White & Partners was attracted to the potential in the Padstow Park Hotel asset to realise income growth by refurbishing the facilities whilst concurrently transforming an under-utilised land holding of 1,200sqm into a residential development.
Despite its dated appearance, lack of capital investment and strong local competition, White & Partners recognised that the Padstow Hotel benefited from being located opposite the railway station and close proximity to the town centre. With partner JDA Hotels, White & Partners capitalised on the limited number of gaming facilities to acquire the hotel for $13.7 million reflecting a 10% yield on passing income.
After seven months of implementing new management and prior to any works, JDA Hotels improved net income by 23% from $1.3 million to an EBITDA of $1.6 million.
White & Partners achieved development approval and refurbished the hotel including a new bistro, sports bar and gaming room. The hotel was subsequently revalued at $22.5 million, representing an appreciation of 64% in 24 months.
White & Partner sold the Padstow Park Hotel for $26 million at auction, achieving a sale price that was a 15.6% premium to valuation. Investors received a net equity multiple of 1.95x and an IRR of 25.4% over a 38 month term.