Realising Value

General Gordon Hotel

Sydenham, Sydney

Acquisition Date 2017

Acquisition Size $18.1 million

Equity Investment $9.1 million

Acquisition Yield 10.3%

Asset Class Hotel

Investment Strategy Acquire, Manage, Refurbish

Project Highlights
  • Secured new equity and debt funding
  • Implemented new management
  • redesign hotel

White & Partners in partnership with JDA Hotels, acquired the General Gordon Hotel off market for $18.1 million at an acquisition yield of 10%, well above prevailing market yields of circa 8.5% achieved at the time of acquisition.

The Hotel is located in Sydney’ Inner West region, approximately 7km west of the Sydney CBD. Part of the town center, the Hotel is positioned directly opposite the Sydenham railway station, a major stop along the expanding Bankstown railway line. Location was a key aspect which underpinned the appeal of the asset to White & Partners. JDA Hotels also identified the Hotel as underperforming, and not in tune with the evolving catchment.

The below market acquisition price was due to a discrepancy between licensed hours issued by the Office of Liquor, Gaming and Racing (OLGR), and the Council (DA) approved trading hours.

During due diligence, White & Partners had uncovered that although there was a discrepancy with the DA hours, there had been a consistent history of Council approving extended trading hours spanning 34 years. The pending approval of extended DA hours will bring the value of the Hotel inline with current market yields, providing an immediate arbitrage of circa $3 million to the Trust.

White & Partners continues to work on reinventing the Hotel to better match the changing demographics of the area. The Inner West is renowned for its food culture and JDA Hotels will reposition the Hotel to provide a superior bistro offering. The key to the Hotels success will be to diversify the offering into a 50 / 50 gaming / food and beverage venue. Currently over 65% of revenue originates from gaming with bars and bistro accounting for only 26% or revenue. Renovations will be undertaken to not only improve the gaming offering but also create an entirely new dining experience.