Pub baron pays $34m for Sydney’s Allawah Hotel
Pub tycoon Justin Hemmes is diversifying his hotel empire and has bought one of Sydney’s biggest gaming pubs, the Allawah Hotel, in the city’s southwest, for about $34 million.
The billionaire has bought high-profile pubs across the city, as have long-time players, including the Laundy family, and more activity is expected as the Beach Hotel in NSW’s Byron Bay is on the block for more $100 million, and a pub fund run by business figures Geoff Dixon, John Singleton and Mark Carnegie is selling Balmain’s Unity Hall.
The Allawah pub was offloaded by the White family’s private real estate investment firm that has a long record in the sector and has also been buying.
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The deal, struck late last week, is part of a shift by Mr Hemmes, whose overall Merivale empire includes about 70 hotels, pubs and restaurants, with flagship venues including The Ivy, The Beresford and The Establishment, and the Newport Hotel on the northern beaches.
Merivale is estimated to be worth more than $1 billion and larger plays are planned.
The pub mogul last year bought a large Sydney CBD site adjoining the Ivy party palace for a multistorey development valued at more than $1.5 billion.
Merivale confirmed it has purchased the hotel in Sydney’s southwest, saying it joined the recently acquired The 3 Weeds, Rozelle, in the company’s continued program of expansion.
Merivale says it will receive the keys to the Railway Parade property in November. The company has about 46 properties that house about 90 brands in total.
Pub baron Justin Hemmes’s Merivale has bought the Allawah Hotel. Picture: Jonathan Ng
The Allawah deal was brokered by HTL Property’s Andrew Jolliffe and Daniel Dragicevich.
The pub sector has been trading strongly. Established players are picking up properties that spin off returns of about 8% and banks are lending aggressively.
A separate partnership between the White family/JDA Hotels also sold the Tennyson Hotel in Mascot to Merivale in one of Sydney’s highest-priced auctions for just over $37 million in 2016.
Although the Allawah property is regarded as Merivale’s second gaming-oriented pub, the group owns more than 200 poker machines, well behind public companies such as the Woolworths-backed ALH Group and the listed Redcape, but now making Merivale a large owner alongside the Laundy and Meers families.
Gaming pubs provide steady income and their operations are resilient against slowdowns in consumer spending.
Merivale has already repositioned the Mascot pub, lifting the business from 91st in NSW when it was purchased to 39th position.
The sale also continues a run of deal-making by the White company that is quietly run by family scion Dan White, but is not as well known as the Ray White agency that is the country’s largest residential real estate network.
The Allawah Hotel was originally purchased in 2007 by the Feros family’s JDA Hotels arm and it was then sold down two years ago when the Feroses took in White & Partners into the hotel at a price of $28m.
The pair have already lifted its performance and consolidated its gaming growth and won approval for a redevelopment.
Hemmes has been on the buying trail and last month bought the 3 Weeds pub in Rozelle and has plans to open a new Totti’s Italian restaurant in part of the property.
This article originally appeared on www.theaustralian.com.au/property.
