McGrath director pays huge premium for Sydney's Hyde Park Inn
Sydney developer Central Element, co-owned by McGrath director Shane Smollen, has bought the well known Hyde Park Inn on Elizabeth Street and a small office building behind it for $95 million from RSL NSW.
The deal was struck at a whopping 77 per cent premium to the independent valuation of the two properties as of June this year, according to information in the struggling 104-year-old veterans’ charity’s 2020 financial report.
The acquisition comprises the four-star hotel at 271 Elizabeth Street, which offers 97 rooms across 15 floors, and a three-level office building at 262 Castlereagh, which the club bought for $8.7 million in 2014.
Central Element is led by McGrath director and former McGrath franchisee Shane Smollen, and father-and-son team Wayne and Nathan Chivas.
The trio secured the Hyde Park properties from RSL NSW following a competitive tender process with plans to undertake a luxury apartment development.
The result is a strong outcome for RSL NSW, which has reported operating losses for the last two financial years of $357,000 and $2.04 million.
According to its June 2020 financial report the Hyde Park Inn was valued at $42.3 million as of June 30, down from $48.1 million in the prior year due to the impact of COVID-19, while 262 Castlereagh Street office was valued at $10.6 million, down from $11 million.
“We are delighted to have secured the freehold site, which has significant potential for further development under a long-term collaborative arrangement with RSL NSW,” said Wayne Chivas.
“The property directly overlooks Hyde Park and is located in an area where there have been several premium residential developments but very few available sites remain.
“Our vision is to create a high-quality development featuring luxury apartments overlooking the park and are confident in strong continued growth for the residential market over the next 3-5 years.”
Mr Smollen, who co-owns Central Element with Wayne Chivas, was one of McGrath’s largest franchisees before selling his network of 10 Sydney suburban offices back to the real estate firm ahead of its December 2015 IPO for $31.5 million in cash and $21 million in shares.
Having assisted the company with its turnaround strategy, and with a7.4 per cent stake in McGrath, Mr Smollen joined the McGrath board in September.
Central Element has completed more than 400 apartments over the past 14 years across Sydney metropolitan locations.
It is developing a 101-room hotel at 1-11 Oxford Street, Paddington, as well as constructing multiple apartment projects on Sydney’s Lower North Shore and Eastern Suburbs.
Central Element’s proposed development overlooking Hyde Park will add to a strong pipeline of hotel and apartment projects in Sydney’s emerging midtown precinct.
These include a freshly approved $250 million hotel project at 371-375 by developers Rebel Property Group and Everest Property, two 80-storey mixed-use towers on the corner of Pitt and Liverpool streets proposed by Chinese developer Han’s Group and an 80-storey approved residential tower by Mirvac and Coombes property at 505-523 George Street.
