In addition, he said the existing operator had done a “really good job” with the Windsor Castle Hotel.
“It’s a big pub with a good bistro, strong local following and diversified earnings, which will continue to grow,” Mr Cornforth said.
Harvest Hotels are not the only ones seeing value in pubs in regional towns.
Rich Listers the Laundy family and Merivale boss Justin Hemmes have also been buying hotels outside the major capital cities in places such as Wagga Wagga and Narooma.
So has private equity-backed Black Fox Property, which purchased the Australian Hotel in Ballina on the NSW North Coast in June for $9.5 million. Byram Johnston, the former CEO and chairman of funds administrator Mainstream Group, bought the 150-year-old Tarana Hotel near Lithgow in central-western NSW for $5 million in May.
Also looking towards the regions is syndicator Nick Quinn who along with his investment partners – Wagga Wagga publican Sean O’Hara and Michael Ireson– were the vendors of the Windsor Castle Hotel. The trio purchased the Manning River Hotel in Taree on the NSW Mid North Coast for about $20 million last month.
The acquisition of the Windsor Castle Hotel – a two-storey venue at 78 Lawes Street in East Maitland that comes with 30 gaming machine entitlements, a public bar, large bistro, beer garden, drive-thru bottle shop and accommodation rooms – takes Harvest Hotels ‘ portfolio to eight venues worth about $210 million and held in two funds.
In May, The Australian Financial Review‘s Street Talk column reported that Harvest Hotels was pitching a third fund at investors targeting venues in Adelaide and seeking to raise about $50 million.
Total returns of 17 per cent and a cash yield of 8 per cent were on offer, Harvest Hotels said, as it looked to acquire a $250 million portfolio within five years.
The sale of the Windsor Castle Hotel was brokered by JLL pub specialists Ben McDonald and Kate MacDonald.
“This transaction highlights the market’s willingness to pursue assets underpinned by robust trading fundamentals in key growth locations,” Mr McDonald said.
The sale follows JLL selling the leasehold to the Glenquarie Tavern in Macquarie Fields for $28 million last month – NSW’s largest ever leasehold transaction – and after the real estate firm listed The Oaks Hotel in Neutral Bay with price expectations of more than $175 million.