By Clyde Mooney
On the grounds that transaction activity and confidence are on a sharp increase, Ray White Hotels (RWH) has speculated that the barriers to market between buyer and seller are drying up in the Australian hotels sector.
Whilst not yet at the levels that occurred between 2005 and 2007, a sharp rise in both sales and debt liquidity have effectively created a groundswell of positive activity that has been gaining strength over the past two quarters.
More recently, RWH has secured the sale of over $150 million in freehold assets just this financial year in Sydney alone.
RWH’s Andrew Jolliffe told TheShout that the rise of transitional forces and potential was best illustrated by the sale of the Compass portfolio in the state with the most licensing restrictions and lowest gaming revenue, Western Australia.
“The recent sale of the Compass assets to a well-capitalised group such as ALH is a seriously positive shot in the arm for the Perth pub market,” he said.
"For obvious imbalanced capital stack reasons, Compass has been unable to present and operate their portfolio of hotels as best they should.
"The manifestation of this is that the respective patronage at each outlet hasn't enjoyed the level of product the market now demands and deserves; a very experienced and well-funded operator will improve the level of patron experience.
"And that, un-controversially, is a good thing.”
The decision to sell the Compass assets was announced in June, with Jones Lang LaSalle Hotels and CB Richard Ellis appointed joint managers.
John Musca of Jones Lang LaSalle Hotels managed the sale and said the new owners would be continuing operation of the venues, which are located around Perth’s metropolitan area.
Only on the market for three months, ‘the most significant on-premise and retail share opportunity’ as it was billed, can be considered a strong testimony to buyer sentiment and investor confidence generally.
“I currently have more buyers than sellers – a good problem to have, and a sure sign that the industry, notwithstanding some well documented headwinds, is replicating its indomitable characteristics as a compelling investment space,” Jolliffe told TheShout.
indominable indeed