In a time when A grade freehold hotels are being actively sought by astute investors, and following the successful sale this month of the Colombian Hotel on Surry Hill's Oxford St, leading broker Andrew Jolliffe has
been appointed to bring to market the hugely popular Commodore Hotel.
Rumoured to be once the preferred hotel of choice for Henry Lawson, the two level hotel, a very well-known watering hole in vibrant North Sydney, is situated upon 1138sqm on Blues Point Rd. Boasting highly sought after large format licensed outdoor areas, a reputation for food and functions, and the operation 17 valuable gaming machines; the position of the upmarket hotel has been a prominent meeting place on the lower North Shore for over 150 years. Originally the site of the First Old Commodore Hotel, the hotel site has seen multiple reincarnations, including by the famous Tooth and Co operation around the middle of the last century; and until its current modern offering which was extensively rebuilt in 1997.
Jolliffe cited the weight of domestic and international capital looking for yield based property investment avenues as a compelling factor for the forthcoming EOI sale process. "Recent campaigns we have run such as those for the Colombian Hotel and Dolphin Hotels respectively, have attracted significant interest from local investors, as well as off-shore hospitality funds looking to deploy capital in a stable economic and political environment such as that enjoyed by Sydney" commented Jolliffe.
The hotel is currently owned and operated by ASX listed company Lantern Hotel Groups, which, under the stewardship of CEO John Osborne, has recently made its first distribution payment to security holders. This milestone followed a well publicised repositioning process, including a successful senior debt facility refinancing and throughout a period which has also seen the sale of a number of Lantern Hotels group's other non core properties; many of which were located in geographical locations outside the Sydney metro region.
"Hotels like the Commodore are very rare in that they enjoy the potent mix of historically strong cash flow generation, as well as being situated on very valuable parcels of premium commercial land holdings; providing the potential, indexed to approvals and investment cycle chronology, for downstream development of both a mixed and alternative use basis." "Additionally, the hotel recently moved up the state wide gaming rankings list by some 130 places for Q1FY17, illustrating one of many upside levers available to a successful purchaser in order to augment the $5.5m in annual revenues already being achieved under the current operational format" said Jolliffe.
The North Sydney hotel property market is one which is typically tightly held, with examples of well known industry stalwarts Patrick Gallagher (Union Hotel), Athol Davis (North Sydney Hotel) and Peter Calligeros (Rag and Famish Hotel) having successfully operated in the suburb for decades. Ray White Group Head of Research Vanessa Rader predicts A grade office development projects to increase in the precinct following the implementation of the Baird Government transport strategy. “North Sydney is an established market place, which is enjoying significant State Government reinvestment in the form of infrastructure projects such as the planned Victoria Cross train station development” said Rader. “We saw the investor magnetism this proposed reinvestment stimulus and proximity to the Sydney CBD generates when we sold the North Sydney Rugby Club" advised co-agent and Head of Ray White Commercial NSW Jeff Moxham.
"As a suburb, the investment thesis for North Sydney is compelling with the area enjoying a very solid base of residential occupation and development, a CBD commercial workforce influx of some 55,000 people daily; and
a major transport hub in the form of both rail and bus interchange" concluded Jolliffe.
The Expression of Interest sale campaign for the Commodore Hotel will commence next week, and will run until Wednesday 12 October 2016.
