MORTGAGEE SALE ON PUBLIC’S PADDINGTON FLOWER

Lender Australia Pacific is selling Public Hospitality venue El Primo Sanchez Hotel – formerly the Rose, Shamrock and Thistle – as Adgemis’ collection unravels.

One of Paddington’s historic pubs, the Rose, Shamrock & Thistle first opened in 1884, on the site beside where it now stands. The original building was demolished and in 1939 the current four-storey Art Deco structure was constructed on the present 536sqm site.  

Overlooking Oxford Street at the gateway to Darlinghurst and Paddington, the pub is adjacent to St Vincent’s Hospital & Health campus, proximate to the Verona Cinema and 25 Hour Hotel mixed-use developments, and within walking distance of Allianz Stadium, the SCG, Entertainment Quarter and Hordern Pavilion.

Image: State Library of NSW

Commonly known as the Three Weeds, the RS&T stood empty for years until it was purchased in 2022 by KPMG banker turned hotel tycoon Jon Adgemis, along with the adjacent Arts Hotel, which was relaunched as 65-room boutique hotel Oxford House.

The pub enjoys rare 24-hour trading approval Monday to Saturday, and the lower levels have been extensively renovated and refurbished. The team from Maybe Sammy has been manning operations on the ground floor and basement levels.

Having secured a DA, work has commenced on converting the upper floors into 22 accommodation rooms with ensuites. Furthermore, there is scope to activate a rooftop beer garden (STCA) in line with other successful rooftops in the area, seen at the nearby Light Brigade, Hyde Park House and East Village hotels.

The site holds flexible planning approvals that could support further redevelopment, and its location within the Oxford St Cultural and Creative precinct may qualify it for additional FSR and height permissions.

Adgemis left his role as a senior deal-maker at KPMG in 2018, opting to pool his resources and contacts into building a hospitality group, which came to amount to about 20 venues.

Confident in finding significant increase in valuations through renovations based in activating unused accommodation, the plan went off the rails after interest rates ballooned and construction costs blew out, requiring hundreds of millions to be borrowed through a posse of non-bank lenders to service debts and continue works.

A complex refinancing dance has been playing out in recent months, as Public Hospitality holds talks with Deutsche Bank, US-based Muzinich and Archibald Capital on a $430 million refinance. But select lenders have begun assuming control of assets in favour of being part of any restructure.

Bank of Queensland seized one of Adgemis’ properties in Potts Point, and Australia Pacific Mortgage Fund (APMF) has taken back El Primo and the Kurrajong Hotel in Erskineville, which has had its accommodation tastefully refurbished, but the pub itself remains closed.

As mortgagee in possession, APMF has engaged HTL Property’s Andrew Jolliffe, Dan Dragicevich and Sam Handy to manage the divestment.

Comparable transactions have pundits putting expectation on El Primo of circa $20 million.

“Given the very recent successful sales of nearby hotels such as both the Light Brigade and Unicorn, we expect significant operator and developer interest from both Sydney and interstate investors,” offered Jolliffe.

The freehold going concern is to be sold via Expressions of Interest, closing Wednesday, 7 August.

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