HOTEL, TOURISM & LEISURE

Hemmes’ Merivale makes a pawfect investment

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MERIVALE Group has splashed out $32 million for the Duke of Gloucester “DOG” Hotel, in yet another pub sale in Sydney’s inner suburbs.

The hotel adds to Merivale’s list of eastern Sydney icons including the Royal Hotel Bondi, the Coogee Pavilion and the Centennial Hotel in Woollahra.

JLL’s John Musca and Ben McDonald managed the sales campaign on behalf of prominent hospitality operator, Good Beer Co.

They said the property attracted significant interest from a wide ranging, established investor set including hoteliers, unlisted investment funds, family offices and high net worth individuals.

The large format, freehold going concern asset generates about $180,000 in weekly revenue and features 19 EGMs and a 2am hotel licence, and is positioned within an expansive R3 medium density catchment with limited competition.

It was initially listed early in 2019 with hopes of more than $30 million.

In a matter of days, St Vincent’s Hospital acquired LGBTQI+ icon The Green Park Hotel to  convert into a mental health clinic, while fellow Darlinghurst venue and late-night Oxford St institution The Courthouse Hotel was picked up by Moelis Australia for $22 million, and the leasehold interest of the Olympic Hotel in neighbouring Paddington was bought by former Newcastle publican Wayne Lambert.

They quickly followed ASX listed Redcape Group – managed by Moelis Australia – acquiring  the Gladstone Hotel in Dulwich Hill, in the inner west, for $38 million.

“The DOG has been a fantastic hotel to own, and a great local community to be part of, and we’re delighted to now pass it onto such well-respected operators as Merivale,” Good Beer Company owner John Azar said.

Merivale owner Justin Hemmes has reportedly been asking for $500 million from the major banks to refinance and grow the business.

McDonald highlighted the strong underlying property fundamentals of Sydney’s eastern suburbs, coupled with the robust trading profile of the business as key investment characteristics for the freehold going concern asset.

“As the NSW economic recovery gathers momentum, we have seen the market for operating real estate assets swell as capital is put to work in search for the stronger yielding opportunities that hotel assets offer,” he said.

JLL has now transacted over $253 million worth of hotels in the past two weeks.

“The current weight of capital, and it’s divergent private and public sources, continues to drive transaction demand not seen in over a decade, yet again illuminating the asset classes undeniable investment attributes,” Musca said.

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