Pub tsar Justin Hemmes has extended his footprint in Sydney’s eastern suburbs, splashing out $32 million on popular Randwick watering hole the Duke of Gloucester.
Affectionately known as “The DOG”, the expansive two-level heritage property is located at the intersection of Frenchmans and Clovelly roads.
The Gloucester joins the Coogee Pavilion, Hotel Centennial, The Royal Bondi and The Paddington as part of Merivale’s growing eastern suburbs portfolio. There are reports the sale comes as Mr Hemmes has approached banks for $500 million to help expand his empire.
Mr Hemmes said the deal was a strong vote of confidence in the future of the industry after a devastating year and an optimistic step forward in hospitality’s road to recovery.
In 2015, the Good Beer Company paid Newhaven Hotels $17 million for the pub, which was once run by rugby league Immortal Clive Churchill.
It comes after a busy few weeks for pub sales, with close to $70 million worth of property changing hands.
On Tuesday, Bruce Solomon and Matt Moran’s Solotel Group sold the popular Green Park in Darlinghurst to St Vincent’s Hospital for between $5 million and $10 million.
Investment house Moelis Australia paid $22 million for late-night Taylor Square spot the Courthouse Hotel, through HTL Property; and the publically-listed Redcape Hotel group spent $38 million on the Gladstone Hotel in Dulwich Hill, through JLL.
The DOG can generate as much as $180,000 in weekly revenue through its late licence and 19 gaming machines. Good Beer Company owner John Azar said it had been fantastic to own due to the local community.
JLL hotels & hospitality group advised on the sale and national director John Musca and senior vice-president Ben McDonald said the sale of the Duke of Gloucester attracted significant interest from a wide-ranging, established investor-set including hoteliers, unlisted investment funds, family offices and high-net-worth individuals.
Mr McDonald said the strong underlying property fundamentals of Sydney’s eastern suburbs, coupled with the robust trading profile of the business, were the key investment characteristics of the 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,” Mr McDonald said.
Mr Musca added the current weight of capital, and its divergent private and public sources, continues to drive transaction demand not seen in over a decade, “yet again illuminating the asset class’ undeniable investment attributes”.
CBRE hotels director Paul Fraser said the pub sector has been one of the hardest hit during the enforced lockdowns from the global pandemic.
“Recent times have been some of the most challenging for the pub industry nationally. We believe that this will continue into 2021, putting added pressure on operators in all states,” Mr Fraser said.
“Over the past year, operators have been able to conduct a full top-to-bottom review of their business and overwhelmingly adapt to the challenges they’ve faced and we’ve seen a trading performance bounce back in states where restrictions have been lifted or less onerous.”