$70m hotels portfolio comes to market

25 March, 2019 by Craig Hawtin-Butcher

JLL has revealed it’s marketing the largest pub portfolio offered to market in Adelaide in over a decade.

The GM Hotels Group’s portfolio includes two freehold hotels, Christies Beach and The Lodge, Brahma, and four leasehold hotels subject to long term leases – the Towe Inn, Crown Inn, Emu Hotel and Beach Hotel, spanning north and south in the Adelaide metropolitan area.

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JLL’s National Director John Musca believes the sale is reflective of wider industry trends being experienced across Australia, saying “It’s an exciting and liquid time for the industry as stakeholders realise that ongoing aggregation and consolidation is tightening the supply of these sought-after assets in every state. JLL are experiencing this liquidity first hand with over $400 million of pub assets currently under agreement or negotiation nationally, 85% of which are transacting in an off-market format.”

The GM Hotels Group portfolio includes 203 electric gaming machines across the hotels along with seven retail liquor outlets.

Musca believes interest will be high, saying “South Australia has one [of] the lowest number of hotels and gaming machines per capita of any of the gaming-approved states, has the preferred perpetual gaming authority model and no club culture to speak of and the group delivers an immediate large-format suburban pub network with substantial earnings.”

Musca highlights recent comparable sales of this scale, when in 2007 ALH bought the privately held Saturno hotel portfolio for a reported $110 million. The two most recent large hotel sales were ALH’s acquisition of the Watermark Hotel for circa $25m and the sale of Lockleys Hotel for $16 million.

“South Australia has some [of] the highest barriers to entry of any jurisdiction nationally for new hotel developments with associated gaming approvals, so these capital city businesses become more coveted and irreplaceable with the passage of time”, Musca said.

GM Hotels Managing Director Greg Maitland said “On the back of numerous direct approaches we’ve had for the group the timing seemed right for the stakeholders to divest as the businesses demonstrate a sound earnings trajectory and present well, and on the back of some significant recent sales in the local market.”

The GM Hotels Group is being offered for sale by Expressions of Interest with the sale process closing 2 May 2019.