Paddington's Captain Cook Hotel sells in off-market deal for $10.5 million

The freehold was snapped up during a strong bidding war by a private syndicate associated with the incumbent tenants who wanted to secure their business interest with the restapling of the valuable underlying property interest, JLL Hotels & Hospitality Group managing director John Musca said.

“The reality of it is they are just waiting for the stadium to reopen, they’re waiting for the office complexes to be built next to the stadium …. that changes the business drivers for the hotel straight away,” he said. “When that stadium closed, they were missing 28 to 30 weeks a year of 40,000 people-plus a weekend, coming through the area. They’re one of only two hotels close to the stadium … so, they’re literally waiting for that construction to finish and the stadium to reopen. And then, of course, we need COVID to be gone.”

Mr Musca said there was plenty of history associated with the high-profile hotel. “Everyone in Sydney has some sort of story … they’ve seen a band or stumbled in on their way back from a sporting event, or they’ve been backpackers and stayed in the shared rooms upstairs,” he said. “It has quite a rich history of patronage – everyone seems to know it as it stands so prominently high on that big intersection.”

According to the NSW State Heritage Register, the hotel was built in 1914 during an era of hotel building by breweries. “The building is an important work of the prominent architect John Burcham Clamp with distinctive and unusual architecture and is the only known hotel he designed,” the register states. “It is of major local social significance being a local landmark and a popular meeting place. It is also associated with sports fixtures and events at the nearby Sydney Football Ground and Fox Studios.”

Mr Musca said that despite Sydney’s current hotel ownership challenges, the transaction momentum was likely to continue as owners had the benefit of first-hand experience of what the post-COVID closure trade bounce-back would be like.

“From the Sydney market perspective, it’s the strongest it’s been since 2005-2006. It’s a weighted capital – there is a lot of money around at the moment, and you know debt is cheap, and that helps.

“But ultimately, there is just a lot of capital and capital profiles, so what that means is you have got very different buyers looking to buy into the asset class. So, you have got institutions, publicly listed companies like Endeavour … then you have got a wealth of big private families who own portfolios of hotels,” he said.

“When you have got all these different kinds of buyers with different drivers for buying their capital, you ultimately get quite strong competition to buy assets, and you get assets selling quickly.