Charter Hall has demonstrated its continued penchant for ALH pubs, paying $57 million for the Highbury Hotel and Village Tavern in Adelaide.
The hotels are centred in the capital’s northern suburbs, Highbury about 14 kilometres north-east of the CBD, the Village around 20 kilometres.
Highbury counts a sports bar, bistro, gaming with 40 machines, function room, outdoor dining space and freestanding Dan Murphy’s. The Village offers a bar and bistro, beer garden, gaming also with 40 gaming, and a drive-through Dan Murphy’s.
Both are on long, triple-net leases to Australia’s largest pub operator and subsidiary of ASX-listed Endeavour Group (ASX:EDG), ALH (Australian Leisure & Hospitality). Both enjoy annual rental increases via CPI (minimum three and maximum of five per cent) and hold a combined landholding of 19,818sqm.
The sale represents a yield of 5.25 per cent for the vendor, Sydney-based investor David Fitch, whose Fitch Group owns over $250 million of commercial, residential, manufacturing, retail and hotel assets.
Charter Hall boasts a $3.6 billion portfolio and has affirmed its place as both ALH and Australia’s biggest pub landlord, having previously bought the former ASX-listed ALE Group in 2021 for $1.7bn, in partnership with HostPlus.
After its listing late 2022, sale of Fitch’s pubs was brokered by JLL Hotel’s Will Connolly, John Musca, Ben Parkinson, and Stuart Taylor, amid a reliable appetite for property leased to the pub giant.
“The Highbury Hotel and Village Tavern provided two of the most ‘water-tight’ leases the wider market has seen for quite some time, reinforced by their blue-chip covenant to Australia’s largest hotel and retail operators in ALH Group,” noted Connolly.
“Naturally, it came as no surprise that the assets enjoyed bullish interest from a diverse range of enquiry via both private and institutional markets.”
Despite a post-pandemic reshuffle, demand from investors for South Australian hospitality assets continued in 2022, with total volumes exceeding $440 million, spurred by the zero stamp duty payable on commercial assets.
