White & Partners in partnership with JDA hotels, identified an opportunity in an under performing hotel lacking suitability to a changing demographic. The General Gordon Hotel was acquired at a favourable yield of 10%, well above the current market yields of circa 8.5%, as achieved in multiple sales in Sydney over the past 6 months.The Hotel is located in the Inner West region of Sydney, approximately 7km west of the Sydney CBD. Part of the town centre, the Hotel is positioned directly opposite the Sydenham railway station, a major stop along the expanding Bankstown line.
Although licensed by the Office of Liquor, Gaming and Racing (OLGR) to trade until 3am, the Hotels approved trading hours from Council had lapsed in 2010 under the previous ownership. No other applications for extended hours had since been submitted introducing a unique aspect to the transaction.
During the due diligence process, White & Partners had discovered that although there was a discrepancy with the licence hours, there had been a consistent history of Council approving extended hours spanning 34 years. Along with this precedent, it was also noted that there have been no serious incidents recorded against the Hotel. With these factors under consideration White & Partners understood the regulatory risk leading to the notably above market acquisition yield.
Post settlement, White & Partners has engaged town planning consultant Design Collaborative to review licensing consents previously approved by Council and submit a new application to bring licensed hours inline with Council approved hours.
The Manager is also working on reinventing the Hotel to exploit the changing demographics of the area. Stay tuned for further details.