Iconic Freehold In Booming Melbourne Location With Long Lease To Blue-chip Tenant Hits The Market

Posted on 27th February 2024

The freehold of popular pub Harlow, with a long lease to one of Australia’s premier operators and located in one of Melbourne’s hottest lifestyle locations, has hit the market in an offering that will set the early pace for the hotels sector in 2024.

Located in Melbourne’s “Silicon Yarra” - a global innovation precinct with a leading lifestyle and hospitality offering - the historic 447 Church Street, Cremorne property is occupied by major national tenant Australian Venue Co. (AVC), and is being offered for sale through Fitzroys’ Paul Burns and Chris James via Expressions of Interest closing Wednesday, 27 March at 12 noon.

The property comprises a 1,100sqm building, boasting a ground floor bar and dining space, a sprawling split-level beer garden, rooftop bar, and neon-drenched basement bar. It is on a 485sqm corner site with a 17.42m frontage to Church Street and of nearly 28m to Lesney Street. AVC’s 25-year lease runs to 2039 with two options of 10 years each, and currently returns $516,785 per annum with 3% annual increases and a market review at option.

“Showing huge confidence in the booming location, Australian Venue Co. recently undertook a $3.7 million renovation of the property, and ahead of time was very happy to extend its lease by 10 years, which now runs until 2039,” Burns said.

“This is a significant corner freehold in a premier commercial, retail, lifestyle and hospitality precinct. It’s incredibly rare for something like this to be offered. The investment fundamentals are extremely strong - featuring a net lease with a 25-year term with long options to one of Australia’s best hotel operators.”

AVC owns and operates a total portfolio of 210 venues across Australia and New Zealand, including St Kilda’s famous The Esplanade Hotel. The $50 billion alternative investments-focused firm PAG is currently completing a $1.45 billion deal to take an 80% controlling stake in AVC, effectively valuing the business at more than $1.81 billion. The AVC portfolio is reportedly expected to make $210 million in EBITDA for the 2024 financial year, an upgraded figure following the business trading “very well”.

“We’re expecting very keen interest from pub investors, and we’re likely to see broader interest from the market also. Ultimately, this is good real estate in a booming location. Passive investors looking for bottom-drawer, secure cashflow will see a blue-chip tenancy covenant in arguably the hottest suburban location in Melbourne,” Burns said.

“Australia’s hotels market has shown incredible resilience in the past few years, reflected in PAG’s recent backing of AVC,” Burns said.

The property is on a prominent corner site on Church Street, within the highly sought-after commercial precinct of Cremorne, which has a high concentration of co-working and creative spaces and international headquarters. Major commercial occupiers in and around the area include Carsales, Seek, Disney, Tesla, NDIS, MYOB, Adidas, Australia Post, Red Energy, Reece, 7-Eleven, Uber, Mattel, REA Group and 2XU.

A multitude of nearby restaurants cafés and bars along Swan Street and Church Street create what is broadly recognised as Melbourne’s best hospitality precincts. The commercial and lifestyle markets has attracted many Melburnians looking to live, work and play in the inner city, resulting in a surging local catchment living in new high-density residential dwellings.

Meanwhile, East Richmond Train Station is diagonally opposite the property, and numerous nearby tram stops along Church Street and Swan Street further enhance its accessibility and amenity.

The building at 447 Church Street has been occupied as a licensed premises since the 1850s. Prior to AVC’s refurbishment and operation was The Great Britain Hotel - or The GB, as it was affectionately known - a local institution that in past decades was an early champion of craft beers and hub for live local music.