Former Blue Sky pub portfolio sold for $160m
A portfolio of 11 Adelaide pubs, 10 of which were acquired by failed ASX-listed fund manager Blue Sky seven years ago, has changed hands for $160 million, more than double the $67 million original purchase price, amid a surge in hotel values and strong demand from corporate investors and publicans.
While investors in GM Hotels, as the group of pubs was known, appear to have done very well over the investment period, other Blue Sky investors have been less fortunate.
The portfolio originally comprised 10 Adelaide pubs including Christies Beach Hotel, The Lodge and The Tower Hotel when Blue Sky Private Equity bought a 95.9 per cent stake in publican Greg Maitland’s Independent Pub Group in 2015.
The fund was then renamed GM Hotels with Mr Maitland retaining a minority stake and staying on as chief executive.
An 11th pub, the Cross Keys Hotel in Cavan was later added to the group.
Following the collapse of Blue Sky Alternative Investments Limited in May 2019, the company and its assets were restructured with Fortitude, headed by former Blue Sky private equity executives Nick Dignam, Nick Miller, Bryan Brown and Sam O’Connor taking over Blue Sky’s Growth Capital funds business that included its investment in GM Hotels.
The 11 properties – a mixture of freehold and leasehold investments with a strong gaming component – sold for a combined $160 million following a sales process which began last year.
Mr Dignam said investors in GM Hotels had more than doubled their money over the seven-year period.
Once valued at nearly $1 billion, Blue Sky’s collapse in 2019, however, left some investors out of pocket by hundreds of thousands of dollars.
Alongside the success of Fortitude Investment Partners, another former Blue Sky fund manager is also flying high.
Argyle Capital Partners, which took charge of Blue Sky agriculture and water funds in 2019 and is chaired by former Blue Sky boss Kim Morrison, paid $70 million this month for one of the country’s biggest table grape and lychee farms – 3793-hectare Evergreen Farms.
Buyers of properties offered by GM Hotels include the country’s biggest pub landlord, ASX-listed Charter Hall, which paid $32 million for the Emu Hotel in Adelaide’s outer southern suburbs. Listed drinks and pokies giant Endeavour will operate under the hotel under its ALH business.
Endeavour also acquired the Tower Hotel in Magill and the Beach Hotel in Seaford after it withdrew its proposal to acquire two other GM hotels, the Crown Inn and the Whitehorse Inn following concerns raised by the Australian Competition and Consumer Commission.
Fund manager Harvest Hotels bought The Brahma Lodge Hotel in Adelaide’s north and hoteliers Richard and Denise Jones bought Christies Beach Hotel in the southern suburbs
Mr Maitland will continue to operate six venues in Adelaide, including four of the GM Hotels’ venues.
In other pub news, the leasehold to Bendigo’s Foundry Hotel has come to market with price expectations of between $7.5 and $8 million.
The fully refurbished gaming hotel has been owned and operated by the Kuchel family for 33 years. JLL’s Will Connolly and Lachlan Persley are handling the sale.
The Foundry Hotel includes a 200-seat bistro, sports bar, large gaming lounge housing 25 electronic gaming machines, a function space and a cocktail bar which opened in late 2021.
