The Woolbrokers Arms Hotel in Sydney’s Pyrmont has sold for $9.6 million, giving its owner a $600,000 windfall after holding it for only one year.
The result is understood to be in line with the asking price, which was revised from the initial $11 million.
The vendor had paid $9 million for the property in November 2017, Domain Group records show. They did not perform any renovation work on the building.
The heritage-listed building at 22 Allen Street was snapped up post-auction by a local high-net-worth investor.
The property is currently running as a 27-room budget hotel, which had an annual turnover of $1.2 million in 2017. It is leased for $450,000 a year on a five-year term until 2023.
Colliers International selling agent Miron Solomons, who brokered the deal with Manenti Quinlan & Associates’ Ray Larkin, declined to identify the buyer but said the group had shown interest from the start of the campaign.
The new owner will use it as an investment at this stage and will continue operating it as it is.
“There’s a lease in place, they’ll see that through and then decide if they’ll refurbish or reposition the building, so (it’ll be) more of a long-term view,” Mr Solomons said.
The agent added that all the buyers were attracted to the 442-square-metre site’s “intrinsic value” and growth prospects.
“I think everyone was in the same boat; obviously where the property is positioned, it’s a tremendous growth area, there’s so much happening around that Darling Harbour precinct but also that education corridor,” he said.
“So they’ll sit back and see what happens in that area, and on the back of that growth, I imagine it’s going to be a pretty good investment.”
While the property passed in at auction, Mr Solomons said they had been waiting for the serious buyer to finalise their commercial arrangements.
“The groups were there, we had to wait and get the outcome post-auction, (which is) not unusual in this market, people were sort of trying to work out the commercial terms,” he said.
“Because they came in with their terms so late, we had to resolve them before being able to sell under the hammer, we always knew there was going to be an interested party, it was just a matter of ticking a few boxes.”
The property received 200 inquiries and about six groups showed up at the auction. Interested buyers included investors, which were mostly NSW-based, as well as hotel operators that wanted to occupy the building, and boutique developers.
“Some did see development potential in the existing envelope, it’s obviously a significant heritage building, it wouldn’t be the first time a building of that nature has been repositioned into luxury apartments for example, or even just into more of a boutique hotel offering rather than what it is now,” Mr Solomons said.
The site is zoned for mixed-use development and has a 12-metre building height.
He noted that properties with diverse income streams, including hotels, would continue to attract investors in 2019, with heritage buildings in particular seen to be increasingly rare.
“The demand will certainly still be there for that asset class without a doubt, we certainly saw that evident in this campaign. I think the market in general around areas such as Pyrmont and the rest of the fringe will remain strong.
“Supply is always so limited with assets of that calibre therefore there’s a lot of capital out there chasing these sorts of buildings. If anything there’ll be more demand (next year).”
Built in 1886, the Woolbrokers Arms Hotel was a suburban hotel for workers employed at the nearby wharf and woolstores.
Wool buyers also used the onsite accommodation when visiting the woolstores.