Property developer Virtical has stepped up its hospitality footprint, exchanging contracts with MA Financial to acquire the high-profile Kinselas and Courthouse hotels, in Taylor Square.
In November 2020, the unlisted MA Taylor Square Fund acquired the prominent Courthouse Hotel on Oxford Street for $22 million from the family of late hotel patriarch Claude Wright, who had owned it since 1990. The hotel would be managed by Moelis Australia Hotel Management (MAHM).
The following month, the Fund picked up the adjacent Kinselas from the Kospetas family’s Universal Hotels for $45 million. Universal had built the iconic Taylor Square venue into a thriving operation since buying it from Riversdale Group mid-2017 for around $23 million.
MA Financial is also majority stakeholder in Redcape, which has recently been selling down some of the collection to help sharpen the books, but the Taylor Square Fund was unrelated.
The new Fund sought to take advantage of the consolidated site through repositioning and potentially redeveloping the two pubs and the building between into an expanded hospitality offering. The project was expected to require significant sympathetic capex, in the heart of the Darlinghurst and Oxford Street communities.
Virtical Development cites more than 50 years’ experience and a diversified $500 million portfolio.
It has been undertaking a period of acquisitions, amounting to over $120 million, that has seen it pick up the Adelphi Hotel in Melbourne’s Flinders Lane, and most recently buying the Republic Hotel in the Sydney CBD, in August.
Virtical has now taken MA’s Taylor Square twins in a combined transaction of $61 million through Savills’ Nick Lower and Tony Bargwanna.
“We’re delighted with the acquisition,” says Mark Toma, Virtical MD.
“The addition of the Taylor Square hotels complements our broader strategy for the assets in our portfolio.
“We have a strong track record in the construction and development across various real estate sectors, including hospitality projects, and we’re well positioned to realise the potential of the precinct.”
The reversal for MA is said to have been triggered by changes in both the construction and funding markets, meaning the necessary timeframes for redevelopment now fall beyond its investment timeline.
“The original investment strategy was dependent upon favourable trading conditions emerging from the first COVID lockdown, and the anticipated resurgence of Oxford Street following the repeal of the city’s lockout laws,” explains Chris Unger MA Financial’s hospitality MD.
“However, the precinct and surrounding area has taken an extended period of time to revitalise.”
