Endeavour Hotels Acquires Coastal Pub for $25m

Sydney-based investor Mark Kennedy has picked up the Five Islands Hotel in Wollongong for about $25 million.

The 2300sq m venue at 87-93 Five Islands Road, Cringila, was sold by Ludlow Hospitality Fund, founded by hotelier Paddy Coughlan. 

The property, previously the Cringila Hotel, was acquired by Coughlan in mid-2021 from Oscars Hotels—led by brothers Mario and Bill Gravanis. Oscar Hotels purchased the pub for just $1.1 million in 2017.

The hotel, complete with a 24-hour liquor licence and 22 gaming machines, underwent a makeover in 2020 that included the creation of a new public bar, lounge bar and bistro. 

The on-market sale campaign was managed by HTL’s Sam Handy, Dan Dragicevich and Andrew Jolliffe.

Jofflie told The Urban Developer incoming owner Mark Kennedy, who holds an portfolio of hospitality properties in Sydney’s metro area under Endeavour Hotels, had been actively looking at regional locations. 

Endeavour currently holds the keys to the Clarendon Tavern and Newtown’s Coopers Hotel, which Kennedy purchased in 2019.

“The phenomenon of sub-metro regional and coastal assets transacting for metro prices is not slowing down, it’s becoming more prevalent,” Jofflie said.

“Unsurprisingly, we enjoyed multiple offers to purchase the Five Islands Hotel, with the majority of the interest coming from Sydney investors looking to take strategic positions in growth corridors radiating outwards from the traditional metro core.” 

Having recently transacted both the North Nowra Tavern, for $23.1 million, and the Corrimal Hotel, for $32.5 million, the sale of the Five Islands Hotel represents HTL Property’s third large Illawarra region hotel asset sale this year.

While the successful purchaser of the North Nowra Tavern has not been disclosed, the Corrimal Hotel was purchased by a highly experienced and second generation hotelier with multiple existing hotel assets.

▲ Ludlow undertook some fine-tuning and consolidation of the revised hotel, before listing it for sale again in April.

More and more pub groups have been emerging during and post-pandemic with stronger balance sheets and looking to invest in diverse, large-format hotel accommodation assets within areas experiencing strong population growth.

Long viewed by many investors as trophy assets, pubs offer attractive core investment fundamentals such as being situated on large sites in sought-after metropolitan and regional locations that underpin capital value growth.

They also provide steady and growing rental income through long “set and forget” triple net leases to quality tenants who will often spend millions to upgrade and improve the venues to attract patrons.

Major metropolitan venues and an increasing number in regional and coastal towns have continued to change hands at eye-watering prices over 2022 as investors, offshore groups and publicans have poured money into the asset class.

Earlier this year, The Crossroads Hotel in Casula, 34km south-west of the Sydney CBD, smashed the previous highest price paid for a pub, after selling to former Sydney Lord Mayor Nelson Meers for about $160 million.

The Laundy family, with partner Flower Hotels, also bought the Port Macquarie Hotel and Tacking Point Tavern, both on the NSW Mid-North Coast while the Marlow Hotel Group purchased the sprawling Mill Hotel in Sydney’s Milperra.

Forex trader and returned expatriate Adam MacFarlane also joined the rush of wealthy investors buying trophy Sydney pubs, purchasing the 151-year-old Lord Roberts Hotel in Darlinghurst for $22.5 million in July.

Earlier this week, Sam Arnaout’s Iris Capital picked up hotelier and former Wallaby Bill Young’s Wisemans Inn Hotel on Sydney’s waterfront for a reported $10 million.

It follows Arnaout’s purchase of Strathfield Hotel in Sydney followed by three pubs and two accommodation hotels in Alice Springs.

All up, around $1-billion-plus worth of property has sold so far this year, which puts the pub sector well on track to exceed the record $2 billion in pub transactions in 2021.