Park Hotel auction smashes reserve
By Vanessa Cavasinni, editor Australian Hotelier
The sale of Park Hotel in the leafy Melbourne suburb of Abbotsford has exceeded expectations, as F&B pubs for sale in the city remain very limited.
The freehold of the pub was sold via auction by Knight Frank’s Andrew Greenway and Paul Pellegrino, with 150 people attending on auction day, and a flurry of more than 60 bids from seven interested parties. Park Hotel was sold to a local investor and operator, who offered the winning bid of $3.18 million – almost one million dollars more than the reserve of $2.25 million.
“It was a phenomenal result. It surprised me but it didn’t, given the amount of interest. But we never anticipated it to go that far over reserve. The vendors are very happy,” stated Pellegrino.
The sale of the late-1800s pub reflects a yield of 2.6 per cent, and is currently leased for four years at a net annual rental of $83,340.
While currently the buyer’s identity has not been disclosed, Pellegrino states that it is a local investor who owns other pubs as well.
“They’ll look at this being a longer-term play for them, with the option to reposition it in about four years time when the current lease expires, then the new owner and tenant will reassess.”
Knight Frank advised the vendors, two brothers who have owned the freehold for over 30 years, that an auction was the way to go, due to high demand and limited supply of F&B pubs in Melbourne.
“Our recommendation was definitely an auction given the type of asset. Pubs are having a bit of a resurgence – there’s not too many of them around, especially food and beverage hotels. So we felt there was a lot more of an upside in the price in a competitive market, and that was well demonstrated with going nearly $1 million over reserve.”
Park Hotel is situated on a 480 sqm corner block on the busy Nicholson Street thoroughfare. The venue comprises a front bar, dining room, commercial kitchen, beer garden and upstairs accommodation.
According to Pellegrino, the sale of Park Hotel is indicative of the current appetite of Melbourne operators, who are focusing on F&B.
“There’s definitely been a resurgence of food and beverage. I’ve noticed hotel operators moving away from the pokies-style hotels and moving more into the specialisation of food and beverage.”