[+] No Easy Pickings in RSL Redevelopment

A wave of lucrative, high-profile RSL redevelopments is coming to fruition, with another tranche of proposals under way, but proponents warn that club projects shouldn’t be viewed as low-hanging fruit. The combination of long- and short-term trends in the hospitality and clubs sector have made RSLs and other community clubs an enticing target for developers in recent years, with the number and scale of projects accelerating. With favourable locations and site sizes, and a hungry partner, the financial appeal for developers is obvious. But proponents involved in club redevelopment ventures warn that the sector comes with a its own set of considerations and requirements, and that each project can be a difficult and individual process to get right. Chairman of Capital Corporation Steve Grant suggests that understanding the existing business model and operations of the club, as well as convincing voting club members to get behind a plan, is crucial to success. “We’ll go in, we do a demographics study, we look at their financials, we’ll understand the use of this space,” says Grant. Capital Corporation’s project Bond, a joint venture with Bondi Junction RSL, is currently under construction with residential apartments at its core, but other club redevelopments in recent years have featured commercial towers, retail, hotels, or community and hospitality spaces. “We’re going to have a holistic view of the club and see how we can improve the situation, regardless of whether it’s to knock it down tomorrow, or come up with a staged conversion, or whatever happens. Every case is different,” Grant says. “They don’t always have spare land, they don’t always have good zoning. It’s really about meeting the people, understanding their constraints and putting together something that is going to help them survive and prosper.” ▲ Capital Corporation’s joint venture with Bondi Junction RSL, Bondi. Stephen Abolakian is managing director at Hyecorp, developers of a joint-venture senior living facility with Willoughby RSL , which will break ground next year. He says club projects go beyond simple transactions, and that building trust and understanding for partnership agreements is a long, involved process. “We spent a couple of years understanding what was important for the club, the members, and the community,” Abolakian says. “And then, once understanding all that, seeing if there is a planning and development pathway that can achieve what they wanted. It took years of discussions before there was any pen to paper—we’re probably eight or nine years in now.” “Every club is different. Every membership base is different. You can’t have a short-term view on this. It’s absolutely a long, long game. “If you don’t have that local community understanding, you’re not going to be able to do what’s really important. Absolutely it has to stack up, it has to be fundable, but you also need to tick the community box. You have to get that bit right.” “I’m in the area. I’m here. I’ll be eating at this club with my family, it’s my local,” Abolakian adds. Unlocking potential RSL NSW has acknowledged that the brand is associated with “social clubs, pokies, old people, cheap food and cheap drinks”, while both long-term consumer trends and the impact of Covid shutdowns on hospitality have hurt clubs’ revenue. “Most clubs are asset-rich and cash-poor, as the old saying goes,” Abolakian says. “They need to be, obviously, unlocking the development value. But they also need to ensure the long-term survival of the club and its members, and its social purpose.” “Is there some form of non-trading income that can also be generated out of development? How is the club going to ensure long-term survival instead of a sugar hit up front?” Grant agrees that a successful joint venture with a club will add value beyond rezoning. “It’s not all about building a very tall block of apartments and going home afterwards and thinking, ‘Gee, that was good’. You need to have done something to enhance their operation, so they’ll be around for many years to come,” he says. ▲ An artist’s impression of the 18-storey commercial tower Endeavour Property has worked with Chatswood RSL on. It is in the final stage of due diligence with an unnamed development partner. The managing director of Endeavour Property Andrew Gibbons has worked with Chatswood RSL on its 18-storey commercial tower project, currently in the final stage of due diligence with an unnamed development partner. He warns that distributing added value equitably can be a challenge for clubs. “One of the models that has been put in place on many club projects is that a developer will come along, in those instances where the clubs have been in various states of financial stress, and they will value the land at highest and best-use planning approval,” Gibbons says. “Then they will pay for the planning component, and they will share the upside 50-50 with the client. That’s the typical model for clubs that don’t have the cash flow to do their own planning work and add the value.” “So the developer will be helping the club significantly extract the value, but they’ll be also taking a lot of that value themselves. It really depends on the financial capability of the club to be able to fund some of the development planning through a DA, to then have the option of choosing a development partner with that value already added.” Some clubs may be able to self-fund early development work, as in the case with Chatswood RSL , while clubs with extremely distressed finances and poor long-term prospects at the site may consider sale and relocation. Club projects in all shapes and sizes Among projects in early development in Sydney, Castle Hill RSL has proposed a $151-million senior living complex, alongside residential care facilities and other amenities, while Burwood RSL is under way with a $209-million commercial and entertainment district . Petersham RSL is pushing a residential and hospitality project, while Campbelltown RSL is working through the approvals process for a hotel tower. ▲ Tarragindi Bowls Club in Brisbane is about to begin construction of its retirement village project. In Brisbane, Coorparoo RSL sold its site this year to Bolton Clark for $10 million, with a short-term leaseback clause. Bolton Clark intends to construct a vertical retirement village or residential tower on the site. Melbourne’s Ringwood RSL is undertaking a $120-million project in conjunction with partner Costa Asset Management, a consortium, to add a mixed-use commercial space and apartments. A number of clubs have early-stage projects under way in the sub-$100-million range, including a project to build retail, residential and commercial towers at the Cyprus Community Club in Sydney’s Stanmore. The club had been facing forced administration and a sell-off of its assets before refinancing through a community share-raising and successfully rezoning. Bowls clubs also fit the sweet spot for site and asset characteristics and membership demographics, with a four-building over-55s development by Mirvac currently under construction at Waverley Bowling Club. In Brisbane, the Tarragindi Bowls Club will enter construction phase in November 2021 for another retirement village project. The success of these projects sits in stark contrast to the troubled Balmain Leagues Club site, which has undergone multiple rounds of failed proposals for more than a decade, before being subjected to a compulsory lease by Transport for NSW this year. Mixed-use towers of up to 24 storeys had been proposed, but the site will instead be used to store material related to construction activity on the Western Harbour Tunnel. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] No Easy Pickings in RSL Redevelopment

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[+] No Easy Pickings in RSL Redevelopment

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