Melbourne’s Pentagon Group has bought the EBC Hotel & Leisure Fund’s Tasmanian hotel portfolio for about $30 million in one of the biggest pub deals on the Apple Isle.
The portfolio comprising the Old Tudor Hotel in Launceston, The Bayside Inn in St Helens and the Foreshore Tavern on the outskirts of Hobart were put up for sale in August by Sydney fund manager Mill Hill Capital, with expectations in the high $30 million range.
Together they comprise 4.58 hectares of land, 132 accommodation rooms, 90 gaming machines with revenues of about $17 million and an EBITDA of almost $3.7 million.
Pentagon Group, led by former Subway restaurants owner Vijan Patel, is a property investment development business based in Melbourne’s Docklands specialising in the residential, hotel and commercial sectors.
Mr Patel, whose business partner Pratik Sarsavadia is based in Launceston, told The Examiner recently his plans were to grow the group’s hotel portfolio to $100 million in the next two to three years,
The pub portfolio was offered for sale by the EBC Hotel & Leisure Fund, an unlisted fund managed by former investment bankers David Dixon and John Carter’s Mill Hill Capital.
The Sydney-based fund manager, previously called Edward Baillie Capital, had in 2016 sought to tie the unlisted hotel fund into listed property fund manager Aspen Group, in which it has a major stake.
At the time the hotel fund comprised four properties – the three Tasmanian properties and one in NSW, the Ophir Tavern in Orange, which sold last year for $6.2 million.
The deal, which was finally abandoned last month after protracted talks, would have had Mr Dixon and Mr Carter become joint chief executives of Aspen Group, replacing Aspen boss Clem Salwin.
The sale of the Tassie pubs to Pentagon Group was negotiated by JLL Hotels & Hospitality Group.
The commercial agent said it was the first portfolio hotel sale in Tasmania since the part selldown of the Goodstone Group in 2011 for $27million, a sale also handled by JLL.
JLL national director John Musca said: “The scalability of these assets drove significant interest from mainland hotel groups who valued the stable earnings platform in a key Australian growth market.”
Mr Musca said proposed new gaming legislation in Tasmania that mirrors the “highly lucrative Victorian model” was due to come into force in the next 12 months.
“This would see the system moving from a three-party operator structure to a two-party owner-preferred operator system. Anticipated to take positive effect in 2023, the changes are expected to deliver an earnings windfall for hotel operators,” he said.
His colleague, Peter Harper, said interest in the portfolio highlighted the increasing recognition of Tasmania’s underlying tourism product.
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