Virtical snares Sydney drinking hole The Republic for $40m

The Republic Hotel in the heart of Sydney’s CBD has sold to little-known hi-rise developer Virtical for close to $40m, putting the big-name pub potentially in line for redevelopment.

The Republic Hotel in the heart of Sydney’s CBD has sold to little known hi-rise developer Virtical for close to $40m, putting the big-name pub potentially in line for redevelopment.

A series of well-known pubs have hit the block across the city at the same time as pressure builds for reform of the gaming industry, although the NSW government is sticking to its pilot cashless gaming program.

The popular freehold pub was sold by Singaporean investment house SC Capital, which picked it up in 2017 from publican Patrick Ryan and his family for about $35m. The Ryans leased back the business operation of the asset after 17 years of also holding the property.

They made the hotel one of the city’s best known, with trading across four floors, including a public bar and gaming room with 28 machines on the ground floor; Republic Dining on the first floor; events facilities on the second floor; and the Taylor’s Rooftop Bar.

The pub is a Sydney institution and the deal breaks the drought of large-scale CBD hotel sales so far this year.

The Republic has a history dating back to 1865 and was near an office block that SC Capital sold off to Holdmark for about $210m after it abandoned plans for a striking luxury hotel and office project.

The famed pub could now become the site of a new hotel. While the buyer declined to comment on its purchase, any redevelopment would keep the pub and restaurant and use the airspace above the property, with their Adelphi brand in line to be used if a hotel is built.

Savills agent Nick Lower said the sale “demonstrates the continued demand of well trading pub assets that benefit from strong underlying real estate”.

“As one of 2023’s most significant core Sydney CBD transactions, along with being one of the most well known trophy assets in the pub sector, this successful result shows that there is still considerable demand in the market,” he said.

About $2.2bn in pub transactions were struck last year with NSW contributing more than $1.8bn of this figure. But this fell away ahead of the NSW election as the former government flagged a much tougher line on gaming machines ahead of its defeat.

JLL Hotels agent Ben McDonald said the deal showed the appeal of pubs to a wide investor base, including private operators, syndicated capital and traditional real estate investors.

“An unmatched location, historic trade performance and boutique nature of the building made it a truly exceptional opportunity for the purchaser, seeking long-term value in a world-class CBD location,” he said.

Virtical has been active this year with deals including buying the former Europcar site in Newcastle West for an apartment project and buying a major undeveloped landholding in Southport. The business, formerly known as Core Asset Development Pty Ltd, is planning a $1.2bn residential precinct on the site, which will have 1,019 apartments and 137 build-to-rent dwellings.