Popular pub an old English stalwart

The Gables Tavern, a popular English-style pub in Auckland's upmarket Herne Bay, is for sale as a going concern including its freehold site, building and chattels.

"It's one of the few remaining community taverns in the city fringe area that offers income and a strong development opportunity," says John Davies of Colliers International who is marketing the pub for owner Brikhaus Developments through a tender closing on May 12, 2009.

The 1052sq m Gables Tavern is on the corner of Kelmarna Ave and Jervois Rd in Herne Bay, and occupies a 2342sq m freehold site with parking for 44 vehicles.

"This property offers potential on two levels," Davies says. "In the short term, a buyer would have the benefit of the tavern revenue stream with annual turnover approaching $1 million that provides a solid holding return.

"The site is also nearing the end of a long-running consenting process for a high-quality mixed-use development and this provides attractive longer-term options for the purchaser."

Davies points out that The Gables is set in one of Auckland's most expensive suburbs in terms of median house price, where the average age is 35-40 and median local incomes are reported to be $90,000 to $100,000.

"The Gables is very much a busy neighbourhood pub rather than a bar," says Davies. "The site carried a rating valuation of $7.5 million at July 2008 and sits within a catchment that includes St Mary's Bay, Freeman's Bay, Ponsonby, Grey Lynn and Westmere."
Built in the 1970s, the tavern was listed in April 2006 in the New Zealand Herald's Viva section "among the bars that have stood the test of time" and was named "Best bar for family fun".

It is a local favourite, popular with its loyal following for its midweek quiz and jazz nights and has been described by the "Aucklanders' guide to Auckland" website, viewauckland.co.nz, as "a behemoth of a pub with an old-England vibe".

Davies says the tavern business is well-established, with 18 gaming machines operating under a venue agreement with the Lion Foundation helping to provide a sales turnover of around $80,000 per month.

In 2003, Davies negotiated the sale of a large site at the bottom of Kelmarna Ave, formerly known as St Vincent Hospital, on behalf of the Auckland Catholic Diocese.

"This site essentially 'book-ends' the avenue with The Gables Tavern property and now hosts an exclusive residential community," Davies says.

"With the tavern operating as a business going concern in a popular area, its purchase would provide a lot of flexibility and control to a new owner, who could continue operating the tavern for some years or until such time as resource consent is approved and redevelopment of the site could be undertaken."

Davies says Brikhaus Developments is expecting consent to be received this year for a retail mixed-use development similar to Auckland City's Chancery development but comprising a tavern, shops, offices, showrooms and apartments, as well as basement carparks.

"We have been working with Brikhaus on the redevelopment of this site for some time so we are very familiar with its development potential," says Colliers broker Tony Allsop, who says he's expecting broad interest in the property.

"We are seeing a good number of inquiries from local investors for this property as well as from private investors in New Zealand's larger cities," says Allsop. "There is also interest from a limited number of overseas investors, particularly those in Australia."

Allsop says The Gables has three key advantages going for it. "It's in a great location, it has good existing turnover from the tavern and it has considerable development potential."

As a result, The Gables is likely to appeal to a buyer in the hospitality industry, including breweries and hotel operators, as well as developers and private individuals.

The tavern is divided into three distinctive facilities: the sports bar and lounge is a favourite gathering place for local patrons at the northern end of the premises, and is the venue for televised sports events and popular quiz nights. Adjoining the bar and lounge is a kitchen and dining area providing well-priced pub lunches and dinners in a relaxed and informal setting.

The garden bar is well patronised in the late afternoons and weekends and fronts on to the busy thoroughfare of Jervois Rd. Another garden bar could be developed by new owners with an elevated easterly view of the central city. A TAB/gaming bar with comfortable surroundings is at the rear and has its own entrance.

The pub has residential accommodation upstairs with balcony views and this is rented out under a residential tenancy agreement.

Below the pub downstairs there are good storage and unloading facilities with space that could be developed further.

"The sale encompasses a full complement of chattels including the bar, equipment and furniture, kitchen equipment and utensils, restaurant furniture, televisions, refrigerators, cutlery and crockery, electrical appliances, computers, cash register and security systems," Davies says.

"It is a Lion pub with a full Lion Nathan, NZ Breweries Ltd, outlet support agreement."

Davies says the manager is employed on a flexible short-term contract which can be varied to suit a new owner.

Brikhaus Developments is selling the property to concentrate on other projects in their portfolio, he says.

Davies believes that, with lower term deposit rates and the cost of borrowing falling, properties like The Gables that offer the security of a good holding income are even more attractive to investors, even if rental or capital growth in the short-to-medium term is moderate.

"We have a database of add-value investors who have largely been inactive over the last two years and who are now seeking opportunities like this," he says."