Pub barons battle as billions of dollars worth of pubs are sold
Sydney’s pub market is the wild west of the Australian property scene as five gunslingers dominating the town and staking their claims on famous drinking holes. Billions of dollars worth of Sydney pubs have been sold in the past three years.
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Sydney’s pub market is the wild west of the Australian property scene as five gunslingers dominating the town and staking their claims on famous drinking holes.
Justin Hemmes, Stu Laundy, Bruce Solomon, brothers Patrick and John Ryan and Sam Arnaout — who all head up their own hospitality empires — have emerged in the past few years the key heavyweights in the multi-billion dollar Sydney’s hotels gold rush.
The five cashed-up clans now own just over 70 hotels in Sydney following a three-year splurge which has seen around $2 billion worth of Sydney pubs sold in the past three years alone.
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That figure was capped last week by the high-profile $15 million sale of The Bell’s Hotel in Woolloomooloo to the Laundy family — a shock deal which was done the night before the pub was due to go up for auction.
“But there was no way I was going to stand in a room across from guys like Justin Hemmes or Patrick Ryan or Bruce Solomon,” says Laundy, better known in recent times as the paramore to The Bachelorette Sophie Monk.
“Those guys are hardcore. Everyone’s as smart as each other so they wouldn’t have made it easy. I didn’t want to get into a bidding war so I was very happy to come to an agreement with the owners the evening before.”
The clandestine late-night sale serves to illustrate just how intense competition currently is between the ‘big five’ as well as some of the other outlying heavyhitters like John Singleton, Public House Group’s Mitchell Waugh and the Malouf brothers Jamie, Justin and Ed (who own the insanely popular Royal Oak at Double Bay).
But it’s Hemmes who currently reigns supreme, with the Merivale boss outlaying around $300 million-and-counting since 2015.
Solomon’s mammoth Solotel portfolio has acquired hotel stocks to the tune of around $150 million in that time while relative newcomer Arnaout who arrived in the scene in 2015 with his purchase of The Bourbon, has made his mark with around $150 million in real estate thanks to big purchases like The Colombian Hotel and its neighbouring Gaslight Inn.
The Ryan family dynasty, now steered by brothers John and Patrick, recently added the $26 million Banksia Hotel to their empire which includes the sprawling CBD institution Ryan’s Bar and the The Orient at The Rocks.
And Laundy heralded his return from a six-year lull to swoop on the highly sought-after Bell’s, bringing his family tally to eleven independently-owned pubs as well as several more co-ownerships including The Steyne in Manly and The Watson’s Bay Hotel.
The feverish pub buy-up, he says, is due to three factors; lower interest rates, a population explosion across the eastern seaboard and, ironically, the credit crunch of 2009.
“Before the credit crunch there was a huge restaurant culture in Sydney but when the GFC hit, pubs got wise and started to offer decent food,” Laundy says.
According to second-generation publican John Ryan, well-run hotels can be a very lucrative business.
“But there’s always risk involved because at the end of the day we are still entrepreneurs,” says Ryan, who can still be found most days operating out of at his family’s famed outdoor drinking den at Australia Square, Ryan’s Bar.
“But pubs have always been a pretty solid business model with good cash flows and show good yield provided you get it at the right price.”
Interestingly when they’re not jousting over multimillion-dollar deals, the big five families are said to be on good terms socially.
But, says Ryan; “It would be weird if we didn’t.”
“We’re all in the same game. That’s what we do. We buy beer for a dollar and try and sell it for five. And it’s our job to be hospitable.
“I’m good mates with Stu (Laundy) and if I see Justin drinking in one my pubs or he sees me in mine we know each other well enough to say hi and have a chat.
“In saying that we are very different personalities … I’m not into flying planes or dating supermodels but each to their own.”
In an auspicious position at the centre of it all are the hotel brokers whose job it is to negotiate the sale of billions of dollars worth of hotels while maintaining good relations with the pub barons.
It’s a “delicate balance” according to HTL Property boss Andrew Jolliffe (who has handled several high-profile deals including this week’s Bell’s sale.)
“We’ve been fortunate to participate in a number of significant transactions over the past 2 years, and there are clearly recurring similarities in terms of the parties involved in the buy and sell side universe, but our role as negotiators is both defined and clear.
“We are there to do a specific job, not make friends,” Jolliffe says.
Originally published as Pub barons battle as billions of dollars worth of pubs are sold