Realising Value

Tennyson Hotel

Mascot, New South Wales

Year of Purchase 2015

Acquisition Price $37 million

Realised Return >30% p.a.

Asset Class Hotel

Passing Yield >12% p.a.

Project Highlights
  • Equity investment $13 million
  • Improved profitability by 25% within 12 months
  • 48% increase in sale price within 18 months

White & Partners acquired an operating business with a view to realise income growth through implementing operational efficiencies, and refurbishing in order to sell. By securing development approval to refurbish the facilities and putting in place a hotel partner to actively manage business income growth, the asset sold at an increased price of 48% in 18 months.

White & Partners capitalised on a limited number of gaming hotels to acquire the Tennyson Hotel for $25 million, a 10.6% yield. This was against a backdrop of yield compression in the broader hotel industry.

The hotel’s desirable location within the growing suburb of Mascot was key to the acquisition. 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 Hemmes family’s Merivale Group for $37 million.