Endeavour makes maiden pub play after spin off from Woolworths

Unshackled from Woolworths, Endeavour has teamed with Charter Hall in a big Sydney pub purchase, with more deals ahead.

Endeavour Group and Charter Hall have snapped up the Terrey Hills Tavern.

The Endeavour Group business just spun out of the Woolworths supermarket empire has teamed with property funds group Charter Hall to make its first substantial pub group purchase.

The pair have snapped up the Terrey Hills Tavern in Sydney for about $39.8m, with the Endeavour taking the leasehold interest and Charter Hall the freehold.

The purchase signals that Endeavour will step up its pub buying after being out of the market for some years while part of Woolworths, which could shake up the national pub scene.

Gold Coast-based billionaire Bruce Mathieson had flagged ahead of the proposed float that an Endeavour unshackled from Woolworths would aggressively chase pub acquisitions, joining the race that has been kicked off by big names including Justin Hemmes and the Laundy family.

Mr Mathieson said Endeavour had been “constrained” from joining in the pub and hotel buying spree in the past year but would now enter the market in a big way.

The hotel, poker machine and liquor retail business separated from Woolworths last month in one of the biggest floats of the year, which valued it at about $11bn.

Endeavour includes the Dan Murphys and BWS liquor chains, the ALH hotels and gaming machines business operated by Mr Mathieson’s family and speciality brands such as Langton’s fine wine and Cellarmasters.

The latest move is also significant as it indicates that Endeavour will continue its close ties with Charter Hall, which has become its partner of choice to buy into new hotels.

Charter Hall will pay $26.3m for the freehold with a new 15-year lease to Endeavour covering the remainder of the cost.

“We recognise that an opportunity to acquire a Sydney metropolitan hospitality asset of this land size and asset quality is rare and we are pleased to be working with ALH on strategically growing the portfolio while also deepening our partnership,” Charter Hall chief David Harrison said.

“This acquisition is in line with our portfolio strategy that seeks to extract value from low-risk, long-term leased property operated by best in breed tenant customers such as ALH,” he said,.

The Terrey Hills Tavern was pitched as one of Sydney’s landmark suburban freehold pubs and was sold via HTL Property.

The hotel was sold by the Feros Group, led by Sydney publicans Nick and Chris Feros, who mainly own pubs in Sydney’s south.

HTL Property’s Dan Dragicevich, Brent McCarthy and Andrew Jolliffe handled the sale.

“The highly competitive sales process for the ever popular, ultra-large format Terrey Hills Tavern drew considerable national interest from a variety of buyer profile,” Mr Dragicevich said.

Mr Jolliffe said groups like Redcape and AVC had the fire power and corporate capacity needed to consolidate in the still fundamentally fragmented asset class.

The Terrey Hills Tavern is on a landholding of 15,870sq m, and produces annual revenues of more than $10m.

The Charter Hall-run Long Wale Investment Partnership will hold the Terrey Hills Tavern freehold and it will carry the new lease to Endeavour unit ALH.

LWIP is a Charter Hall partnership backed by super fund Hostplus and Charter Hall Long WALE REIT.

The deal builds on Charter Hall’s long-term partnership with the liquor group, which now includes 70 assets worth more than $1.3bn, leased with annual CPI rent reviews.

Charter Hall is the country’s largest owner of long-term leased freehold pub and is well positioned to help Endeavour expand.

Originally published as Endeavour makes maiden pub play after spin off from Woolworths