Newcastle ALH pubs sell to Sydney investors on 7.9% yields but Doncaster’s Cherry Hill tavern passed in

Newcastle pubs have proved popular with Sydney investors, with both Newcastle offerings selling at a yield of 7.9% as part of an auction of seven ALH pubs in Melbourne on Friday.

Although the auction was well attended, there were few bidders at the auction at Melbourne’s Crown Casino, with four of the pubs passed in despite the best efforts of auctioneer David Scholes and the placing of a number of vendor bids.

Bidders appeared intent on securing bargains and yields of around 9%, with initial bidding on some of the pubs starting at well below the price suggested by Scholes on behalf of vendors.

At one point, with bidders unwilling to meet the $12 million to $13 million starting price for the biggest property in the portfolio, the 4,100-square-metre Macquarie Inn Hotel and Dan Murphy’s in Dubbo (pictured above). Scholes tried to whip up interest by reminding them that fugitive Malcolm Naden was no longer hiding out at the nearby White Plains zoo.

“You can rest easy. He’s been captured,” Scholes said.

All seven pubs were auction with new 20-year leases (with five renewal options of 10 years each) to pub operator ALH and are 75% owned by Woolworths and 25% owned by private hotelier the Bruce Mathiesen Group.

Despite pre-auction interest, the prized asset, the Cherry Hill Tavern Hotel and BWS bottle shop (pictured above) sitting on a 9,100-square-metre site near The Pines Shopping Centre in the affluent Melbourne eastern suburb of Doncaster, failed to sell.

Agents expect the 1,900-square-metre building, which includes an alfresco dining room and TAB gaming bar a well as a “thriving BWS bottle shop”, to sell post-auction

The Jewells Tavern and BWS (pictured above) on the corner of Gradburn Parade and Gurdie Street in Newcastle was the only property to meet the reserve and sell at auction.

It sold for $5.821 million, just above the vendor bid of $5.82 million following a bidding contest between the eventual Sydney winner and a Melbourne buyer.

Having undergone a recent $865,000 refurbishment, the 1,000-square-metre brings in net rent of $460,000 per annum and sits on a 5,700-square-metre site adjacent to the Jewells Town Plaza Shopping Centre.

The Mattara Hotel in Charlestown in Newcastle (pictured above), with net rent of $415,000 per annum, sold prior to auction for $5.25 million on a 7.9% yield.

The Club Tavern and BWS on Beerburrum Road in Caboolture (pictured above), with net rent of $600,000 per annum and situated 41 kilometres north of Brisbane, sold post-auction on a yield of 7.9%.

Also selling post-auction was the Granada Hotel and BWS in Berriedale in Tasmania. There were four bidders on the property, with the winning bidder ($3.3 million) having the first right to negotiate with the vendor.

The pub eventually sold for close to the winning bid price on a yield of around 8%. It is located directly opposite from the $80 million MONA museum, the top tourist attraction in Tasmania.

The Westower Tavern, BWS and Dan Murphy’s on the Pacific Highway in Ballina, with annual net rent of $730,000 and across from the Big Prawn redevelopment, was passed in with a series of low bids not accepted.  The vendor is seeking around $10 million for the property, which measures 2,300 square metres.

The seven properties were marketed jointly by Burgess Rawson agents Billy Holderhead, Raoul Holderhead, Simon Staddon and Pat Kelly alongside Scott Callow, Daniel Dragicevich, Joel Fisher and Craig Harley from CBRE Hotels.

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