Willesee Puts Two Hotels Up For Sale
Sydney Morning Herald
Monday June 10, 2002
Media personality Mike Willesee hopes to raise as much as $16 million by selling two of his popular pubs, the Town Hall at Balmain and the Union at North Sydney.
The sales, by his Trans Media group, are among many listed on the weekend, reflecting continuing interest in the lucrative hotel sector.
Cash generated from poker machines is the main drawcard for buyers, although customers will also pay up for good food and a safe environment.
The high demand for pubs is despite the rise in interest rates.
The businesses become unprofitable for many investors when interest rates exceed 10 per cent and the cost of borrowings starts to erode returns.
While freehold pubs remain popular, the high cost of poker machine licences and low supply of quality stock has seen the spotlight turn to leaseholds.
The CBD market is the hottest and leasehold sales are in high demand as investors try to get a foothold.
Trans Media chief executive John Tully said the decision to sell the hotels was part of normal business activities.
The businesses had developed well and it was time to move on to other investment options, he said.
Trans Media bought the Union Hotel in 1997 for $2.575 million from Vafoga, a company associated with Terrence Agnew.
In 1999 Trans Media paid $4.6 million for the Town Hall.
Mr Willesee, who was appointed an Officer of the Order of Australia in the Queen's Birthday Honours for his support of a range of charitable groups, will keep his Watershed pub at Darling Harbour and the Top End pub in Darwin.
Specialist property agents said the two pubs he is selling could be worth $7 million to $8 million each.
Both have been extensively renovated and boast good returns from poker machines, food and general entertainment.
The Mansions Hotel at Kings Cross has also been listed through Greg G Smith agents and Mike Wheatley of Knight Frank, who is also selling the Trans Media pubs.
Gerry Quinlan, a director of Manenti Quinlan, said there were two cycles in the property market: one where everyone made money and the next where only smart people made money.
``We are coming to the end of phase one, where everyone bought into pubs for the poker machines," Mr Quinlan said.
``Now we are entering the next phase.
``Demand is very strong and we expect that to continue until rates hit 10 per cent then the crunch will come.
``Pubs in the last decade have re-established themselves as viable hospitality centres and the combination of the poker machine money and rising property value has been the daily double."
© 2002 Sydney Morning Herald
