Pub empire carve up begins with $74.5m sales

The insatiable appetite for pubs is seeing ever higher prices paid.

Corrimal Hotel Princes Highway in Wollongong. Picture: Supplied

Backers of the pub empire assembled by ex-Citi banker Damian Kelly have emerged as big winners of the NSW pub boom with two key properties selling for $74.5m.

Two prominent properties – the Rose & Crown Hotel in Sydney’s Parramatta and the Corrimal Hotel in the NSW city of Wollongong – have just been snapped up.

Creditors voted last December to liquidate four pubs welded into an investment trust under the Pub Invest umbrella by the former banker with the move expected to net more than $110m.

Mr Kelly built the portfolio of large gaming hotels, including the North Nowra Tavern in southern NSW, the Crown Hotel and the Rose & Crown, both in Sydney, and the Corrimal Hotel in Wollongong.

The sale of the two properties was the first tranche of assets to be divested out of the Pub Invest portfolio and were struck at $42m for the Parramatta pub and $32.5m for Corrimal.

The Parramatta property was the subject of action by the NSW Independent Liquor and Gaming Authority after pokie players were given free alcohol and cigarettes and ­granted cash loans from the safe of the western Sydney pub.

Private company RC One Pty Ltd was fined $107,358 after a thieving employee reported the Rose & Crown Hotel. Between 2017 and 2018, pub staff allowed at least $145,000 in credit and debit withdrawals from the bar’s eftpos machine, loaned money from the safe to gamblers, and provided free ­alcohol and cigarettes.

HTL Property’s Sam Handy said the hotel sales showed that the industry was well positioned for another strong year

The Rose & Crown in Parramatta was purchased by Sydney-based Highclere Hospitality, adding to its existing metro portfolio. The pub’s new owners were not involved in the conduct that prompted the regulator’s actions.

The Corrimal Hotel was bought by an experienced second-generation hotelier, with multiple pubs.

“The exit yields for these two hotel assets illustrate a continuation of the sharpening transaction yields we saw apply in the market at the end of last year,” HTL Property’s Dan Dragicevich said.

The agency will now put the next two Pub Invest portfolio assets on the market – Crown Hotel in Surry Hills and the large format North Nowra Tavern on the NSW South Coast.

A record 100 hotels changed hands in NSW alone in 2021, and the industry average loan to valuation ratio is sitting below 50 per cent, which was a “powerful contributor” to the chronic supply-demand imbalance, HTL Property’s Andrew Jolliffe said.