Iris and Gallagher Hotels have furthered their history, speaking exclusively of selling each other the Hunters Hill Hotel and Tiger Bar in the biggest pub transaction in years, sources say tops $64 million.
Sam Arnaout’s Iris Capital has been behind some very successful pub developments and is likely Australia’s most influential truly integrated development and hospitality group.
Iris began its pub business in 1995 with the acquisition of 12 freehold and one leasehold hotels, one of which was the Hunters Hill Hotel (HHH). In time it executed a huge redevelopment of the pub and surrounds, bringing a heartbeat to the formerly sleepy north shore suburb.
Patrick Gallagher snapped up Hurstville’s Tiger Bar in late 2015 for close to $28m, citing an interest to diversify the group’s portfolio across key Sydney regions.
Gallagher himself lives in Hunters Hill, and while Tiger was acquired with a gazetted 40-metre redevelopment height, he does not have a history of this kind of property play and very much considers himself first and foremost a publican.
Conversely, Iris has really ramped up its property and development business in recent years, most notably with the huge 1.66Ha Newcastle East End project, occupying four blocks and the largest ever master-planned mixed-use site for the city.
Speaking with PubTIC, Arnaout says despite working a pipeline of around 1,500 apartments to deliver in the coming 24 months, including 700 at Newcastle, his heart is still with pubs and parting with HHH is bitter-sweet.
“It’s the end of a long era, and we’re passing the baton to someone who I believe will do good things with what has been a very beloved pub.
“I never forget what’s been good to me, and that’s the pubs. It’s always going to be the core cashflow for the group. We love the pub industry and will be in it long-term.”
On the deal with Gallagher, Arnaout says the “all-round good bloke” is the man for the HHH job.
“I couldn’t think of a better person to take the keys. I think he’s the right fit for it and I think he’ll do the pub the justice it deserves.”
Iris will relinquish HHH, but buys the southern belle Tiger Bar, which has similarly benefited from a strong operator and is reportedly still in growth. It too has seen extensive refurbishment and Gallagher says he’s sorry to see it go.
“It’s a damn good business and it’s so easy to run,” incumbent Hall-of-Famer Gallagher said.
But more representative of the kind of multi-faceted, hands-on operations that team Patrick & Angela Gallagher like to work, the big food-driven HHH gives them a lot more to chew. While becoming their new biggest food offering, the time saved commuting can be spent ‘down the pub’.
“It’s our biggest hotel to date. And I only need to walk five minutes now, instead of drive 10 hours!
“It’s just the sort of business that we like, and Sam’s done a beautiful job renovating it. The Hotel’s in fantastic order.
“We’ve got a few little ideas of things we want to do differently, but on the whole as is it’s a great pub and we’re looking forward to it.”
The big-dollar sale-acquisition was brokered by JLL Hotels’ national director John Musca, who acknowledged the wisdom of the two vendors, coming soon after his securing Terrigal Hotel for Gallagher in April.
“The asset transactions are manifest examples of astute divergence in investment and operating strategies of two highly respected industry stakeholders at a particular point in time, reflecting class-leading thinking on both their parts.
“Much like the Oaks Hotel in Neutral Bay and the Golden Sheaf Hotel in Double Bay, the Hunters Hill Hotel is a cornerstone, integral community establishment and a truly generational asset the likes of which are rarely traded.”
Go Patrick