Well-known Sydney watering hole sold for $45m in record pub deal

The southern Sydney purchase by Iris Capital continues a run of strong run purchases by big names in the industry including Merivale’s Justin Hemmes, the listed Redcape Group and the private families that dominate the industry.

The big players are being backed by lenders to expand as gaming revenues rise on the back of government stimulus packages, and as food and beverage operations are leveraged to a recovery in consumer spending.

The Narwee Hotel was bought by Sam Arnaout’s Iris Capital from its long-term owners the Ryan family following an off-market process managed by specialist brokerage agency HTL Property.

The sale, the largest nationally for 2020, continues the theme of established investors acquiring A-grade hospitality properties when interest rates are at record low levels.

“When we consider the origin of the most recent capital deployment events, it is almost exclusively linked to leading groups such as Redcape, Merivale and Iris Capital,” said HTL Property managing director, Andrew Jolliffe.

He said experienced pub owners were making the largest acquisitions and buying pubs, fitting with the institutional push to gain an exposure to properties that serve daily needs.

The Narwee Hotel also sits on a 3370 square metre commercial property and is opposite the Narwee train station.

Mr Arnaout, who now owns about 20 pubs, as well as apartment projects and land subdivisions, said he recognised the significance of the Ryan family selling the business they had owned and operated since 1987.

His Iris Capital last month also swooped on the AccorInvest portfolio of 17 hotels, in a $175m purchase.

HTL’s Dan Dragicevich and Sam Handy, who were also involved in the sale, said the price was justified given the scarcity of large format top 150 gaming hotels which also had strong food, beverage, accommodation and alternative use value.

The previous highest price paid this year was for the Macquarie Tavern, which was sold by Monarch Hotels to the De Angelis family for $43m. Mr Dragicevich said the industry had rebounded in the wake of the coronavirus crisis.

The Narwee Hotel sale continues the national run of one hotel sale a week in 2020, and reinforces how many buyers are chasing pubs even during the uncertainty created by COVID-19.

“Transaction volumes are operating nationally at around 70 per cent of those achieved during the same period last year, however the cadence for activity has quickened demonstrably over the past eight weeks,” Mr Jolliffe said.

“Portfolios are being realigned just as urgently as they are being re-imagined, and it really is a landscape where the fast are outperforming the slow; as distinct from simply the big consuming the small,” Mr Jolliffe said.

This article originally appeared on www.theaustralian.com.au/property