Former federal member for Reid and pub owner-operator Craig Laundy has praised the quick efforts of the industry bodies and all governments in enacting policies and guidelines to keep the pandemic-hit sector afloat.
Laundy, who runs the multi-million dollar family pub empire with his father Arthur, says any time an industry loses 10-11 weeks of business, its not good,” Laundy told The Sydney Morning Herald and The Age.
Laundy is a former Liberal Party politician who served as the member for Reid from 2013 until his retirement in 2019, when he went back to help run and expand the family pub business.
Such is the “well-oiled” machine of the sector, as soon as the northern beaches outbreak started to escalate in December 2020, Laundy – who owns two pubs in the area: the Daniel San and Parkhouse Mona Vale – rang NSW chief executive of the Australian Hotels Association (AHA) John Whelan and said he was closing them down “immediately”.
“Even before the NSW Premier Gladys [Berejiklian] closed down the northern beaches, we shut down pubs. We acted very responsibly as an industry, working closely with the [NSW] government to make sure we can help them get on top of things.
“We understood that if we didn’t get on top of things, the damage to our businesses longer term would be far greater.”
He said, while at times it may not seem it, the state, territory and federal governments have worked together to help contain the spread of the COVID-19 virus.
“Scott [Morrison, the Prime Minister] and Josh [Frydenberg, the federal Treasurer] realised quickly that Centrelink is not built nor constructed to handle mass unemployment, mass retrenchments and mass redundancy, to basically outsource that functionality to the private sector – knowing that industry has a direct link to employees, we became the distributor of JobKeeper effectively and that propped up the whole economy,” Laundy says.
“Being an ex-politician and having sat on several Council of Australian Governments (COAG) panels with state and territories ministers and walking away frustrated predominantly, I think we got a great demonstration of how our forebears, who set up our Federation, intended it to work.”
But while it has been a truncated year of trading for pubs with the national lockdown in March through to the second wave of lockdown in Melbourne and most recently on Sydney’s northern beaches, investors have have poured close to $1 billion into pubs around the country, from capital cities to regional towns.
In Sydney, where pubs are held by large family interests and investors, in equal measure, there is always a high turnover of deals. Once the venues were operating and near-normal conditions in October, there was whirlwind of sales.
“We understood that if we didn’t get on top of things, the damage to our businesses longer term would be far greater.”Craig Laundy, Laundy hotels
In contrast, Melbourne’s pub ownership is fragmented with many under the control of private families and array of former sports stars who don’t sell the assets as often as their northern state contemporaries.
In the pandemic-hit 2020, private investor and developer Iris Capital, run by Sam Arnaout, came top of the leaderboard for the second consecutive year with the purchase of the Narwee hotel in Sydney’s south for $45 million, through HTL Property.
In 2019, Arnaout set a record for the industry when Iris Capital paid $65 million for the Hotel Steyne in Manly on the northern beaches. That was sold by a consortium of the Laundy family, businessman John Singleton and investors Mark Carnegie and Robert Whyte.
Pub tsar Justin Hemmes has also added to his portfolio with the $32 million purchase last month of the Duke of Gloucester in Randwick in Sydney’s east from the Good Beer Company, through JLL hotels & hospitality group.
Laundy, who with his father is moving towards the development side with three new sites on the go – including the Marsden Brewhouse in western Sydney – and recently won council approval for a $35 million redevelopment of the Log Cabin Hotel in Penrith in Sydney’s west, attributes the sales to low interest rates and development potential.
“The demand is coming from the historic low interest rates and the ability to add value to some of these pubs that have not been able to do the projects in the past,” Laundy says.
Agents advising on the deals say demand has ‘skyrocketed’ since the easing of the lockdown laws in the past few months.
Director of Asia Pacific for HTL Property Andrew Jolliffe said the closing stages of 2020 were emblematic of the existence of a “pure intersection of market energy; a confluence of well priced and wholly accessible debt funding, married deftly with a distinct shortage of purchasable high grade stock”.
“Add to this phenomena A-grade commercial property, historically robust cashflow business models and pugnacious barriers to competitor entry, and one can quickly reconcile the fervour exhibited by those with both the means and desire to acquire hard yielding assets in this unprecedented low interest rate landscape,” Jolliffe says.
In one of the last deals for 2020, which was completed on January 2, 2021, private equity group White & Partners sold the Engadine pub in Sydney’s southern suburbs to a private Queensland-based developer for $31.5 million.
The sprawling complex comprises three properties across more than half a hectare on the corner of Station Street and Preston Avenue, Engadine. White & Partners paid $22.3 million for the site to the Liddy Family who had owned it for 39 years.
It comes with 26 gaming devices, a 60-space car park which separately enjoys development approval for a residential project.
HTL Property’s Dan Dragicevich, Andrew Jolliffe and Sam Handy advised on the sale. “There’s simply not many pubs that exhibit the unique upside levers the Engadine Tavern does,” Mr Dragicevich said.
Investment house Moelis, which paid $110 million for the NSW coastal Byron Bay Beach pub in late 2019, has added the Kinselas bar and Courthouse Hotel to its portfolio in Sydney’s Taylor Square enclave and intends to redevelop the site to a ‘mega pub’.
Nearby, Bruce Solomon and Matt Moran’s Solotel business sold the popular Green Square pub in Darlinghurst to St Vincent’s hospital, saying the area had changed dramatically and patronage had fallen considerably.
National director of JLL hotels John Musca said JLL transacted over $253 million worth of hotels in the last two weeks of November alone.
“Leading into 2020 the pub market demonstrated significant capital momentum, so once hotels reopened post COVID closures and reinstated sight lines into pent-up patron demand, the manageability of trade restrictions around social distancing and therefore future revenues ensured transaction levels again reflected the sheer weight of capital in the fourth quarter of 2021,” Musca says.
Source: Thanks smh.com