Moelis Australia has announced another big-ticket acquisition in Kinselas Hotel Darlinghurst – unlocking plans to create a consolidated hospitality precinct at Sydney’s iconic Taylor Square.
Moelis Australia Limited (MOE:ASX) has exchanged contracts with the Kospetas family to buy Kinselas for $45 million, following the investment bank’s very recent purchase of the Courthouse Hotel on the same block for $22 million.
“Both venues in their own right are quality freehold going concern assets that will benefit from our platform expertise and the reopening of Sydney following the repealing of lockout laws back in January,” says Moelis Australia Hotel Management (MAHM) CEO Dan Brady.
Kinselas has enjoyed a prominent place in Sydney’s hospitality scene. John Singleton’s Riversdale Group acquired it in 2013 for $12 million, divesting a well-patronised three-level business mid-2017 to Universal for around $23 million.
Jim Kospetas said it was a difficult decision to part with Kinselas, particularly given their three other venues in the precinct and involvement with the community, but they respected the opportunity and have further ventures of their own on the horizon.
“Our vision was to always acquire the Courthouse Hotel and merge Kinselas into one amazing and iconic destination.
“After being the underbidder on the Courthouse sale to Moelis, it was only right to share our vision and offer Moelis the opportunity.
“We congratulate Moelis and wish them all the best!
Prospects in the precinct can be seen in the 99-year lease and $200 million accommodation project by AsheMorgan and Toga, occupying around three blocks of Oxford St opposite the Courthouse.
Following a heated sales process involving eight major bidders, mid-November MAHM won the race to the Courthouse sale through HTL Property, sold by the family of late hotel patriarch Claude Wright, who had owned it since 1990.
Purchase of the four-level property included an adjacent commercial property, between the Courthouse and Kinselas, and MAHM cited plans from the outset to create a prominent development opportunity at Taylor Square.
It is now revealed both hotels will be acquired by the MA Taylor Square Fund, which will be a standalone unlisted fund managed by MAHM.
“Located opposite the fine arts school and previous historic Courthouse, the joining of the properties into one large site presents an investment opportunity in two notably located hospitality assets in one of Sydney’s established nightlife destinations, with the opportunity to extract significant growth synergies through near-term earnings growth and longer-term development potential as we look to create a hospitality precinct that aligns with the City of Sydney’s vision of revitalising Sydney’s nightlife and growing creative industries,” says Brady.
“With capital investment, we are excited to reposition the existing venues and unlock the future potential value of this prominent site.”
MAHM cites its experience in investment management and credentials as “one of Australia’s leading hotel operators” with expertise in capital management, property, governance and operations. It suggests the Taylor Square Fund offers investors unique access to resilient businesses backed by property within the pubs sector, which it concedes is “tightly-held and largely family-owned and operated”.
Significant capex is expected on the sites, sympathetic to the stature of the hotels in the Darlinghurst and Oxford Street communities.
“MAHM will honour this as we look to re-establish the hospitality heartbeat of Taylor Square through a refurbishment that celebrates its significant heritage,” notes Brady.
Both Kinselas and the Courthouse are expected to settle in February 2021.
