Listed pub group Redcape has capped off a busy year with another acquisition only weeks after it paid a record $100 million for the popular Beach Hotel in Byron Bay on the NSW coast.
In a two-pronged deal, Redcape raised $51 million from the sale of the top 30 gaming venue, the Royal Hotel in Granville in Sydney’s west to a private consortium, while also buying the Kings Head Tavern in Hurstville for $27 million.
The sale of the Royal Hotel was a 6.25 per cent premium on the book value.
It marks the end of a year when close to $1 billion worth of pubs have changed hands. While the Byron Bay Beach deal set a high bar, the private Iris Capital kicked off the deals, paying $65 million in May for the Steyne hotel in Manly on Sydney’s northern beaches.
Redcape chief executive Dan Brady said the net impact of the deals completed this year would be to lower the gearing and provide the business with funding capacity of between $60 million to $70 million for additional acquisition or refurbishment opportunities.
These transactions are consistent with Redcape’s strategy of portfolio optimisation.Redcape CEO Dan Brady
Mr Brady reaffirmed the 2020 year distribution guidance of 8.75¢ equating to a yield of 7.85 per cent.
“These transactions are consistent with Redcape’s strategy of portfolio optimisation and demonstrates our continued focus on acquiring venues where we can increase value by enhancing their operations and applying our refurbishment capability,” he Brady said in a statement.
Both deals were brokered by JLL Hotels and Hospitality group’s John Musca who said in a rapidly consolidating asset class, “this sizeable transaction is another example of the value afford to the very best assets across the densely populated Sydney metropolitan area”.
“More than ever the increasing sophistication of the market and capital sources has seen a move towards truly national or global agency platforms to deliver divestment solutions, particularly off-market.”
The sales follow recent Redcape investments in the St George Hotel in Belmore, Sydney for $47.1 million and the Eden Brewhouse in Redbank Plains, Queensland for $11.5 million.
Redcape shares closed up 1 per cent to $1.12.
Source: Thanks smh.com