Salmon Swaps Rydalmere Tavern for Chelsea Hotel

Hotel investor Rod Salmon has sold a Sydney property and promptly bought another in deals worth about $100 million combined.

Salmon sold the Rydalmere Tavern in western Sydney to Andrew Lazarus’s Dalz Pty Ltd in October for about $65 million, industry sources said, which includes $17.24 million for the land.

Then last month he picked up the Chelsea Hotel at Chatswood for about $35 million.

The deals were handled by JLL hotels and hospitality managing director John Musca and senior vice-president Ben McDonald.

Patrick Gallagher was expecting to sell the Chelsea for $30 million in an international expressions-of-interest campaign managed by JLL. 

The Rydalmere Tavern comes with 30 gaming machine entitlements, more than 3000sq m of space and a restaurant on the ground floor as well two commercial tenancies on the first floor of the 1461sq m Victoria Road site. 

Current tenants Totally Workwear and Plus Fitness Gym will be staying on and bring in more than $400,000 in net rental revenue a year. 

▲ Andrew Lazarus has bought the Rydalmere Tavern from Rod Salmon.

Salmon created the tavern after developing two adjacent commercial properties. 

McDonald said the opportunity to buy an asset such as the Rydalmere Tavern was rare.

“Already a highly ranked gaming venue, the chance to acquire assets underpinned by growing underlying cashflows at this premium end of the market is rapidly diminishing as a result of widespread asset consolidation,” McDonald said.

“Combine that with more than $400,000 in net passive income from the commercial tenancies, the underlying development scope plus sought-after geographical location and we think the result speaks for itself.”

The Chelsea Hotel, opposite Chatswood Station, has 30 gaming machine entitlements, a bistro, bistro bar and public bar, and planning permission to add a beer garden deck. 

It also has council approval to extend its trading hours until 4am. 

Musca said that for investors hotels were a relatively stable investment despite economic uncertainty.

“The perpetual nature of hotel cashflows in key markets have shown their unrelenting ability to perform despite changing economic conditions,” Musca said.

“Long-term hotel investors continue to seek out assets offering value-accretive characteristics for existing portfolios, and we expect that to continue in 2023 despite a moving macro-economic environment.”

JLL Hotels has recorded $1.2 billion across 78 transactions for 2022 with more than $350 million in sales being finalised last week. 

Endeavour Hotels recently purchased a coastal pub for $25 million while billionaire Sam Arnouat just bought ex-Wallaby player Bill Young's Wisemans Inn Hotel in an off-market deal.