RG McGees in growing Richmond has sold to prominent Sydney hotelier Ashton Waugh’s pub group Watering Hole Hotels, furthering the region’s surge of pub investment.
The well-known Hotel came to market in August, as a cooperative arrangement between tenant Jason Teague and freeholders Stan and Janice Bridger to offer up the freehold going concern.
Standing on a 942sqm block in Richmond’s main retail and commercial precinct, it adjoins a large Council car park also servicing a Dan Murphy’s and Coles supermarket.
Beyond the public bar, RG’s offers gaming with 17 machines, 12 in smoking solution, and five accommodation rooms plus a large manager’s residence, all up reporting annual revenue of $2.25 million. It holds a 3am licence, but rarely trades beyond midnight.
Richmond is on the cusp of the North-West Priority Growth Area and undergoing major infrastructure and residential development, with a slated 33,000 new homes on the way.
Future opportunity in the region is being seen in the likes of Arthur Laundy’s $45m The Marsden pub-brewery at Marsden Park, around 13 kilometres south, and more locally Peter and Karen Wynne’s purchase of the Royal Hotel in Richmond for $18 million in July.
Waugh says he has “lots of plans” at RG McGee’s, explaining his fund and investors have secured additional capital for a significant renovation, relocating and improving the gaming operation, revising the menu and making the place more comfortable for locals.
He believes the area ticks the right boxes for Watering Hole, and that operators need to be seen to be bringing growth and improvement in this kind of precinct.
“Richmond’s a great area. That’s why we bought it. It doesn’t take Einstein to see that’s where the population is going.
“We’re going to be a local’s hotel. A value option with good food but not expensive.”
Waugh’s group now counts five operations, and RG’s location and proposition augment well with the style he strives to apply at all. As front man, operator, renovator and “bloke finding the assets” he says they have criteria in mind.
“I’m looking at pubs that are in growth areas, whether that be Tamworth, Bathurst, or Richmond. It’s just about finding A-grade assets I believe we can improve.
“Cap rates now are pretty sharp; you’ve got to justify it in the long-term … where are you going to be in five years, in ten … that’s why Richmond is such a good story. Come back in ten years’ time there will be a 100,000 people out there.”
The on-market sale campaign was through HTL Property’s Sam Handy, Dan Dragicevch and Blake Edwards, who managed the complex tripartite contract negotiations between Waugh and the vendors.
This marks the third recent sale in the area by HTL, following the Royal and the Clarendon Tavern, amounting to more than $30 million in total.
RG’s was sold in line with marketing guidance, for $6.5 million.
“The fact that experienced hoteliers Ashton Waugh and Peter Wynne have invested into the area should instil confidence in other investors seeking trading opportunities within the Hawkesbury Region,” suggests Handy.
Representing another investment vehicle acquisition, agents suggest the market is experiencing an “arbitrage opportunity” in the re-stapling of lease and freeholds, as seen in the mooted $100+ million sale of the Beach Hotel in Byron to Moelis, and now in a suburban pub in outer Sydney.
“The respective premiums achieved by both tenant and landlord on the sell side of our Richmond transaction reflect that theory, and we are currently in discussions with other landlords and tenants about re-coupling their assets in order to take advantage of this most recent market paradigm,” posed Edwards.
