Iconic pubs for sale as freehold transaction activity increases

Iconic pubs for sale as freehold transaction activity increases
Zoe FieldingDecember 7, 2020

Live pub theatre the Old Fitzroy Hotel in Sydney’s inner-east is for sale by expressions of interest as the hospitality sector faces consolidation and increased transaction activity.

The iconic pub in Woolloomooloo, about 2 kilometres from Sydney’s CBD, is being sold as a freehold going concern by private owner Garry Pasfield.

Transaction activity for freehold pubs rose in 2013, with the cost of debt low and lenders competing for market share. Experienced hoteliers such as Arthur Laundy and private equity and institutional funds including the John Singleton and Mark Carnegie-led Australian Pub Fund were active buyers.

Other pubs, including Melbourne live music icon The Esplanade Hotel and Emerald's Mayfair Ridge Tavern, are also on the market.

Specialist accounting firm Ferrier Hodgson, in a report into the hospitality sector released in February, predicted further growth in the volume of freehold transactions in 2014, as confidence returned to the sector and access to well-priced debt and equity finance improved.

The report cautioned that the Sydney market could be subdued in the first half of 2014 as investors waited to assess the effects of strict new lock-out laws, which came into force on February 24 in certain precincts.

Ferrier Hodgson said gaming venues may suffer revenue drops of up to 30% as a result of the new laws, and yields on affected pubs could soften by 0.25 to 1.5%.

“This has the potential to affect the sector as a whole as investor demand increasingly shifts towards assets with truly diverse product offerings, revenue streams and lower operational risk profiles,” the report noted.

The Old Fitzroy falls within the Sydney CBD Entertainment Precinct and has a gaming room with 15 poker machine entitlements, but its business is diversified, being Australia’s only live pub theatre.

Last April, Sydney Independent Theatre Company took up residence at the pub and uses the space six days per week, following the relocation in February 2013 of performance group Tamarama Rock Surfers which had been based at the venue for the previous 16 years.

The pub has been operating on the site since around 1910. It has a public bar, ground floor restaurant, beer garden, function room, commercial kitchen and accommodation rooms and offices on its second floor.

It received TimeOut Sydney’s Best Pub Award in 2012 and Hall of Fame Award in 2011.

CBRE’s Peter Vines and Daniel Dragicevich have been appointed to sell the property.

“We expect this iconic hotel will attract strong interest from a range of potential buyers including experienced operators looking to drive revenue in the already successful ground floor areas and further establish the underutilised first and second floor areas to achieve strong growth in profitability,” Dragicevich said.

The hotel’s public bar features vintage interiors, while the recently refurbished upstairs bar is more modern.

Dragicevich said the hotel held redevelopment potential and would benefit from further refurbishment, “particularly the upstairs bar which is currently underutilised, but would be perfectly suited to a cocktail, whisky or craft beer bar”.

Expressions of interest close March 27. 

Zoe Fielding

I am a freelance journalist and editor with more than 15 years experience specialising in personal finance, property, financial services and financial technology. A skilled writer and researcher, I have extensive experience producing high quality content for corporate and media clients. I am used to working to tight deadlines and tailoring the pieces I produce to suit a variety of audiences and formats.

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