The ‘next Justin Hemmes’ swoops on Bruce Gordon’s iconic Illawarra pub
The purchase by rising hospitality star Glenn Piper of iconic Scarborough Hotel on NSW’s south coast has spurred hopes that trade in the sector could return near record levels in 2024, according to one of Australia’s leading pub brokers.
The pace of investment is picking up. In the past week alone, regional pubs roll-up Harvest Hotels acquired the Queanbeyan-based Jerrabomberra Hotel for between $24 million and $27 million, while ASX-listed Charter Hall took a near-15 per cent stake in $640 million pubs landlord HPI last Thursday.
Charter Hall’s move on HPI could be the first step in a more ambitious bid to take the listed platform private, industry insiders and analysts say.
Andrew Jolliffe, leading pub broker and managing director of HTL Property, said more pub deals were “imminent” as investor confidence recovers, driven by anticipation of interest rate cuts later this year. A decrease in interest rates would lead to investors demanding lower yields when buying commercial property such as pubs, he said.
The improved pubs outlook comes after a year of moderating transaction activity in 2023, when $1.45 billion of pubs were sold. This was compared with the record $3 billion worth of pub deals in 2022, according to MSCI data.
“There’s a strong parallel between the timing of these deals and where we are at in the yield cycle that indicates prosperity and more deals in the pubs space,” said Mr Jolliffe, whose colleagues Dan Dragicevich and Sam Handy managed the sale of Jerrabomberra Hotel.
“I think the trend line for pub deal volumes in 2024 will near but won’t top 2022 deal volumes, remembering that 2022 was the record nationally all time.”
On Hemmes’ heels
The latest purchases by Mr Piper and Harvest Hotels break extended pauses by both players in their portfolio growth.
For Mr Piper, who is earning a reputation as “the next Justin Hemmes”, the Scarborough Hotel is his first pub deal in about 10 months. He acquired just one pub in 2023, which was a much quieter year when compared with his $100 million buying spree in 2022.
The Scarborough Hotel was sold by Rich Lister Bruce Gordon’s WIN Corporation, which had owned the oceanfront asset in the northern Wollongong suburb for more than 40 years. The pub, which comes with more than 3900 square metres of prime oceanfront land, was put up for sale in March last year as WIN’s focus was on growing and maintaining the organisation’s media and investment businesses, chief executive Andrew Lancaster said.
“Pubs are not part of our core business and it is time for a new owner to guide this iconic site into the future,” Mr Lancaster said.
Mr Piper’s Epochal Hotels had agreed to buy the Scarborough Hotel a month after it came on the market. Contracts were exchanged in June, with an extended nine-month settlement period, with the deal finalised this week.
The 138-year-old heritage-listed pub at Scarborough expands Mr Piper’s portfolio, which already includes McMahons Point’s Commodore Hotel, Newcastle’s Merewether Beach Hotel, the historic 105-room Q Station hotel near Manly, and the Harbord Hotel in Freshwater.
Colliers’ Simon Kersten and Taleah Thomas managed the sale of the Scarborough Hotel.
Harvest Hotels’ acquisition of Jerrabomberra Hotel, affectionately known by locals as “the Jerra”, similarly marks its first NSW pub deal since August 2022, when it bought Windsor Castle Hotel in NSW’s Hunter Valley for $51 million. Before its buying slowdown, Harvest Hotels had bought the Windsor Castle Hotel, Wagga Wagga’s Victoria Hotel and Woy Woy Hotel all in the span of 10 months.
The Jerra acquisition is also the first to be made under the regional pubs roll-up’s new Harvest Pub Fund, which comprises eight large-format pubs across regional NSW. Harvest Hotels manages 12 venues in total. The Jerra comes with about 2750 square metres of land, including a drive-through bottle shop, bistro, sports bar and 30-machine gaming room.
Another highly anticipated pub sale that may be finalised in the coming months is the Oaks Hotel in Sydney’s Neutral Bay. More than a year after the sale to a local family was announced, the famous north shore pub remains in the hands of the Thomas family. The Oaks’ general manager Andrew Thomas said a deal was imminent, but there has been no activity on the property title at all. The property title does not have a caveat to indicate that an agreement has been struck with an incoming owner.
