Following the year’s highest hotel sale in the form of the $40m Coolibah Hotel in Sydney’s Western Suburbs earlier this month, leading agent and Ray White Asia Pacific Director of Hotels Andrew Jolliffe has sold Surry Hills hotel icon Kinselas.
Kinselas, situated on Taylor Square just off Sydney’s Oxford St, was sold by the Australian Pub Fund; the sixth hotel sold by the fund in as many months, and following announcing plans in late 2016 that it would bring properties to market.
Following the sale of Kinselas, the Australian Pub Fund will have four hotels. Two in Sydney; the Unity Hall in Balmain and the Vic on the Park in Marrickville, and two in Brisbane; the Stock Exchange and Elephant Arms.
“The sale of Kinselas is consistent with the fund’s previously announced strategic objectives to sell our pubs at cap rates that reflect their market value, as well as illustrating our desire to deal at market value with experienced buyers” advised Australian Pub Fund Director Matthew Beach.
Unlike Newtown’s Marlborough Hotel, also owned by the Australian Pub Fund and which Jolliffe sold via EOI campaign in March this year for more than $30m; Kinselas was sold via a discreet off-market campaign to the Sydney based Universal Hotels.
“Over the past two years, and we fully expect beyond, the market has supported both on and off market transactions; highlighting both a strength and depth in terms of prices achieved, and pedigree of participating parties” said Jolliffe.
The successful purchaser of Kinselas, the Universal Hotels is the hospitality vehicle for the Kospetas family; a highly regarded multi-generational family owned business headed by father Jim Kospetas, and supported by sons Harris and Steven.
Universal Hotels also counts Sydney CBD’s Civic Hotel, V Bar, Hotel Downing and recently opened high end Martin Place restaurant, 1821, in its impressive stable.
Exclusive agent for the sale Andrew Jolliffe would not be drawn upon the price achieved, but confirmed the transaction was dealt at a level consistent with the market guidance provided to participating parties.
“Kinselas, since its inception as a hotel in 1910, has been a very popular entertainment magnet and a mainstay upon the Sydney hospitality landscape” advised Jolliffe.
“The multi-level and two street fronted nature of the hotel, complete with a full suite of gaming machines and a deliberate connection to music as a revenue lever, means the business’ multi-faceted appeal ensures strong patron support across the breadth of licensing hours available to it” Jolliffe commented.
“Kinselas attracts patronage from numerous sources, and given its expansive three level layout, often has three distinct patron base complexions at a given point in time; which provides it with great income diversity” commented Riversdale CEO Andrew Gibbs.
“In a competitive market, the ability to run a business with such flexibility in terms of patron reach has been a key factor in terms of the strong results we have been able to consistently deliver” he concluded.
“Kinselas is situated in a hugely popular, and always vibrant inner-city precinct of Australia’s gateway city; and additionally, the patent and recent investment in transport and other government funded infrastructure in the vicinity, suggests the evidence of deep historical revenue generation for this particular business model is very well placed to continue in an upward trajectory” advised Jolliffe.
Following the 2016 record sale of the Tennyson Hotel to Justin Hemmes Merivale Group, Jolliffe and Ray White Hotels Australia returns to the auction arena later this month on May 31 with three hotels on the block – including the Hunter Valley’s Belmore Hotel, and Wollongong’s Unanderra Hotel.
In speaking more broadly regarding the national hotel market, Jolliffe maintains the view that strong fundamentals prevail.
“We enjoy in excess of $100m worth of Super A Grade hotel assets currently under agreement nationally, and consequently can see well beyond 2017 in terms of positive runway and a compelling investment argument to support longevity in terms of demand for this prosperous asset class” concluded Jolliffe.