Hemmes expands pub empire with $70m shopping spree

Pic of the Royal Hotel in Bondi.28th September 2006  SMH NEWS Royal Hotel/Bondi  Photograph by Dallas Kilponen/dak.
Pic of the Royal Hotel in Bondi.28th September 2006 SMH NEWS Royal Hotel/Bondi Photograph by Dallas Kilponen/dak.
The Royal Hotel Bondi at 283 Bondi Rd, Bondi Beach, on 9 November 2017. Justin Hemmes has just bought the hotel. Photo: Jessica Hromas

The Royal Hotel Bondi at 283 Bondi Rd, Bondi Beach, on 9 November 2017. Justin Hemmes has just bought the hotel. Photo: Jessica Hromas

The Royal Hotel Bondi at 283 Bondi Rd, Bondi Beach, on 9 November 2017. Justin Hemmes has just bought the hotel. Photo: Jessica Hromas

The Royal Hotel Bondi at 283 Bondi Rd, Bondi Beach, on 9 November 2017. Justin Hemmes has just bought the hotel. Photo: Jessica Hromas

The Royal Hotel Bondi at 283 Bondi Rd, Bondi Beach, on 9 November 2017. Justin Hemmes has just bought the hotel. Photo: Jessica Hromas

The Royal Hotel Bondi at 283 Bondi Rd, Bondi Beach, on 9 November 2017. Justin Hemmes has just bought the hotel. Photo: Jessica Hromas

The Royal Hotel Bondi at 283 Bondi Rd, Bondi Beach, on 9 November 2017. Justin Hemmes has just bought the hotel. Photo: Jessica Hromas

The Royal Hotel Bondi at 283 Bondi Rd, Bondi Beach, on 9 November 2017. Justin Hemmes has just bought the hotel. Photo: Jessica Hromas

Pub tsar Justin Hemmes has cemented his position as the largest single owner of popular Sydney pubs, splurging more than $70 million on the purchase of three major hotels over the past three months.

Having snapped up Bondi's Royal Hotel on Wednesday, the string of purchases gives Mr Hemmes' Merivale Group an almost unassailable lead in the sector, ahead of restaurateurs such as celebrity chef Matt Moran's Solotel group and established pub owners such as the Laundy family.

Since August, Mr Hemmes has bought the Collaroy Hotel on Sydney's northern beaches for about $21 million, the Vic on the Park in Marrickville for about $23 million and now the Royal Hotel for more than $30 million.

Contacted by Fairfax Media on Thursday, Merivale confirmed the deals, without giving financials. It said it expects to receive the keys for the Bondi hotel next July, with plans for the venue to be "announced in due course".

The latest acquisitions will add to Mr Hemmes' stable that includes the Tennyson Hotel in Mascot, which he bought last December for $37.5 million, and the Newport Arms, which he bought in 2015 for $46 million and re-opened in 2016 after a significant revamp.

Overall, Merivale operates 65 hospitality venues including such as the Ivy and the Establishment Bar in the Sydney CBD and the popular Coogee Pavilion in the eastern suburbs.

As he bought the Vic on the Park in October, Mr Hemmes said he was in the market for further acquisitions with a "self-imposed mandate" to grow the Merivale business "both deliberately and responsibly".

The sale of the Royal Hotel was managed by JLL national director John Musca, who also handled the Coogee Beach Palace, Hotel Bondi, Golden Sheaf Hotel, Royal Oak Double Bay and Clovelly Hotel transactions.

"The hotel market is witnessing its third significant phase of consolidation last experienced a decade ago, in particular with a return of capital support for food and beverage operations nationally", Mr Musca said.

"It's a privilege being entrusted with the sale of the generational held eastern suburbs icons, and this is particularly special given the owners are such genuine people and Merivale so community oriented.

"I can't remember ever selling a hotel that attracted this level of interest, not surprising given Bondi's burgeoning global status, the area's gentrification and the hotel's manifest repositioning potential."

The Royal Hotel on Bondi Road was established in 1904 and hosted the first meeting of the Bondi Lifesaving Club three years later. It has been run over the past four decades by the family of local publican Geoff Moulding, which decided to sell it after having received several offers.

Mr Musca said the pub was "ripe for a renovation", with three levels including 20 guest rooms with 80 backpacker beds, a first-floor four-room office and lounges and a beer garden.

Hectic year

Mr Hemmes' latest shopping spree tops off a busy year in the pub sector, which has seen more than $600 million worth of assets change hands since the start of 2017.

The deals have been bolstered, in part, by the sell-down of John Singleton and Geoff Dixon's Australia Pub Fund.

Andrew Jolliffe, the Asia Pacific director of Ray White Hotels, who advised on the sale of the Vic on the Park to Mr Hemmes, said the deals involving significant A-grade freehold hospitality assets on Australia's eastern seaboard continue.

Mr Jolliffe also sold the Republic Hotel opposite the Australian Stock Exchange, in Bridge Street, Sydney for about $35 million.

The four-level pub on the corner of Pitt and Bridge streets was acquired by an Asian-based international property fund in a sale and lease-back deal with the Ryans, a Sydney pub owner family.

In September, the Melbourne-based Impact Investment Group paid $70 million for Byron Bay's Beach Hotel.

CBRE Hotels' Daniel Dragicevich and Wayne Bunz represented Impact Investment Group in the off-market deal, which was struck with owner Max Twigg who paid $44 million for the hotel in 2007 following the sale of his waste management business.

This story Hemmes expands pub empire with $70m shopping spree first appeared on The Sydney Morning Herald.