For the first time in more than a quarter century, the striking Arthouse Hotel in the Sydney CBD has been listed for sale.
A handsome two-storey sandstone building in old-town Sydney, the Arthouse is on bustling Pitt Street, seeing very high pedestrian foot traffic. It is central to the Galleries retail shopping precinct – a prominent destination for fashion, art and dining – and surrounded by commercial office towers, retail, accommodation hotels and public transport infrastructure.
An expansive footprint across multiple levels, the pub is one of the largest in the CBD, with capacity of 900-pax. It comprises four bars, gaming room with 21 machines, two kitchens and two restaurants, an outdoor courtyard, and functions and event spaces.
The gaming operation, last ranked #447 on the Liquor & Gaming list, comprises 15 entitlements owned by the lessor and six owned by the lessee, which are included on the sale. The hotel is proximate to several strong-performing rooms, and none of its machines are in an outdoor smoking solution.
The Arthouse recently underwent an extensive $3 million renovation of the ground and first floor, the final stage completed 12 months ago. The business is generating annual revenues of around $8 million. The Pitt St site was redeveloped in 2000, and the freehold is owned by Vicinity.
Fifth generation hotelier Ben McBeath has held the leasehold interest for the last 26 years.
McBeath has relocated to Newcastle, rearing four kids. He says he enjoyed the process of building the Arthouse and exploring his vision, but he’s trying to centralise his interests closer to home and after several unsolicited approaches to sell says it’s with reluctance he is ‘writing the next chapter’.
“It’s an incredibly good business. I’ll be sad to see it go,” he laments. “It’s a case of a perfect storm of reasons, at the perfect time.”
Polished from decades of trade, he notes there is no need to spend and nothing needing change.
“Whoever takes it will get a pretty good run of play. No-one would regret owning an institution like that.”
McBeath still holds the TreeHouse Hotel in North Sydney, and the Great Northern in Newcastle, near where the family operation began, in the Hunter Valley. He says he will look for another hotel “closer to home and community” where he now lives, preferring to serve locals and benefit from having more time on hand.
“It makes more sense to be connected to the community, rather than holding on to an asset where I used to live,” he suggests.
The Arthouse features a 24-hour liquor licence, able to trade until 5am, but is seldom open past 1am.
Marketing literature touts its strong cash flow and the potential to reposition the space towards the kind of sports bar that is popular with its surrounding catchment.
There is 10.5 years remaining on the lease, and sources indicate it will likely fetch sale price of around $7 million.
HTL Property’s Dan Dragicevich and Sam Handy lead the sale campaign, with Expressions of Interest closing Thursday, 14 May.
“It’s testament to the ongoing success of the business that the original operator is still involved to this day, which is a rarity for any hotel, especially a leasehold,” remarks Handy.
“Further reinforcing the value of this opportunity is the underlying hard-asset value that comes with the inclusion of six gaming machine entitlements.”
