Pub tsar Justin Hemmes has snapped up the Tennyson Hotel in Sydney's Botany Road, Mascot, for $37.5 million - a record price for a hotel sale at a public auction.
It will cement the Merivale chain owner's presence in Sydney's suburban pub market, which is unaffected by the city-zoned lockout drinking regulations.
Mr Hemmes is expected to redevelop the site in the same way as his other properties to reflect the local demographic, which includes the nearby Green Square development.
His empire now stretches from Sydney's northern beaches with his revamped Newport Arms, to the CBD with the Ivy and Establishment, the eastern suburbs with the Coogee Bay Pavilion and the recently re-opened Paddington Arms, and the inner-south with the Alexandria Hotel.
Ray White Hotels Asia-Pacific director Andrew Jolliffe said bidding for the Tennyson was "spirited" and the final price tag was the highest paid at auction for a freehold going concern to date.
"Justin Hemmes completely dominated the 250-person crowd," Mr Jolliffe said.
He said the Tennyson was a popular multi-level hotel with 30 gaming machines. Notwithstanding its latest ranking at 87 in NSW, it required an upgrade and renovation plans designed by architect Paul Kelly had recently received development approval.
"Only a very small number of Top 100 gaming hotels have changed hands over the past few years, such is the vice-like grip the ever-diminishing number of consolidating ownership bodies hold on this particular asset class," Mr Jolliffe said.
"The hotel, even in its currently unrenovated state, attracts in excess of $8 million in annual receipts from predominantly high gross profit margin revenue centres."
The pub market is currently one of the hottest sectors in the property industry.
To take advantage of the demand, businessmen Geoff Dixon and John Singleton are selling two prized assets, the Marlborough Hotel in Newtown and Kinselas at Taylor Square, in Darlinghurst.
Mr Jolliffe, who is working on the two pub sales, said operators and traditional pub owners such as Mr Hemmes were coming back into the pub industry, which had once been dominated by investors.
He said the yields and the development upside that many of the pubs being sold were offering was the attraction.
Mr Jolliffe this week also sold Queensland's largest hotel, The Acacia Ridge in Brisbane's south west, to a Sydney-based fund for about $26 million.
Originally bought in 2014 for $16 million by Sydney hoteliers Peter Calligeros and partner Steve Farley, the hotel was marketed by Mr Jolliffe, together with CBRE Hotels agent Glenn Price.
Mr Jolliffe said the sale price was "directly indexed to the Acacia Ridge Hotel's huge 18,000 square metre block, situated prominently on the very active Beaudesert Rd in the blue-collar industrial precinct of Acacia Ridge".