Sand Hill Road targets a $70m price tag for Espy pub freehold
Sand Hill Road, the hip hoteliers fresh from selling the lease of the Esplanade Hotel, has now listed the iconic St Kilda property for sale. The grand 1878-boom era pub overlooking Port Phillip Bay is expected to fetch about $70 million.
Earlier this month, Sand Hill Road sold a portfolio of businesses, including the Espy operations, to private equity-backed Australian Venue Co, for a price believed to be more than $100 million.
It’s a huge return for the hotel, which had been written off several times for being too old and run down; its sticky carpet and dark corners unappreciated.
Records show Sand Hill settled on the Espy freehold back in 2017 for $13.2 million before going on to spend a rumoured $15 million on an extensive refurbishment.
The hotel, which features one of the best bars in Melbourne to watch the sun go down, reopened with a bang in 2018 and remains one of the city’s most popular venues.
Previous owners had closed the pub in 2015 before attempting the huge renovation.
Sand Hill Road’s Andy Mullins said in a statement: “We feel so privileged to have been the team that breathed fresh life into the lungs of this stunning historic establishment. It’s so much more than a pub. We feel very proud to have done our job as one of The Espy’s few custodians.”
AVC has a 20-year lease on the property, plus options, paying $3.15 million in rent. The 3500 square metre hotel covers five levels and includes 12 bars, two restaurants and live venue, the Gershwin Room.
Gorman Allard Shelton agent Joseph Walton, who is handling the international expressions of interest campaign, said: “It is truly a once in a lifetime investment opportunity, given its particularly strong lease to a blue chip tenant.”
The move comes as St Kilda appears to be entering a new cycle, with a cluster of new hotels and apartments, as well as the prize-winning Victorian Pride Centre, opening around the corner on Fitzroy Street.
It also follows a string of bumper hotel sales up and down the eastern and southern seaboards. More than $2 billion worth of hotels sold in 2021 and more than $300 million has already been spent this year.
While Melbourne hotels haven’t previously hit the peak prices paid by investors for pubs north of the Murray, Sydney hotelier Justin Hemmes’ Merivale group last year paid $38 million for the Lorne Hotel and another $40 million for Tomasetti House on Flinders Lane.
In St Kilda, the Village Belle sold for $31 million on a yield of 4.7 per cent just before Christmas.
And the Zagame family sold two of its suburban pokie palaces: the Boronia Hotel for $24 million and the Edwardes Lake Hotel in Reservoir for $28 million.
Sand Hill Road’s first attempt to sell its portfolio of businesses came unstuck at the beginning of the pandemic but is understood to have sold early this month for slightly more than the price touted in 2020.
Still on its books is the Waterside Hotel on Flinders Street, which is currently undergoing renovation.
