Developer Mark Toma ordered to settle $61m pub deal
Mark Toma, the former director of high-flying pub investor and developer Virtical, has been ordered to complete the $61 million purchase of two well-known Sydney watering holes, Kinselas and The Courthouse in Darlinghurst by the NSW Supreme Court.
The ruling follows the vendor of the two hotels on Oxford Street’s Taylors Square, the hospitality funds arm of ASX-listed MA Financial, suing Mr Toma and four companies he owned and that he directed at the time to enforce a September 2023 sales agreement.
At the time of the deal, the four companies – Kinselas Pty Ltd, Kinselas Management Pty Ltd, The Courthouse (NSW) Pty Ltd and The Courthouse Management Pty Ltd – came under the umbrella of private developer and investor Virtical, led then by Mr Toma.
On June 18, Justice Kelly Rees ordered the purchasers to perform their obligations under four interdependent contracts and pay the balance of the purchase price for the Taylor Square hotels by July 1.
When this did not transpire, MA Financial (through subsidiaries that owned and operated the hotels) pressed for orders that Mr Toma, as guarantor of the purchaser, fulfil the contracts.
While Mr Toma submitted that the purchaser was the only party obligated to pay the purchase price, Justice Rees disagreed.
The judge ordered that the Kinselas Land Contract, the Kinselas Business Contract, the Courthouse Land Contract and the Courthouse Business Contract “be specifically performed by the fifth defendant [Mr Toma] and carried into execution”.
Justice Rees ordered Mr Toma to “pay the balance of the monies due” under the four contracts and inclusive of the “balance of the purchase price, interest, and adjustments as required under the contracts”. This is to be paid to MA Financial by 2pm on August 23.
The defendants were also ordered to pay MA Financial’s costs.
In its published judgement, the court said Mr Toma was “replaced as a director of the purchasers on 28 November 2023 by Mr Palasty, apparently as part of a broader restructure of multiple companies in which both gentlemen were involved. Mr Toma remains the sole shareholder of each company”.
A spokesman for MA Financial, which manages the now unlisted Redcape Hotel Fund and other pub and hotel assets, declined to comment.
A spokesman for Mr Toma and Virtical also declined to comment. It is understood the defendants intend to appeal the ruling.
The failed settlement of the Taylor Square pubs follows the collapse of another deal involving a famous Sydney pub, the circa $175 million sale of The Oaks Hotel on Sydney’s Lower North Shore to a mystery vendor.
MA Financial paid $67 million for the two Taylor Square pubs in 2020, holding them in an unlisted fund and with plans to consolidate and redevelop the precinct. However, the fund manager abandoned these plans and put them on the market instead.
Under the leadership of Mr Toma, Virtical burst on to the hospitality scene last year when it bought the Republic Hotel in the Sydney CBD for about $40 million, the Adelphi Hotel on Melbourne’s Flinders Lane for “some $18 million” alongside the contracted but never settled the purchase of the Taylor’s Square hotels.
At the start of August, Virtical put the Adelphi Hotel on the market in Melbourne, following a partial refurbishment.
“We are reluctantly putting Adelphi on the market as it is a great asset with enormous potential, however we have decided to focus on our Sydney CBD assets,” Mr Palasty said.
“We have also decided to exit our planned property developments at Southport in Queensland and Newcastle, as we are concentrating on our prime hospitality locations in Sydney’s downtown CBD.”
