High-net-worth investor-backed fund buys Wollongong pub for $21m
A new high-net-worth investor-backed pub fund founded by former Young Rich Lister Paddy Coughlan has made its first acquisition after buying Wollongong’s Five Islands Hotel from Oscars Hotel Group for $20.7 million.
The venue at 87-93 Five Islands Road in Cringila, previously the sleazy “boobs and beer” Cringila Hotel, underwent a makeover last year that included the creation of a new public bar, lounge bar and bistro after being bought by Oscars – owned by the Gravanis brothers – for just $1.1 million in 2017.
Standing on a 2314 square metre site, the Five Islands Hotel also includes a gaming room with 22 machines, 12 hotel rooms and on-site parking.
It was acquired by Mr Coughlan’s new venture, Ludlow Hospitality. He established this in October last year with the launch of the Ludlow Pub Opportunity Fund, which is backed by New York-based family offices.
“We are delighted to launch the new Ludlow Hospitality Fund with such a quality cornerstone asset and for the opportunity to become part of the local Cringila community,” said Mr Coughlan.
Together with Rod “Ned” Kelly, he co-founded Riversdale Group in the mid-2000s, which focused on acquiring and turning around distressed inner-city pubs.
About a decade ago, Financial Review Rich Lister John Singleton, former Qantas CEO Geoff Dixon and investment banker Mark Carnegie bought into Riversdale, and expanded it to about 17 venues worth more than $300 million.
Portfolio sale
Mr Coughlan, valued at $26 million on BRW’s 2013 Young Rich List, stepped down as Riversdale CEO in 2014 ahead of a planned IPO before Mr Singleton and his business partners decided instead to divest the portfolio at a time of surging pub real estate values.
The last venue to sell was the Unity Hall Hotel in Balmain, which was bought by the Roddy and McRedmond families for $20 million in November 2019.
Mr Coughlan then turned his attention to expanding his newly formed craft-brewed alcoholic lemonade business, Frank Strongs, before returning to the pub scene last year with the formation of the Ludlow Group.
The sale of the Five Island Hotel was brokered off-market by JLL Hotels & Hospitality Group’s John Musca and Kate MacDonald.
Mr Musca said transactional activity in the pub sector was at its strongest in 15 years – JLL currently has more than $200 million of hotels in various stages of contract or negotiation.
The sale of the Five Island Hotel follows JLL’s Stuart Taylor, MingXuan Li, Tom Noonan and Will Connolly selling listed pub investor ALE Property Group Boundary Hotel in Melbourne’s Bentleigh East for $33 million to a private investor, at a 30 per cent premium to its book value.
The Boundary Hotel sold on a yield of 4.2 per cent with a long-term lease to operator ALH, part of Woolworths’ soon to be demerged Endeavour Group.
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