The booming Australian Venue Co is refinancing a new $600 million debt facility, as investors flock to hold the deeds on its pubs around the country.
Most recently, the freehold of the Bentley Hotel and associated First Choice Liquor outlet in central Perth sold for just over $10 million, leased to the AVC-Coles partnership until 2049, including options.
The asset was reportedly purchased as a long-term investment by two Sydney-based Chinese-Australians, at a price representing a yield of circa four per cent.
It was sold by Coles Property Developments at an auction through Burgess Rawson’s Melbourne office, on 30 March.
This was around a week after the heritage-listed New Albury Hotel, aka Beer DeLuxe Albury, sold at a fiercely competitive auction for $13.2 million.
Receiver FerrierSilvia appointed Manenti Quinlan & Associates and D.J. May Real Estate to manage divestment of the five-storey hotel, built in 1939 on more than 2,000sqm in the heart of the Albury CBD.
Following strong interest from a range of potential buyers throughout the sales campaign and an opening offer of $8 million, six parties competed, seeing individual bids increase by close to $1m.
The eventual winner is thought to be well-known local hotelier Peter Griffiths, at a price reflecting a 4.1 per cent yield.
“We fielded enquiries from institutional and private investors and several experienced hoteliers, all attracted by the asset’s quality and the prospect of partnering with a blue-chip, long-term tenant in AVC,” said MQ’s Leonard Bongiovanni.
“The result was well above expectations,” added auctioneer Doug May, of D.J. May Real Estate. “We blew past the reserve and kept going, showing there’s still an exceptionally strong market for regional hotel investments, particularly those with an A-grade tenant in place.”
Next in line is the passive freehold investment of the Barron River Hotel, leased to AVC and Coles until 2046, including options.
The investment reports annual income of nearly $339k, with built-in annual increases of either double CPI or four per cent, and the tenant paying all outgoings.
Set on a 3,860sqm site, approximately 6.8 kilometres from the Cairns CBD, ownership includes the liquor licence and 35 EGM authorities, currently worth around $4.3 million.
Barron River Hotel’s freehold is set to be sold via public auction through HTL Property, at 10:30am on Thursday, 28 April, at Dexus Place, in Margaret Street, Sydney.
Having risen to the status of Australia’s second-largest pub operator, AVC shows no signs of slowing and reports “plenty of opportunity” to continue doing what it has been doing.
The group is in the final stages of a major refinancing plan on around $605 million, to replace existing financing, and fuel its ongoing acquisitions and capital improvements.
It has been five years since American investment giant KKR took a majority share, and as debt is set to mature in September, the time is right to reorder the books.
AVC is thought to be securing the new funding from several banks and institutional investors, in a unitranche facility incorporating secured and unsecured debt, with a $75 million revolving line of credit through NAB.
AVC’s leasehold-only model continues to find no shortage of institutional and passive investors happy to join the returns emerging from the pubs industry.
In the throes of final legals, AVC declined to comment, but reports a return to strong trading in recent months, and revenues up more than 10 per cent against the corresponding period last year.
