HPI and Australian Venue Co snap up another six pubs
The “slick” partnership between ASX-listed Hotel Property Investments (HPI) and private equity backed Australian Venue Co (AVC) has bought another six pubs, splitting the business and freehold between them.
Under the model, HPI acquires the pub freehold while AVC buys the business, its tenure secured by a long-term lease.
HPI on Monday announced it has outlaid $32.7 million as its share of the latest purchases, all leased to AVC for 20 years on an average weighted yield of 7.75 per cent.
The portfolio comprises the Surfair Beach Hotel in Marcoola for $10.45 million, Commonwealth Hotel Clermont for $3.06 million, Grand Hotel Clermont for $2.78 million, Capella Hotel in Capella for $3.34 million, Commonwealth Hotel Roma for $9.78 million and White Bull Tavern Roma for $3.25 million.
All but the Capella Hotel, which was sold by Power Jeffrey & Co, were brokered by Glenn Price and Brent McCarthy from HTL Property, which recently predicted that total pub sales this year would exceed $1.3 billion.
HPI chief executive Don Smith said AVC has been making the running, scouting acquisition opportunities in the latest iteration of a partnership that now encompasses almost 50 hotels.
“We’ve bought a few like this and from where where we sit, it’s a pretty slick process now,” said Mr Smith.
“AVC take the lead and establish the supportable earnings out of the pub then they tell us what rent they’ll pay, we’ll put a cap rate on it and and that’ll give a value for the property.
Mr Smith said the most recent pubs are smaller than HPI would normally buy, but the high-yielding 20-year leases to AVC make them worthwhile investments, he said.
Paul Waterson, chief executive of AVC, says both parties are confident more will follow.
“We’re a very acquisitive business and we intend to continue to grow and acquire businesses,” Mr Waterson said.
“Many of those will be freeholds and I’ll certainly be picking up the phone to Don when those opportunities become available.”
