Sydney developer snaps up last Virtical pub in first trade of 2025
Prominent Sydney developer Lyon Group has struck the first notable pub deal of 2025 after emerging as the buyer of the historic Hotel Australasia in Eden on the NSW South Coast.
The 121-year-old hotel was the first pub acquired by collapsed hospitality investor and developer Virtical and is the final asset to be sold by administrators and receivers after the group’s main financier, Bond Finance – run by Sydney’s Morello family – took action to protect its interests.
A December creditors report by the administrators of two Virtical companies – one of which owned the Hotel Australasia and another that owned a nearby site meant to be developed into a $100 million luxury resort – said contracts for the sale of the pub had been exchanged for $4.1 million and completion was due on February 3.
The same report said renovations work was incomplete with temporary fencing and flooring organised to “ensure safety of patrons”.
Lyon Group, founded by the late developer Bruce Lyon, will add the Hotel Australasia to two other hospitality assets it owns just across the bay from Eden at Boydtown. These are the heritage-listed Seahorse Inn, a boutique hotel, and the Boydtown Beach Holiday Park. Lyon Group also owns the 170-room Mercure Hotel Townsville.
Its current development projects include land subdivisions in Kellyville and Rouse Hill in Sydney’s west.
Virtical – led then by John Palasty – paid $1.65 million for the Hotel Australasia, with the deal settling in March 2022.
Virtical began to unravel in September last following reports by The Australian Financial Review that the group was under investigation by the Australian Taxation Office over $100 million in GST refunds, and after it failed to settle the $61 million purchase of two hotels on Taylor Square in Sydney’s Paddington.
Receivers and administrators were later appointed over its hospitality assets and these have been progressively sold – the last one being the Hotel Australasia.
The Adelphi Hotel on Melbourne’s Flinders Lane was acquired by pub investor Mazen Tabet for $19 million and The Republic Hotel in the Sydney CBD was bought by the Thomas family for $32 million.
The sale of the Eden pub was handled by HTL Property’s Sam Handy, Blake Edwards and Ben Kennedy acting on behalf of joint administrators Andrew Cummins and Peter Krejci from BRI Ferrier.
The Australasia Hotel stands on a 2886 square metre site on Imlay Street in the main commercial and retail precinct of Eden. It includes a restaurant, bistro, cocktail bar and eight accommodation rooms.
It sold with a partially completed development application to create an outdoor kitchen, a bar and retail shops. The hotel was generating annualised revenues of about $2 million when sold.
Strong year
Beyond the problems at Virtical which forced assets onto the market, last year was a strong year for pub sales with about $1 billion of deals struck in the Sydney metro area alone, according to figures provided by HTL.
Sydney accounted for nine of the ten biggest pub sales of 2024, including Redcape Hotel Group offloading the El Cortez Hotel for about $100 million and the Cabramatta Hotel for $90 million just before Christmas. Both pubs were acquired by Rich Lister Sam Arnaout’s Iris Capital.
The combined value of the top 10 sales was close to $600 million, a record according to veteran pub broker Andrew Jolliffe, managing director of HTL, which negotiated eight of them. (The other two were negotiated by JLL.)
Notably, pub fund Redcape Hotel Group was the vendor of seven of the 10 biggest sales of 2024 as it offloaded assets to resume paying redemptions to investors, after they had been frozen in 2023.
However, Redcape started buying assets again in 2024, including the Lucky Tree Tavern in Brisbane for about $34 million and the leasehold to the Criterion Hotel in the Sydney CBD.
