Hospitality investment manager and operator Harvest Hospitality has cashed in some capital, parting with both the Milestone Hotel in Dubbo and Aussie Inn in Adelaide.
Located in the south Adelaide suburb of Hackham, the Aussie Inn was one of the group’s first purchases in South Australia, in 2022.
In the past three years HH has invested in substantial operational and capital improvements, building both revenue and the venue’s reputation, leading to it being dubbed the ‘super pub of South Adelaide’.
The big-ticket sale, to an unnamed buyer, was brokered by TJ Board’s Terry Board. Settlement is scheduled for October.
Dubbo’s Milestone Hotel is a high-performing regional venue generating weekly revenue of more than $90K, through bar, bistro, wagering, and gaming room with 29 machines. It spans three distinct trading floors, on a 920sqm site adjacent to major retailers Coles and Kmart.
HH acquired the hotel in 2021, and having focussed on elevating the dining experience and generating a loyal customer base, divest it with an architecturally designed development plan aiming to increase its scale.
Stepping into the Milestone freehold going concern for a rumoured $14 million is well-known and growing hotelier Barham Hamarashid, who keeps a regional stable that already includes Hotel Cecil and the Tattersalls Hotel in Casino, Winmalee Tavern, and Highlands Hotel in Mittagong, as well as The Mill in Bondi Junction, acquired in 2024.
Hamarashid was said to be attracted to the Milestone’s regional positioning and the growth prospects of Dubbo, which is NSW’s largest inland centre.
“The operational improvements we have made, together with some minor capital works, has improved the venue’s appeal and made the asset an attractive acquisition target,” suggests HH CEO and co-founder, Chris Cornforth.
Sale of the Milestone was brokered by JLL’s Kate MacDonald, Greg Jeloudev and Ben McDonald, and is expected to close in December.
“This sale highlights the execution skillset of Harvest as investment managers to recycle capital for the benefit of their unitholders,” says MacDonald.
HH report the two assets attracted a combined sale value exceeding $50 million, providing handsome returns for its backers in Harvest Pub Fund 1, which held the Milestone, and Pub Fund 3, which kept the Aussie Inn.
Beyond the sale of optimised venues, HH reports the funds will continue to execute operational and capital improvements on further assets prior to selldown.
This year has found a major increase in activity in the regional hotel market, as seen in the sale of the Panorama Hotel in Bathurst this month for $25 million by award-winning hoteliers Peter and Jane Harris and Gary and Kerry Narvo.
HH attribute its success to adding value to hotels in high growth areas, and the positive sales coincide with launch of the entity’s two new hospitality investment funds.
Harvest Hospitality Opportunities will be a closed-end fund looking at both freehold going concerns and leaseholds. It hopes to build $200-300 million in assets, returning 15-17 per cent annually over a five- to seven-year term.
The HH Income vehicle is to be an open-ended fund designed to deliver sustainable and regular cash distributions to investors, investing in freeholds, leaseholds and freehold going concerns. It’s aiming for $500 million in assets over the medium term, with an annual return target of 10-12 per cent.
Both funds are designed to address the specific capital growth and income generation objectives of investors, which dovetails with the group’s methodology of building growth through experiences.
“The successful implementation of our strategy has delivered significant revenue uplift, which in turn has produced a great return for our investors,” adds Cornforth.
“Selling these optimised assets demonstrates our delivery of that strategy. The sales also complement the launch of our two new funds, which will enable us to expand our core pub business.”
