In Finance by Clyde Mooney

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The pub fund play to sell in a hot market has attracted another big name with Australian Pub Fund (APF) and Riversdale listing two of the best in time for Christmas.

The dollar nous behind APF is comprised of business celebrity John Singleton, former Qantas boss Geoff Dixon and investment banker Mark Carnegie, who launched the vehicle in 2010 with a plan to buy up to 20 under-performing pub assets in prime locations and overhaul them, better realising their value.

In this manner 12 venues were acquired, through a fund boasting a $300m backbone and eventual plans to mature the asset most likely through an IPO. The hotels acquired have been predominantly in New South Wales, but also bought were the large format Elephant and Stock Exchange Hotels in Brisbane.

Riversdale Group is the face and operations arm of the business, running the day-to-day of the venues.

Following listed entity Lantern’s recent meticulously planned sell-down successes, the high-flying backers of APF have determined the time is right to execute their exit.

Dixon confirmed to The Australian the 12 venues are up for grabs, citing “Prices for pubs are as strong as they have been for many years”.

Ray White’s Asia-Pacific director Andrew Jolliffe has been engaged, beginning with arguably the best two in Sydney – Newtown’s cornerstone Marlborough (Marly) Hotel and Darlinghurst institution Kinsellas.

The pubs were both bought in 2012 for around $12 million (each) and both are multi-level, with evolving options on different levels to cater to the local markets, based mostly around trendy food & bev and entertainment.

The APF/Riversdale portfolio boasts only 1 venue in L&G’s list of gaming venues’ top 300, the Peakhurst Inn (#198). The Marlborough languishes at #372, and Kinsellas does not make the list.

However, upside potential in development and gaming, such as that which saw Lantern fetch 30-50 per cent premium to book value sale prices, will likely mean strong competition for the high cashflow hotels and their siblings.

Speaking with PubTIC, Jolliffe says “indexed directly to asset quality” interest will be high for the assets, and intimated that premiums are to be expected for portfolio sales due to the difficulty in building them in a competitive market.

“We have been retained to procure the sale of Riversdale hospitality assets,” he confirmed.

“I’m not in the habit of discussing the motives of my client’s or what may or may not happen in the future [but] suffice to say we can identify neither a better time in the market for vendors to exit A-grade property … nor opportunity for purchasers to take advantage of liquid and well-priced funding arrangements.”

Jolliffe has recently tipped auctions as ‘back in vogue’ in ideal market conditions, next week offering up JDA’s Tennyson Hotel and the Waugh-managed Figtree Hotel.

Sale details for the Marlborough and Kinsellas have not yet been provided. PubTIC was unable to contact Riversdale CEO Andrew Gibbs or ‘Singo’ for further comment.