Billionaire Sam Arnaout forks out $200m for Sydney gaming pubs

Pubs are making a late year surge, with property billionaire Sam Arnaout snapping up two venues.

Redcape has sold the El Cortez Hotel to Iris Capital's Sam Arnaout.

Property billionaire Sam Arnaout has snapped up two Sydney pubs in a deal worth close to $200m, capping off a frenetic year-end for the sector as pubs swing back into favour.

Mr Arnaout’s Iris Capital operation purchased the Cabramatta Hotel, a landmark in its namesake suburb, and the El Cortez Hotel in Canley Heights, both of which are in Sydney’s western gaming heartland.

While the prices of the pubs have not been revealed, industry sources said that they were record setting sales for this year, which had started with an overhang of pubs as the market was reset in the wake of interest rate rises.

But now the sector is running hot on the back of low unemployment, still high spending on drinking and gaming, the desire of property developers to get their hands on key sites that could accommodate apartments in future.

The sale of the two hotels was negotiated by HTL Property directors Andrew Jolliffe and Dan Dragicevich.

Redcape last week signalled that it was taking more of a national approach, and it bought three freehold hotels in South East Queensland.

Mr Arnaout, who is worth $2.5bn according to The Australian’s The List, lives near Manly, and is a substantial hotel owner and property developer.

He owns the Steyne Hotel, which he purchased for $65m from publican Arthur Laundy, adman John Singleton and entrepreneur Robert Whyte, as well as the Ivanhoe Hotel Manly.

The former panel beater-made-good owns commercial sites and large residential holdings, and is active in both NSW and Queensland.

“Whilst Iris Capital operates on a national hospitality and development footprint; large format Sydney suburban hotels remain very attractive to our company,” Mr Arnaout said.

He said that the two pubs had a combined 17,000 sq m of commercial property holdings and pointed to their development potential.

Redcape managing director Chris Unger said “the divestments will provide Redcape with capital to continue its redeployment into other opportunities in line with the fund’s stated strategy”.

HTL Property’s Mr Dragicevich said that both hotels are well-known large format multi-revenue channelled businesses, with Cabramatta on two separate land holdings; and being the beneficiary of a recent planning gazettal which he said “adds materially to the additional use options from a development perspective”.

HTL Property’s Mr Jolliffe said the sale of the two Redcape Hotels brings the transaction window for 2024 to a prosperous close, and also brought the consolidated Sydney hotel sales dollar value to $1bn, in line with the record set in 2022, when markets rebounded after the pandemic.

Others have been active in the market

At the beginning of the month, pub baron Mr Laundy took control of Sydney’s heritage-listed Lord Nelson Hotel which he acquired for just under $20m, saying he will never say no to buying more pubs to bolster his $1.6bn portfolio. The billionaire said that after the acquisition of the pub and brew house, he would focus on renovating two of the larger hotels in his 90 plus pub collection, the Sofitel Hotel in Noosa and the Mirage Surfers Paradise.

Pubs are also back in favour with institutions, with Charter Hall Retail REIT’s take over approach for Australian Venue Co pub landlord Hotel Property Investments winning over investors as it took majority control of the register last week.