The entire portfolio of the Zagame family has come to market with an expected price of $300 million, representing the biggest single gaming portfolio ever offered in Victoria.
The portfolio consists of five gaming-centric hotels around Melbourne, as well as the eight-level 4-Star Grand Hotel & Casino in Vanuatu, with resort facilities and 74 luxury accommodation rooms, which came to market a year ago with a price tag of $25 million.
The pubs consist of Zagame’s Reservoir, Caulfield, Boronia, Ballarat Club, and Victoria’s #4 ranked gaming venue, Berwick Springs.
Victor Zagame began in hospitality in 1971 and built and ran the family’s holdings until his passing late last year, endowing pride of presentation and building an enviable crew of staff.
“These successful businesses are well placed to continue to deliver substantial growth,” offers company director Victor Zagame Jr, who took over management with brother Robert.
The family has chosen to divest the businesses just as Victoria solidifies changes to its gaming operations legislation, which has seen the number of permits for pubs and clubs frozen for the next two decades (to 27,372), and ownership terms increased from ten to 20 years.
All five pubs are strategically located on large landholdings within central suburban locations, and hold a collective 490 EGMs, representing an impressive 3.6 per cent of the State’s total.
The portfolio is being marketed by CBRE Hotels’ directors Mark Wizel and Sam Handy, in conjunction with Cropley Commercial’s George Iliopulos.
“The pub component of the Zagame’s portfolio generates combined revenues in excess of $94 million, and is poised for strong future growth,” says Handy.
“The gaming-dominated businesses will appeal to a wide spectrum of buyers, given the relatively low number of moving parts involved in generating gaming income.”
“The State Government’s decision to extend gaming licences until 2042 has provided operators with certainty, and has made Victoria’s 13,750 pub gaming entitlements that much more sought after and valuable in Australia’s fastest-growing state,” furthered Iliopulos.
It is likely Victoria’s biggest gaming operator, the Woolworths-backed ALH, will run the ruler over the Zagame books, with the potential to upgrade its gaming exposure at the possible expense of lesser-performing venues.
The portfolio is also destined to garner enquiries from Charter Hall, the Moelis-run Redcape operation, the partnership of Delaware North and Open Arms Group, and the KKR-driven Australian Venue Company, which has abandoned its former no-pokies policy.
Melbourne is increasingly on the radar of global investors, bolstered by its economic and political stability, and consistent high levels of population growth.
Beyond the Zagame legacy and current trading, the sites stand to entice interest from investors looking for opportunities to capitalise on unrealised development potential.
“Victor Zagame was an innovator and leader of the Australian hotel and hospitality industry, with a product that immediately captured a loyal clientele at The Albion Charles Hotel more than 46 years ago, for what became the Zagame Corporation … one of the Australian hotel and service industry’s most respected and well-known businesses,” says CBRE national director, Mark Wizel.
“These sites offer future mixed-use development options, adding significantly to the potential upside available within a portfolio of quality and scale that very rarely comes to market.”
The Zagame collection is being sold individually, in combination or in one line.
The International Expressions of Interest campaign closes Friday, 22 June.
