In a transaction of assets worth $70m, MA Redcape Hotel Fund has acquired the leasehold interest of inner-city Sydney pub The Criterion Hotel from Gallagher Hotels, while also exchanging the sale of the Crescent Hotel, Fairfield freehold property.

Holding a prime position on the corner of Park and Pitt Streets in Sydney CBD, The Criterion Hotel is an asset with rich history, while the recently refurbished Crescent Hotel sits in Sydney’s Western Suburbs.

The strategic transaction of the two assets, which was brokered by JLL Hotels managing director John Musca and executive vice president Ben McDonald, represents the largest pub transaction that JLL Hotels & Hospitality Group has managed this year.

In commenting on the transaction, Chris Unger, managing director of Redcape, said: “The Fund is in a position to capitalise on opportunities to recycle assets and further enhance the portfolio. This deal is testament to that, and we look forward to building on the great business that Patrick and Angela Gallagher have built at The Criterion and equally wish them much success at the Crescent Hotel.”

The acquisition of the Crescent Hotel marks Gallagher Hotels’ return to Sydney’s Western Suburbs, and managing director Patrick Gallagher shared his excitement.

“Having owned and operated several venues in Sydney’s west throughout our group’s history we cannot wait to play a key role in providing heightened amenity and a sense of fun for the Fairfield community.

“We would like to sincerely thank Redcape for the opportunity to crystallise this transaction and the professionalism shown by the team throughout the process.”

The transaction demonstrates a move from both groups to capitalise on premium trading fundaments in differing geographical markets, and according to McDonald, changing investment landscape and capital deployment opportunities were the key themes underpinning the deal.

“With varying investment mandates and portfolio aspirations, this deal perfectly aligns with the corporate focus for both Redcape and Gallagher Hotel at this time,” he said.

Following a strategic asset divestment initiative, which realised around $200m and the extension of a $150m debt facility, Redcape has announced its intention to process redemptions along with the reopening of applications.

Unger said: “We are buoyed by the resilience of the pub sector, both in liquidity and operational performance. Customers are continuing to visit their local pubs though they are understandably more mindful of value.

“Thanks to steady revenue and effective cost management, we have experienced like-for-like venue EDBITDA growth since the September quarter which has allowed the Fund to increase distributions again.”

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  1. I’m very interested in your news letter and knowing what is happening in the exciting hospitality industry

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