An inner-city Newcastle hospitality venue owned by the consortium behind Merewether Surfhouse has hit the market, fresh off the group's high-profile beachfront sale.
The investor syndicate, which includes Paul Williams, Paul Duchen, Mark Swadling, Tony Green, and John Tierney, recently offloaded Merewether Surfhouse for $27 million.
Now, they have listed 212 King Street, the building housing their popular Pan-Asian-inspired restaurant and bar, Ginger Megs.
Offered as a freehold investment with an auction guide of $3.8 million through Jason Morris of Movable, the site includes a seven-year leaseback.
The owners will continue operating Ginger Megs, which generates $232,000 net annually.
The syndicate's portfolio includes Newcastle West's Parry Street Garage and Sydney venues such as Pontoon Bar at Cockle Bay Wharf.
"The reason for the sale is they are selling up equity to renovate one of their other venues," Mr Morris said.
"They have other venues in Newcastle and quite a few in Sydney, but they are leasing Ginger Megs back for seven years, which is a fairly substantial commitment.
"The group simply wants to release the asset and free up cash from the building to work on their other venues."
Originally home to the Kensington Theatre, the property was sold in 2010 and converted into a nightclub.
However, the venture was twice refused a liquor licence and the venue eventually closed.
Following its closure, the current owners bought the site and undertook a multimillion-dollar renovation, converting the two-level building, complete with lift access, into a premium dining venue in 2017.
Mr Morris described the asset as a "true set and forget" opportunity.
He said the recent changes around negative gearing and capital gains tax are driving residential investors towards commercial assets.
"We are seeing investors turn to commercial assets that haven't considered it before since the changes to the budget," he said.
"Generally, the tenant pays the outgoings, which has the same effect as negative gearing, so we are seeing a lot of interest from investors who haven't had a commercial property before."
The listing follows the group's exit from Merewether Surfhouse, which they operated from its construction in 2011.
An international expressions of interest campaign led by HTL Property generated nationwide enquiry from major hospitality operators and local wealthy investors.
Prominent hotelier Ben May, founder of May Hospitality, whose portfolio includes Burleigh Pavilion, Terrigal Pavilion, and Bali's Mrs Sippy, is the new owner.
"My first job in hospitality was working for the vendors, Tony Green and John Tierney, at The Royal in Paddington and then The Greenwood North Sydney," Mr May said.
"As such, I have enormous respect for what they have done over the years. We're very excited to dive into Newcastle and get to know the locals. It's similar to Burleigh in so many ways."
The King Street property goes to auction on October 7.
