JLL Hotels & Hospitality Group is delighted to be offering for sale the Chelsea Hotel, Chatswood, one of only three hotels with gaming machines in the area, by Expressions of Interest closing Tuesday 18th October 2022.

Located in what is knowingly considered the Golden Triangle of trading demographics, the hotel sits opposite the entrance to burgeoning Chatswood Station and offers 30 gaming machines entitlements, bistro, bistro bar and public bar. It also comes with the benefit of a recent DA approval for a beer garden deck which the new owners can construct immediately. In addition, the hotel recently received council approval to extend the trading hours from 1am to 4am, a literal gamechanger once the final ILGA application approval is achieved.

JLL Hotels Managing Director John Musca suggested “There are only two other hotels in Chatswood, with the Orchard Hotel consistently ranking in the Top 20 in the state and the Monkey Bar also ranking within the Top 100. Both of these hotels are also multi-level strata offerings like the Chelsea and demonstrate that the density of the commercial, residential and retail population in the immediate Chatswood precinct is the ultimate perennial business driver.”

The offering comes off the back of the recent sales of both the Longueville Hotel for circa $50m, Bar Broadway for $37 million and the Earlwood Hotel for $46 million, all at sub 5% yields and with none having the benefit of the full complement of 30 gaming machines and Chelsea’s catchment density.

Chatswood rates alongside Hurstville, Eastwood, Bankstown and Fairfield as one of the highest density town centre trading precincts with patron catchments that are traditionally supporters of hotel offerings including gaming & wagering, food & beverage. “There would be no hotel in any of those other precincts that is worth less than $50m today with many having values nearing $100m, so with the Orchard Hotel and Monkey Bar trading on comparable configurations and generating enormous EBITDA performance, it's very easy to draw a straight line to the Chelsea's growth potential”, said JLL Senior Vice President Ben McDonald.

With no likelihood of further gaming machine entitlements ever being released by the government, the value of these is widely projected to reach over $1 million each in the medium term, with recent transactions of $700,000 per entitlement mooted, up almost 100% in the past 12 months. Uniquely the underlying alternate-use strata value of the Chelsea, when combined with the hotel licence and entitlements, supports the $30 million plus expected price, in addition to the businesses growing profitability and earnings potential, which is very rare in the hotel asset class where value is predominantly attached to goodwill.

The vendors include Gallagher Hotel Management who recently acquired the Longueville Hotel. Patrick Gallagher commented that, “The Chelsea is starting to show real trade growth so it’s sad to sell it, but we have partners in the asset who wish to do other things and the market is strong for these kinds of assets, so the decision was made to divest now. We’ll just turn our family group resources to the Longy and get on with what we love doing in this great industry.”

For more information contact the agents via the contact form below.