Virtical’s Adelphi Hotel sold for discounted $19m
Prominent Melbourne pub and hotel investor Mazen Tabet has taken advantage of the collapse of once high-flying hospitality group Virtical after buying the Adelphi Hotel on Flinders Lane for just $19 million – a 24 per cent discount on its $25 million sale 18 months ago.
The sale comes less than a week since Nic Natkunarajah from insolvency firm Roger and Carson was appointed liquidator of Virtical on behalf of creditors of the group, and a day after The Australian Financial Review revealed the company owed at least $50 million for fake GST refunds.
The Adelphi Hotel was part of a $125 million spending spree on trophy Melbourne and Sydney property by Virtical last year as it burst onto the hospitality scene.
Virtical paid prominent businessman Ozzie Kheir around $25 million in May 2023 for the Adelphi – one of the Melbourne CBD’s best known boutique hotels.
But its property empire collapsed last month after non-bank lender Bond Finance put key Virtical venues into administration in pursuit of $91 million in overdue loans.
The Adelphi Hotel was sold via administrators BRI Ferrier on behalf of the Morello family’s Bond Finance after previously being placed on the market by Virtical.
Located at 187 Flinders Lane, the boutique hotel features 34 guest rooms and suites, a rooftop pool and events venue, cocktail bar and boardroom.
The Financial Review revealed last month that Mr Tabet had made an offer for the Adelphi.
It will complement a portfolio that includes South Yarra’s Lyall Hotel and Spa, the Village Belle pub in St Kilda and luxury hotel The Royce on St Kilda Road. Mr Tabet is also a co-investor alongside billionaires Chris Morris and the Tarascio family in a $130 million hotel project on Phillip Island.
Earlier this month, administrators BRI Ferrier sold Virtical’s trophy venue, The Republic Hotel in the Sydney CBD for $32 million to Thomas Hotels – headed up by Chris Thomas.
In August, former Virtical managing director Mark Toma was 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. Mr Toma is appealing the ruling.
Virtical also did not complete the purchase of the Metropolitan Hotel on George Street in Sydney for more than $40 million.
Until September 27, when he stepped down and sold his shares to a 27-year-old man from Mount Hunter on the outskirts of Sydney, Virtical was led by developer John Palasty.
The Adelphi will be operated by 1834 Hotels on behalf of Mazen Tabet in a deal negotiated by the property’s selling agents, Nick MacFie and Peter Harper from JLL and Nick Lower and Benson Zhou from Savills.
“We’re incredibly excited to announce a valuable addition to our growing portfolio, the iconic Adelphi Hotel,” said Andrew Bullock, chief executive of 1834 Hotels.
“Continuing to expand into the Victorian market aligns with our strategic goals to further strengthen 1834’s presence and brand across Australia. We look forward to building on the hotel’s rich history and offering exceptional guest experiences.”
Virtical’s first hospitality acquisition was the $1.65 million purchase of the 120-year-old Hotel Australasia in Eden, on the NSW South Coast, in 2021. It also had plans to build a $100 million luxury resort, dubbed Sapphire of Eden, on the site of the town’s former Fisherman’s Club, but that project never got off the ground.
The Virtical business began to unravel last month when the Financial Review revealed the company was under investigation by the Australian Taxation Office over $100 million in GST refunds.
