Australian Venue Co and listed partner HPI have announced an end of year portfolio shake-up, cashing in at Acadia Ridge and snapping up the entire ‘Booze Bros’ Saturno portfolio.
Hotel Property Investments (ASX:HPI) has agreed to pay $66.1 million in conjunction with the Australian Venue Company (AVC) for Adrian and Leon Saturno’s collection of eight pubs and four bottleshops in and around Adelaide.
AVC will operate the businesses on new 15-year leases, with two options.
Furthering their growing collaboration, HPI will reportedly also provide QVC – AVC’s partnership with Coles on the former Spirit Hotels venues – more than $30 million for major renovations across 12 pubs in that portfolio.
HPI CEO Don Smith is buoyant on the industry’s trajectory.
“We see the investment as being very strong with high quality assets coming to the market,” he told PubTIC.
Integration of the Saturno collection will bring AVC’s South Australian portfolio to 18 venues, adding The Unley, West End Tavern, The Mile End, The Colonist and Avenues Café Bar in Adelaide, and The Victoria Hotel in Strathalbyn, The Duck in Coromandel Valley and Mick O’Shea’s Hotel in Hackham.
The group reports all the pubs will continue to operate as usual and all venue staff will be retained.
AVC cites focus on “iconic heritage venues and landmark destinations”, seen in recent acquisition of Parkside Hotel and Naracoorte Hotel, and ongoing investment in the sector, as per the recent $3.6 million renovation of Brighton Metro Hotel and planned renovations at Hampstead Hotel, Waterloo Station Hotel and Robe Hotel.
“We see a lot of potential in the South Australian market,” explains AVC CEO Paul Waterson.
“We’ve been operating in SA with a local team on the ground for over two years and will continue to invest in the State.”
Adrian and Leon Saturno, aka the ‘Booze Brothers’, are wrapping up a half-century in South Australian hospitality with the sale of their last pubs. They sold five pubs to ALH in 2007.
“Adrian and Leon have retired from the industry after 50 years and they wish to thank all the wonderful people they have worked with,” offered a spokesperson.
Completion of the Saturno portfolio acquisition is slated for February 2022.
It will be funded through a combination of a recent increase in bank debt facilities by HPI, and by the sale of the freehold of the Acacia Ridge Hotel, in Brisbane.
HPI purchased the 18,740sqm Acacia Ridge freehold early 2019 for $20 million, under long-term lease to the vendors, White & Partners. The REIT has since fielded “numerous approaches” to on-sell.
Its sale now for $25 million represents a yield of 4.44 per cent. The buyer is said to be a Brisbane-based private investor with other commercial property holdings in the area.
“This is our second investment-grade freehold hotel sale this financial year, following the Queensland record sale of Brisbane’s Royal Exchange Hotel Toowong via auction at a yield of 4.01 per cent, in August,” notes HTL Property’s Glenn Price, who brokered the deal.
Once the dust settles on the portfolio shuffle, HPI’s total assets are expected to surpass $1.1 billion.
HPI’s share price reached an all-time high today of $3.73, before closing at equal high from October of $3.67, up 5.5 per cent since 15 December.
