PJ Gallaghers pub in Leichhardt has sold for $14.5 million. Photo: Airphoto AustraliaA publican has poured $14.5 million into buying the PJ Gallaghers pub in Leichhardt from Gallagher Hotel Management as tight market conditions push hoteliers north across the border into Queensland.
The Norton Street hotel, located on a prominent corner site, sold as a freehold going concern on a 9.8 per cent yield just a day after a Sydney syndicate led by Roosters chairman Nick Politis snapped up the Treetops Tavern in Burleigh Waters, Queensland for $20 million.
PJ Gallaghers was purchased by a private publican who will run it as a stand-alone asset, JLL Hotels & Hospitality Group national director John Musca said.
The pub had recently undergone a $2 million facelift and sold with 28 gaming machines and sought-after 5am trading licence.
The vendor, Gallagher Hotel Management who own and operate 14 hotels across Sydney, last month sold the leaseholds to the Liverpool Hotel and Corner Pub for a combined $12.5 million in order to focus on other freehold opportunities.
Yield compression in Sydney and Melbourne for limited numbers of hotel assets was pushing investors to look further north, he said.
The Treetops Tavern was offloaded by Sydney-based Thomas Hotels to the Politis syndicate that also included well-known Sydney hotelier Peter Ashelford.
The same syndicate swooped on The Boathouse Tavern in April, purchasing it for $13.9 million from Leda Holdings owner Bob El.
Another Gold Coast hotel, the Melbas Tavern, also recently sold to interstate investors for $12.5 million, while an imminent sale of the Mermaid Beach Tavern has been mooted.
“These sales reflect the cyclical trend of interstate hoteliers looking beyond their tightly held markets to invest in south-east Queensland,” Mr Musca said.
“Interest in Brisbane hotels [is] understandably escalating as a result of the casino announcement and the enormous weight of capital driving the city and fringe apartment boom”, he said.
A different development cycle was driving sectors of Sydney’s market where developers were pouncing on larger metropolitan hotel sites to take advantage of council planning regulations that foster alternate development uses.
Development-led sales have fuelled an estimated $100 million of transactions including the sale of the Bull & Bush Hotel, Penshurst Hotel and Kings Head Hotel, JLL estimates.
“The frenetic transaction activity of late last year has spilt into 2016 with the aggressive expansion of the Public House Group and a number of other acquisitive newly formed private equity syndications moving to accumulate portfolio scale,” Mr Musca said.