Three high-flying business partners have put up the Heathcote Hotel and Engadine Tavern, both with big development plays, offering scale and opportunity in Sydney’s south-west.
The Heathcote is on a corner of the Princes Highway, around 25 kilometres from the heart of Sydney, on the fringe of the Royal National Park.
It occupies 7,200sqm in the vibrant Heathcote West commercial area, providing a single service ground floor bar, sports bar, two separate dining spaces and a compact kitchen, gaming room with 15 PMEs, beer garden, accommodation rooms and drive-through bottleshop.
A few kilometres north, the Engadine Tavern is located in the heart of the shopping precinct, and title includes attached retail tenancies providing solid passive rental income.
The pub boasts a 5,576sqm footprint, incorporating a large, single level complex close to the train station, offering public spaces, gaming room with 26 machines, stand-alone drive-through bottleshop, separately accessed function centre, and 60-space carpark.
It was sold by White & Partners to the current owners early 2021 for $31 million.
Both properties are now being sold, and both with significant development upside.
Heathcote holds concept plans for 130 units, comprising 37 1BR apartments, 72 2BR, and 21 3BR, plus 225 car spaces.
Engadine occupies a 1,660sqm lot, with another 1,900sqm of adjacent retail tenancies included in the sale. It holds plans to reduce the size of the tavern and facilitate a large single tenant footprint of 2,000+sqm for a supermarket or similar, with up to 55 apartments above (STCA).
Both Heathcote and Engadine are on the train line.
Both venues are being offered as freehold going concerns, although there is an existing tenant in place at Heathcote, currently paying $352k annual rent, who is willing to stay until the end of their lease in November 2023.
Vendors and joint venture partner on the two assets are rich-lister Tony Denny, Shire-based developer Gavin Duffy, and CEO of Central Real Capital and real estate partner with Denny, David Stone.
“The motive behind the sale is part of a longer-term plan to diversify into other real estate asset classes within the group,” explains Stone.
“We believe the divestment of both Engadine and Heathcote assets represents an amazing opportunity for a prospective buyer to buy two quality venues and take a strategic position in Sydney’s growing southern districts.”
Sale of two such assets in one line is rare, but even more so given they are in adjoining Sydney suburbs, lending opportunity for the incoming to virtually own the precinct.
It’s thought the joint offering will attract sale price north of $85 million, likely to come from a party drawn to the development potential.
“The demand for large format taverns has skyrocketed over the past couple of years, as publicans cherish the development upside and flexibility that naturally comes with excess land,” notes Savills Hotels’ Nick Butler, marketing the properties with colleague Tony Bargwanna.
“The opportunity for consolidation or tailoring the two pubs to different clienteles should be irresistible – especially to operators prepared to unlock the residential development upside of both significant footprints.”
The Heathcote Hotel and Engadine Tavern freehold going concerns are being sold via Expressions of Interest.
