This was published 4 years ago
Australian Venue Co to take over Brunswick's Sarah Sands Hotel
For boutique beer-drinking Brunswick hipsters it might be the equivalent of barbarians at the door of their favourite drinking hole.
Developer Joe Chahin’s Peregrine Projects has leased the historic Sarah Sands Hotel in Sydney Road to pub group Australian Venue Co, the country's second largest hotel operator backed by private equity giant KKR.
Australian Venue Co has signed a 10-year deal, with two 10-year options, to run a gastro pub in the two-storey hotel once its renovation is complete in November next year.
Mr Chahin swooped on the Brunswick pub four years ago when it was trading as the Irish-themed Bridie O’Reilly’s, purchasing the 1120 square metre corner site as a development play for $6.03 million.
The Sarah Sands pub in Brunswick with an artist's impression of the yet-to-be-built apartments behind it.
Early plans for a five-storey apartment were replaced with a seven-storey tower designed by JCB architects on surplus land behind the original 1854 hotel which will be retained in full and restored under the guidance of heritage experts Lovell Chen.
Australian Venue Co will model the pub on two other venues it runs: Middle Park Hotel and the Prince Alfred Hotel in Richmond.
In June 2017, KKR - the global investment house made famous in the book Barbarians at the Gate - paid $190 million for an 80 per cent stake in the former Spotless Group and Healthscope boss Bruce Dixon’s pub portfolio. Mr Dixon and other managers held on to the rest.
The pub group then went on to buy Coles Group’s 87-strong Spirit Hotels portfolio in March this year, making Australian Venue Co the second largest hotel operator in the country with nearly 160 venues in Australia and New Zealand.
Mr Chahin said the pub deal comprised more than two thirds of the financial value of the redevelopment of the pub site.
Peregrine has sold nearly one third of the 31 apartments slated to be built above a high-end “providore-style” grocery food space on the ground floor. Construction of the apartments will finish in two years' time.
The apartments, predominantly two to three bedders between 80 and 120 sq m, were targeted at owner occupiers, the strongest buyer segment in Australia’s struggling apartment sector.
The lease deal to Australian Venue Co, along with Peregrine’s focus on two office projects in Collingwood and Richmond, has “cushioned us from what’s been happening in the residential space over the last few years,” he said.
Mr Chahin said he was approached by multiple hotel operators over the past year as demolition and construction on the site got underway.
A list of potential groups was whittled to a shortlist of three before Australian Venue Co were chosen. Their food concept and depth of management matched with the project, he said.
The development will have a completed end value of $45 million. Peregrine will hold the pub’s freehold and the apartment’s retail space long term, he said.
Changing demographics in Brunswick, which is now skewed towards younger university-educated professionals, has prompted a spurt of apartment projects.