Harvest Hospitality offloads Albury pub for $27m and plans new funds

Harvest has now relinquished the pub as a freehold going concern – brokered by HTL Property’s Andrew Jolliffe and Blake Edwards – as part of a partial sell-down from its $258 million Pub Fund 1 to return capital to investors.

Chris Cornforth, group chief executive and co-founder of Harvest Hospitality, said that while the firm was strategically selling assets from its Pub Fund 1 and its $65.4 million Pub Fund 3, which accounts for four venues, it was equally focused on growing its portfolio.

“This includes executing capital works across some of our remaining underdeveloped pubs like The Jerrabomberra Tavern in Queanbeyan and The Victoria Hotel in Wagga Wagga early next year,” Cornforth said.

“We’re also expanding our platform with the launch of two new investment funds, which will see us add more venues, explore diverse hospitality offerings and deliver some new development projects.”

Harvest Hospitality is launching two new funds – one is targeting $200 million to $300 million in assets and the other around $500 million. The fund manager is also considering making its entry into the Queensland market.

Cornforth said the new funds were a few weeks away from launching.

“The focus for us right now is executing on our liquidity strategy for the existing funds,” he told The Australian Financial Review. “We’re always sad to see these quality pubs go, but it’s important that we show we’re a manager that’s very happy to return capital to investors.”

The Northside Hotel sale follows Harvest’s divestment in The Aussie Inn in Adelaide, which it bought for $22 million three years ago, as well as The Milestone Hotel in Dubbo it purchased four years ago. The separate sales equated to more than $50 million combined.

Harvest isn’t building any new pubs, so any increase in its customer base is coming through strong tourism traffic in the regional areas and in the urban growth areas where its venues operate, Cornforth said.

“We love the suburban areas, we love where there’s good population growth, where there’s new houses being built, where there’s plenty of families moving to these areas,” he said.

JDA Hotels, led by John, Dean and Alexandra Feros, will be adding The Northside Hotel to their already considerable portfolio of 13 venues across NSW, Queensland and Victoria.

The Albury purchase comes about six months after the group snapped up the Crystal Palace Hotel for $35 million in Haymarket, close to Sydney’s emerging Tech Central precinct, which will comprise 268,000 square metres of commercial space once complete.

The transaction adds to a boom in investment across the pubs sector which has pushed transaction levels this year well above average. More than $1.7 billion in pubs, bars and nightclubs across 95 transactions had changed hands by the end of September, compared to the industry’s 10-year average of $1.48 billion across 160 transactions.