Sydney-based Reklaw Hotels has joined the rush of publicans and investors seeing good opportunities in regional hospitality markets, buying the Duke of Wellington Hotel in Newcastle, NSW, for $16 million.
The acquisition is the first for the newly established operator, co-owned by Nick and Ineke Walker. Mr Walker is the grandson of the late Les Walker and nephew of Kent Walker, founders of Sydney pub group Lesday Hotels.
One of the oldest pubs in Newcastle, dating to 1876, The Duke stands on a 885-square metre corner site at 69 Regent Street in the suburb of New Lambton, about 15 minutes from the Newcastle CBD.
It includes 24 gaming machines, a sports bar and TAB, internal beer garden and seven first-floor accommodation rooms.
The vendor was private equity firm Hunt Hospitality, led by Stephen Hunt, which still owns and operates four hotels in the Hunter region following the divestment.
Records show the property last traded for $8.4 million in 2016.
“This is the third time in the last six years our fund has divested an asset for well over 50 per cent more than the original purchase,” Mr Hunt said.
The sale of The Duke adds to the growing trend of investment in regional pubs by city-based groups.
In October, fund manager Harvest Hotels bought the Woy Woy Hotel on the NSW Central Coast for $32 million as the first asset for its second pub fund.
Others like the Laundys and Justin Hemmes’ Merivale Group have also been expanding into regional hotspots such as Byron Bay and Lorne on Victoria’s Great Ocean Road.
JLL’s Ben McDonald who brokered the off-market sale of The Duke said it was another example of increasing buyer depth in the marketplace.
“Assets underpinned by strong trading fundamentals in key geographical markets continue to attract the interest and capital of a wide-ranging buyer pool,” he said.
“We anticipate such interest continuing to intensify as hotel opportunities are aggressively pursued.”
In April, Investment Management Group, a syndicate of wealthy Canberra investors, swooped on a $75 million portfolio of five pubs in the NSW Central West, comprising the Royal Hotel in Orange, the Dudley Hotel in Bathurst, the Castlereagh Hotel in Dubbo, the Federal Hotel in Wellington, and the Federal Hotel in Mudgee.