The newly demerged Endeavour Group has made its first substantial pub purchase, teaming up with Charter Hall to buy the Terrey Hills Tavern in Sydney for around $39.8million.
Endeavour Group major shareholder Bruce Mathieson flagged last month that an acquisition spree was on the cards for the newly formed entity, which was spun off from Woolworths in June.
Mathieson told The Australian Endeavour had been “constrained” from buying pubs and hotels in the past year.
“We are 100% in a different situation now and can be a lot more aggressive now that we are free [from Woolworths],” he said.
“I think people will be surprised by what we will buy. In fact, I know so.
“The good thing now is we will be completely independent and be able to concentrate more on our core business, particularly on the hotels side. People have underestimated hotels for so long that it is a joke.
“Almost 70% of the pubs out there were built before the 1940s. They are not going anywhere and they don’t go out of fashion. It is not like having to get the latest piece of clothing. Johnnie Walker or Veuve Clicquot, they are always going to be there. You are not going to turn whisky into something electronic.”
The Terrey Hills Tavern is on a landholding of 15,870sq m, and produces annual revenues of more than $10million.
Charter Hall is paying $26.3million for the freehold with a new 15-year lease to Endeavour Group covering the remainder of the cost. Charter Hall has a long-term partnership with the liquor group and is the country’s largest owner of long-term leased freehold pubs.
“We recognise that an opportunity to acquire a Sydney metropolitan hospitality asset of this land size and asset quality is rare and we are pleased to be working with ALH on strategically growing the portfolio while also deepening our partnership,” Charter Hall chief David Harrison said.
“This acquisition is in line with our portfolio strategy that seeks to extract value from low-risk, long-term leased property operated by best in breed tenant customers such as ALH.”
The suburban pubs and was sold via HTL Property, by the Feros Group, led by Sydney publicans Nick and Chris Feros.
“The highly competitive sales process for the ever popular, ultra-large format Terrey Hills Tavern drew considerable national interest from a variety of buyer profile,” HTL’s Dan Dragicevich said.