ASX-listed Eumundi Group Limited has partnered with the new Open Arms Hospitality Group in purchase of the long lease of Brisbane’s historic Plough Inn for $13.1 million.
The Plough Inn first opened in 1885, and overlooks the winding Brisbane River. It boasts a large outdoor area, complete with stage for live music events and festivals.
Sale of the 96-year lease on the structure required Ministerial Approval and the nod from South Bank Corporation, which has now been granted and the transaction gone unconditional to Eumundi’s (ASX: EBG) wholly owned subsidiary, Eumundi Property Group (EPG).
EPG has negotiated a sub-lease to the burgeoning Open Arms Hospitality Group – comprising former Pegasus Leisure CEO Simon Gardner, and former Beer Deluxe partners Craig Shearer and Jason Sheather, already operating their Public House in Albury, and currently creating the unique ‘Riverland’ venue on the river on Brisbane’s Eagle St, slated to open November.
Open Arms is triple-net leased into the Plough for an initial term of 15 years, with three further 10-year options, and annual rent increases of the greater of CPI or 2.5 per cent.
EPG reports it is funding the acquisition through existing and new approved facilities, and says the $13.1m price tag represents initial net cap rate of 7.25 per cent, with the asset projected to make the parent company $0.42m annually before tax.
“This transaction is the result of patience and determination by the Board over a number of years to find the right acquisition for the Group,” reports Chairman, Joe Ganim.
“The Plough Inn meets the Group’s stated objectives of targeting blue chip assets with substantial capital growth potential, minimal management and solid income backed by tenants of substance and proven capability. The acquisition fits the mould perfectly as an ideal complement to Eumundi’s impressive portfolio.”
The off-market deal was brokered by Brent McCarthy and Joseph Ganim of Savills Hotels, who were unable to comment.
PubTIC contacted Open Arms’ Shearer, but he is for a time similarly bound by confidentiality.
