Arguably the best located traditional pub in the Sydney CBD the Criterion Hotel offers public, TAB and basement bars, bistro, gaming room with 30 machines (11 owned by the lessee), 19 newly ensuited hotel rooms and late trading approval. The hotel is set to benefit from a recent $3 million renovation and is ideally positioned opposite the new Pitt Street CBD Metro Station.

A syndicate headed by recently formed Tilley & Wills Co, were the successful purchasers in a highly contested sale process managed on behalf of Gallagher Hotel Management, by JLL’s John Musca and Tom Gleeson. The purchase follows Tilley & Wills acquisition of the Veranda Bar for $9 million in 2017 and its subsequent spectacularly successful relaunching. The group have also moved into the field of specialist hotel management and are currently operators of the Buena Hotel in Mosman and the Clovelly Hotel on behalf of private owners. They were also previous operators of the Windsor Hotel on Park Street which was resumed by the state government as part of the CBD Metro works.

Tom Gleeson suggested that “the process was tricky to navigate with the hotel being mid renovation but the business fundamentals, and particularly its location, are so robust the earnings upside was uniquely quantifiable”.

The Criterion Hotel has long enjoyed a position as a Top 100 state-ranked gaming venue and the opening of the Pitt Street Metro Station directly opposite and two subsequent 35 level and 43 level commercial office and residential towers proposed above, will be a boon for the long-term 20 year leasehold business.

“Sydney CBD hotel opportunities are in very limited supply so having received 12 bids from suitors across three states and of very differing buyer profiles, it was no surprise to see the hotel operation keenly contested”, said John Musca National Director.

Prior to the recent announcement of the Woolworths Mathieson demerger ALH sold the long-term leasehold interest in the Cambridge Tavern at Fairfield for $18 million in another transaction managed by JLL. “Both the Cambridge and Criterion leasehold sales point to a renewed capital appetite for hotel cash flows under the long-term leasehold tenure model” Musca suggested. This is supported by the progressive national expansion of KKR’s Australian Venue Company following the completion of the Coles hotels acquisition in March and their mooted earnings push prior to 2020 planned IPO.

The sale comes on the back of a spate of hotel transactions with over $300 million of sales announced in Sydney alone over the past few months and with JLL reporting no foreseeable end to the capital flight to the asset class.

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