Home' Australian Hotelier : AH MARCH 2016 Contents 6 | MARCH 2016 AUSTRALIAN HOTELIER
Bondi Asset Management (BAM), the newly established, unregistered
fund has made its first asset purchase for investors, the Vauxhall Inn of
Western Sydney. BAM is headed up by CEO Stuart King, and director
Andrew Lazarus, who also leads the Eastern Hotels Group (EHG). BAM
purchased the Vauxhall Inn in Granville from EHG as its seed asset for
investors, who pooled together over $15 million for the purchase. The
difference was made up by debt funding.
While EHG offered up the Vauxhall Inn as the seed asset for BAM’s first
fund, King insists that the two companies remain separate businesses.
“It was very much an arm’s length transaction with the asset moving
into the fund based on an independent valuation.
“EHG is a completely separate entity. Some of EHG’s assets will be
interesting to BAM; some will not,” states King, adding “I would expect the
relationship to remain at close quarters as BAM looks to leverage EHG’s
management skills to maximise the returns from the gaming assets in
The fund for Vauxhall Inn was settled last week, with the team at BAM
already looking to set up a second fund for another hotel. While King would
not comment on which asset BAM was interested in, it will be another
western Sydney hotel, which is currently its main area of interest.
“It is the growth of Sydney as a major city that we are investing in and
the urban sprawl pushing for greater development and infrastructure
spending out west. Population growth is a key determinant here with a
marked increase in the number of people living and working in centres
such as Parramatta and Liverpool. The time is ripe for a significant
upgrading of infrastructure assets (both public and private) in Western
Sydney and this in turn will bring increased residential and commercial
BAM’s plans for 2016 include maximising returns for investors of
the Vauxhall Inn fund, securing a second asset to offer investors before
identifying more assets for the portfolio, which may also include other
assets besides hotels.
“Hotels are currently our main focus, but we are certainly not going to be
limited to hotels. Hotels still offer very attractive running yields which, in an
ongoing low interest rate environment, we believe will offer significant scope
for cap rate compression on these assets,” explains King.
By all accounts, shareholders at BAM are expecting the Vauxhall Inn
fund to do quite well for its investors. While before settlement the hotel had
a running yield of more than 10 per cent, King suggests that the ROI could
be much higher.
“We believe that this yield, combined with development opportunities
and an expected compression in capitalisation rates on these types of
assets will see an IRR in excess of 25-30 per cent.”
The BAM fund purchased
the Vauxhall Inn off the
Eastern Hotels Group
BEER DELUXE OPENS ITS
FIRST SYDNEY SITE
Last month, Armada Hospitality Group, launched its first Beer DeLuxe
venue in Sydney, situated in one of Sydney’s hospitality hubs, King St
Wharf near Darling Harbour. There are currently four other Beer DeLuxe
venues, two in Melbourne (Federation Square and Hawthorn) and two in
regional New South Wales (Albury and Wagga).
Having taken over the Sydney site in December, the Armada
Hospitality Group was quick to renovate the site and have it open within
a couple of months. Beer DeLuxe King St Wharf offers a beer menu that
includes 150 beers on tap and bottled that changes seasonally.
Director of Operations for the Armada Hospitality Group, Craig
Shearer, says the group have been looking for a Sydney venue for a while.
“We had been planning on a Sydney Beer DeLuxe for some time
now, and came close on another couple of sites two to three years ago,
however we waited until we found the right opportunity to launch in a
space that ticked all of the boxes for our brand.”
Shearer said the move into Sydney was part of a more national
strategy, and as a nod to the Sydney beer scene. “The Sydney market has
a thriving craft beer community with some amazing local brewers, and
having the chance to showcase their beers on tap was a major drawcard.
Our aim is to make Beer DeLuxe a national brand so having a presence in
Sydney is very important to us.”
The King St Wharf location was also a strategic choice with how the
group wanted to place their latest venue in the Sydney market.
“We love King St Wharf and think that the precinct fits our brand
extremely well. There is a high number of passing foot traffic including
CBD workers, tourists and general Sydney-siders out for a night out, and
while there are some awesome craft beer focused bars and pubs located
in the city fringe suburbs, we felt there was an opportunity to bring
this focus to the city where the craft beer movement may have been less
represented. As Barangaroo comes to life over the next few years, it can
only be good for us and the other operators along King St Wharf.”
There are over 150
beers to choose
from at Beer
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