then move forward and reinvest in the market at a faster rate.”
The Kings Head is around 1.5 kilometres from Hurstville CBD, surrounded by national retailers such as an IGA, BWS and McDonalds.
It is being offered to market with an initial term to Francis Venues of 20 years, plus two 20-year options, on a triple net lease, where the tenant pays 100 per cent of all outgoings and utilities, including land tax and insurance. Annual rent begins at $1.1 million, subject to yearly CPI increases and both mid- and end-of-term market reviews.
The valuable site and legacy lease are further enriched by the hotel licence and 27 gaming machine authorities, worth more than $11 million in-situ in the current market for the buyer.
Such investment grade properties are hotly pursued and can achieve tight yields, seen in the freehold of Moss Vale’s Argyle Hotel selling earlier this year at 4.8 per cent, and a Dan Murphys site in regional South Australia finding 5.2 per cent.
An Expressions of Interest campaign on the Hurstville Tavern closes Wednesday, 10 September, through HTL Property’s Dan Dragicevich and Andrew Jolliffe, who cite both its property fundamentals and “investment-grade” lease structure.
“Sydney metropolitan freehold investment Hotels are rarely offered to market, and as such we expect significant market interest,” notes Dragicevich.
