Fortitude Investment Partners finalises sale of its GM Hotels portfolio in Adelaide for $160m

The partnership between a private equity firm and a veteran publican has been wrapped up with the final sales of a $160m Adelaide hotel portfolio.

Private equity firm Fortitude Investment Partners has exploited the strength of the pub market and finalised the sale of its Adelaide GM Hotels portfolio.

Brisbane-based Fortitude sold the 11-strong portfolio through a series of sales of individual venues over a 12-month period to a range of local and national buyers including ALH, Harvest Hotels and RD Jones Group for about $160m.

The exit included the sale of the Emu Hotel in Adelaide’s southern suburbs to ASX-listed fund manager Charter Hall for $32m, a record price for a South Australian pub. The leasehold was sold to pub operator ALH.

The final two GM Hotel assets were under contract and due for settlement in April 2023.

Fortitude partner and director of GM Hotels Nick Dignam said the sale would deliver a return to investors of greater than 2.0 times multiple on invested capital over the investment period.

GM Hotels was established by Fortitude in partnership with industry veteran Greg Maitland as chief executive to acquire a portfolio pub venues in South Australia in 2015.

The Emu Hotel in Morphet Vale, Adelaide.

The portfolio, bought from Quadrant Private Equity, consisted of a mixture of leasehold and freehold assets, and all venues had diversified revenue streams across food and bar, retail, and gaming.

Mr Maitland will continue to operate his six-venue pub group under the GM Hotels banner which includes four of the portfolio’s venues.

He said it was the right time to divest the portfolio.

“We felt that pub values were peaking or not far off the peak so we decided the time was right to divest,” Mr Maitland said.

GM Hotels chief executive Greg Maitland.

Under Fortitude and Mr Maitland’s ownership, GM Hotels invested significantly in renovating and upgrading most of the venues, divested portions of surplus land and modernised the offering to accommodate a broad range of consumers.

The group’s earnings grew by more than 50 per cent during the investment period, which enabled the group to pay out a consistent distribution to its investors of more than 10 per cent a year.

“Pubs are high quality assets and through good times and bad times they trade well,” Mr Maitland said.

“So demand for freehold and going concern pubs is there but I think that will come back with the cost of money and will prices will return to a more normalised level.”

The GM Hotels portfolio included the Christies Beach Hotel, the Beach Hotel, the Tower Hotel, the Paradise Hotel and the Whitehorse Inn.