Bondi’s Tea Garden for sale at $40m

On the market … the Tea Gardens Hotel in Bondi. Photo: Tamara VoninskiThe popular Tea Gardens pub at Bondi Junction is on the market with a price tag of about $40 million.

It comes amid a flurry of pub deals, most recently being the sales of the Bellevue in Woollahra by the John Singleton-backed Riversdale Group, the Beach Palace Hotel in Coogee, worth about $30 million, by Justin Hemmes of Merivale and the Evening Star in Surry Hills.

The Tea Gardens selling agent, Andrew Jolliffe of Ray White Hotels Australia, said it was rare for a freehold asset of this magnitude, position, heritage and earnings capacity to come onto the market.

The seller is an interstate investment group who has owned the asset for the past seven years, which is a typical investment cycle time frame.

‘‘This is undoubtedly a blue chip freehold hotel asset and its close proximity to Westfield’s and Myer’s flagship stores in Bondi, as well as the respective train and bus station interchanges nearby, meaning the level of passing trade and local pedestrian and car activity is staggering,’’ Mr Jolliffe said.

It is set over two levels with in excess of 800 square metres of land including, outdoor areas, a highly sought after balcony, large kitchen operation and 30 gaming machines.

‘‘The latest quarterly Top 200 gaming rankings highlight the hotel’s sizeable jump from 121 in September 2013 to 88 in the state of NSW for the December 2013 quarter,’’ Mr Jolloffe said.

‘‘The annual profit delivered regularly by the Tea Gardens puts it firmly in the A-Grade asset class, irrespective of category, and means that it enjoys similar status to the Coogee Bay Hotel, the Golden Sheaf in Double Bay, the Newport Arms and the recently traded Steyne in Manly and Watsons Bay hotels.’’

Mr Jolliffe expects interest to come from many sources, including experienced long term hoteliers who have been active in the market in the past two years, as well as several sophisticated and well funded investment groups who have also been quietly amassing an enviable suite of high performance and strategic hotel assets.

‘‘Assets like the Tea Gardens are iconic for a reason. The barriers to entry for competitors in such a highly developed area are high, the number of hotels in the broader area is comparatively low to others, and the sheer volume of people in and around the hotel is the very reason assets of this grade are seldom traded.’’

Elsewhere, the management of the Riversdale Group has undergone a restructure, as it prepares to go public later this year.

The co-founder and chief executive of Riversdale, Paddy Coughlan has moved to a new role to focus on boosting the portfolio, through new acquisitions and will work with the backers, Mr Singelton, ex head of Qantas Geoff Dixon and investment advisor Mark Carnegie to create new areas of investment and growth for the group.

Riversdale co-founder Rod ‘‘Ned’’ Kelly will work from Brisbane, where two pubs there now generate about 40 per cent of the business.

The Australian Pub Fund, which owns the hotels and will look to float, will look for a new chief executive to oversee the corporate arm of the business.

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