Realising Value

Tennyson Hotel

Mascot, New South Wales

Acquisition Date 2015

Project Value $37 million

Equity Investment $13 million

Distributions 13% p.a. paid quarterly

Asset Class Hotel

Investment Strategy Acquire, Reposition, Distribute, Sale

Project Highlights
  • Development Approval for refurbishment work
  • Improved profitability by 25% within 12 months
  • 48% in Sale Price Within 18 Months
  • Gross IRR p.a. of >50%

With the Tennyson Hotel, White & Partners acquired an operating business with the potential to realise income growth by refurbishing the facilities and putting in place JDA Hotels, our hotel partner. White & Partners capitalised on the limited number of gaming hotels to acquire the Tennyson Hotel for $25 million or a 10.6% yield.

Despite its dated appearance and lack of capital investment the Hotel regularly ranks within the top 100 Hotels by revenue in NSW and had a net income of $2.6 million. The Hotel is primarily focused on gaming and holds the maximum 30 Electronic Gaming Machines (EGMs). The Tennyson also benefits from having a 32 metre frontage to Mascot’s main food and retail strip, Botany Road. Mascot is a 15 minute train ride to the Sydney CBD.

After 12 months of implementing new management and without any works, JDA Hotels was able to improve net income by 25% from $2.6 million to a yearly run rate of $3.1 million. White & Partners achieved Development Approval to refurbish the hotel including the bistro and sports bar and reconfigure the gaming, bar and bistro areas to allow the hotel to appeal to a wider clientele.

In December 2016, the Tennyson Hotel was sold to the Merivale Group (Hemmes Family) for $37 million, representing an increase of 48% within 18 months. White & Partners believe that the increase in sale price was primarily due to three factors:

  • Active management by JDA Hotels which increased efficiency and resulted in net income growth;
  • The Hotel’s desirable location within the growing suburb of Mascot; and
  • Yield compression in the broader Hotel industry