Following heated weekend negotiations, it has been announced Damien Kelly’s Rose & Crown Hotel Parramatta and Corrimal Hotel of Wollongong have sold for a combined $74.5 million.
The properties went to market in January, under direction from Wexted Advisors, as the first tranche of assets to be divested out of Kelly’s troubled Pub Invest portfolio.
The Rose & Crown, occupying a 1,126 sqm site, provides 24-hour liquor licence and single bar operation for the ground floor, 30 gaming machines and 3-hour weekend shutdown, generating annual revenues across departments of close to $7.6 million.
It stands to benefit greatly from Parramatta’s $20bn ongoing infrastructure and development boom, counting Parramatta Square, the Riverbank Precinct, CommBank Stadium and the light rail.
It has sold for $42 million to the Sydney-based Highclere Hospitality, adding a strong suburban pub to its existing metro portfolio.
The large-format Corrimal Hotel, six kilometres from the Wollongong CBD, adjoins Corrimal Village Shopping Centre and is proximate to the former Corrimal Coke Works site master planned community, bringing around 550 new dwellings.
It also holds a 24-hour liquor licence, plus 23 gaming machines consistently ranking Top250, in an Amber zone SA2 region.
The pub has sold for $32.5 million to “a highly experienced and second-generation hotelier” with a suite of existing hotel assets. This is believed to be his first pub outside of Sydney.
The on-market sales process reportedly generated multiple offers to purchase, resulting in the Rose & Crown selling on a very tight sub-six per cent yield, and the Corrimal Hotel selling on a sub-seven per cent yield. Sale prices were in line with market guidance on announcement.
Agents remark that the characteristics of the pool of interested and participating parties supports their ongoing view that the industry is looking at another strong year.
“The exit yields for these two hotel assets illustrate a continuation of the sharpening transaction yields we saw apply in the market at the end of last year,” says HTL Property’s Dan Dragicevich, who managed the sales with colleagues Andrew Jolliffe, Sam Handy and Blake Edwards.
A record 100 hotels changed hands in NSW in 2021, bolstered by the clear headroom many publicans have found, having undergone re-evaluations in a strong market. An average LVR (loan to valuation ratio) across the industry below 50 per cent is thought to be “a powerful contributor” to the supply and demand imbalance being seen.
Dragicevich says the environment “augurs well” for sale of the next two Pub Invest assets, the Crown Hotel in Surry Hills and North Nowra Tavern, being announced soon.
Year-on-year comparison with 2021 has sales this year already up in volume, and 11 per cent in value.
Wexted Advisory’s Andrew McCabe says it is a continuation of the active transaction landscape “so patently clear” throughout 2021.
