In December 2016, The Tennyson Hotel was sold to the Merivale Group for $37.05 million, equivalent to an 8.25% yield. The sale was the highest price secured in a public hotel auction. In partnership with JDA Hotels, White & Partners acquired the Tennyson Hotel in Mascot for $25 million in 2015. The sale price represents an increase in value of 48% in 18 months.
The contributing factors to the resounding success of the sale were the strong underlying fundamentals of the asset and favourable market conditions. To a prospective purchaser, the Tennyson Hotel offered:
Hotel yields are typically last to follow the trends of core markets. The sale of the Tennyson Hotel at 8.25%, in conjunction with the recent sales of the Lantern portfolio, cements yields for Sydney gaming pubs at pre GFC levels.
For investors in the syndicate, the returns realised in 18 months (IRR of approximately 55%p.a.) where originally planned over 5 years. A great example of how in a strong investment environment, prime assets can achieve results well beyond expectations.