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Brooklyn Hotel - Creating competitive tension nationally for high profile business

March 2012 - The Brooklyn Hotel is located on the Corner of George & Grosvenor Streets within the Sydney CBD at the base of Grosvenor Place Tower, metres from The Rocks precinct.
 
The leasehold was owned and run by a private operator for ten years but was subsequently put into ceceivership due to unsustainable rent levels and poor operation. The freehold is owned by several ASX listed companies and is run by Grosvenor Place Sydney. The business trading trend was declining sharply and the property was in need of significant capital expenditure. It was widely known that the leasehold interest was available for purchase in an off-market capacity and subsequently the asset had become ‘stale’. The opportunity had never been broadly communicated to the marketplace.
 
It was the preference of Grosvenor Place Sydney that a new tenant be secured for the Brooklyn Hotel and that this tenant be high profile and experienced thus creating a strong ‘entry-statement’ for the occupants of the Grosvenor Place commercial tower. The client wanted to attract interest from the best operators nationally and to be sure they had secured the best possible commercial terms in the process.
 
Initiatives
 
JLL's Hotels & Hospitality Group took the following initiatives to ensure a competitive process was created and a premium outcome achieved:
  • Recommended a public Expressions of Interest process to ensure a lack of bid transparency
  • Shortlisted a select number of key targets to personally present the opportunity prior to the press release and first press advertisement.
  • Substantiated forecast earnings by benchmarking against past trading performance and other businesses proximate to the hotel. This allowed prospective purchasers to comfortably calculate an estimated Net Profit and facilitated them securing debt with finance providers.
  • Demonstrated the opportunity for incoming operators by highlighting; the fact it was the first time in 10 years the leasehold interest was being offered to market, the unique CBD location, the attractive 24-hour liquor licence, the potential for an outdoor smoking/gaming room solution and the rise to prominence of a number of similar CBD bar/restaurants proximate to the hotel .

Results

JLL's Hotels & Hospitality Group received 14 Expressions of Interest after the four week campaign. These were of varying price levels, conditionality and from different buyer groups. Two parties were selected and entered into the second stage shortlist process. Each buyer was provided with additional Due Diligence information and asked to personally present their ‘vision’ for the business. Following this process, the vendors selected a suitable tenant on excellent commercial terms and were exceedingly happy with the outcome.

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