The high-profile Public Hospitality Group led by Jon Adgemis has listed the Empire Hotel in Annandale, as it strives to maintain the collection under increasing financial strain.
Public (PHG) has amassed 22 pubs and hotels in Sydney and Melbourne, including the Camelia in Alexandria, Lady Hampshire in Camperdown, and Strand Hotel in Darlinghurst.
PHG picked up the Empire, on Parramatta Road, in 2021 from the Gravanis brothers’ Oscars Hotels, for circa $17 million. This marked the fund’s 15th venue.
Built by Tooth’s in 1890, the commanding three-storey pub was refashioned in the twentieth century in a modernist, Art Deco styling. It resides on a prominent 803sqm corner site, comprising public bar, lounge area, gaming with 16 machines, twenty-five pub-style accommodation rooms on the upper levels, and onsite parking.
Late 2023 PHG announced a collaboration with Love Tilly Group and Maybe Sammy, ushering in outposts within the Empire and a potential name change to the Federal Hotel, but these partnerships have since broken down.
Crippled by the weight of major debt in a high interest rate environment, Adgemis has been seeking a $500 million refinance deal in recent months with Bain Capital, hoping to consolidate multiple existing loans into one debt package, with the goal of easing pressure from lenders.
It’s been reported that this plan has since fallen through, potentially prompting the first asset sale.
PHG bought 20 of its properties for a collective $280 million, and although it subsequently claims far higher valuations, not all of the revamps have come online yet, and by mid-2023 the company had over $500 million in debt, subject to crippling interest rates.
No anticipated price has been offered for the Empire, but sources say it holds book value of $40 million, while holding debt of almost $34 million to Adgemis major lenders Gemi Investments, Millbrook Funds and Archibald Capital.
Lenders are reportedly “getting more impatient” and some say interest payments have stopped, as some come under increasing stress; Gemi is facing a possible class action by investors.
The company that owns Adgemis’ luxury yacht was forced into receivership last month.
PHG is now said to be courting Deutsche Bank for a new refinancing deal, with assessors in Sydney running the ruler over the portfolio.
The former KPMG dealmaker is attempting to keep suppliers onside, this week issuing a message promising better times when the refinance is secured.
“Once we have completed the debt reset, I expect the enhanced stability will help strengthen our relationships with you, our valued suppliers,” Adgemis wrote.
The Empire Hotel is scheduled to go to auction, at Auction Works on Margaret Street. Former Wallaby Drew Mitchell, who joined Savills this month, has been appointed.
(updated 22 April.)
