Redcape Hotel Group’s strategic asset divestment initiative continues, successfully contracting the sale of seven hotels in five months for a combined value of $150m.
The group reached the milestone by securing the sales of three venues: Sydney’s Eastern Creek Tavern and Mount Annan Hotel and Wollongong’s Unanderra Hotel. The Unanderra Hotel has been sold to Oscars Hotel Group for $14.5 million, and the Eastern Creek Tavern and Mount Annan Hotel were sold to two separate operators for a combined value of $70 million.
Chris Unger, managing director of Redcape, is pleased with the divestment initiative so far.
“We informed investors in July of our strategy to leverage the depth and quality of our portfolio to strengthen the balance sheet through selective divestment. We are pleased with the progress we have made to fulfil this strategy quickly and our ability to exchange contracts ahead of book value,” Unger said.
“In addition to the successful divestments, we are seeing improved trading dynamics across our portfolio as pubs continue to be a popular choice for customers. This combination supports our confidence in the sector and positions the fund well for investment in further growth initiatives and a sustainable reinstatement of the fund’s liquidity facility in due course,” Unger added.
Located in the growing Wollongong suburb of Unanderra, The Unanderra Hotel is approximately six kilometres south of the Wollongong CBD and 90 kilometres south of Sydney. The hotel sits on 4000 square metres of land in the centre of the suburb, with 3am trading approval, 26 gaming machine entitlements, 14 accommodation rooms and currently generating more than $130,000 per week in total revenue.
Oscars Group already have a number of hospitality venues in Wollongong and the South Coast, including the Towradgi Beach Hotel. The group was attracted to the Unanderra Hotel for the chance to secure a dominant trading operation in a market Oscars knows and understands.
The sale was managed by JLL Hotels & Hospitality Group managing director John Musca and executive vice president Ben McDonald. The pair also managed Redcape’s recent sale of the nearby Central Hotel Shellharbour for $25 million.
“Given the acquisition is earnings accretive for Oscars and their deep understanding of the local market there was genuine excitement at the prospect of securing the asset from Redcape. We fully expect Oscars to seamlessly integrate the hotel into their current operations and look forward to seeing the business evolve in line with their investment and operational strategy,” Musca said.
HTL Property brokered the sale of the Mount Annan Hotel, making it the fifth transaction that HTL Property brokered on behalf of Redcape this year. The sale was managed by HTL Property national pubs director, Dan Dragicevich and HTL Property managing director, Andrew Jolliffe.
Mount Annan Hotel is located in a continually developing retail precinct, profiting from organic population growth in the area.
“Mount Annan Hotel represents an extremely rare opportunity to gain a large format trading footprint in a rapidly expanding corridor of South-Western Sydney. Surrounding, prominent venues at Gregory Hills and Narellan provide a blueprint for its future earnings profile from an already strong and established base,” said Dragicevich.
Both JLL Hotels & Hospitality Group and HTL Property spoke about the positive situation of the pub sale market.
“Traditional hotels, particularly those that are multi-departmental in terms of revenue attraction, enjoy a resiliency that serves as both a magnet for investor attention; and the basis upon which they can out-perform in all manner of economic environments,” said Jolliffe.
“With price discovery being a key theme so far in 2023, we are now seeing a reduction in bid-ask spreads as the market seemingly starts to normalise. We are seeing private capital continue to drive enquiry through active campaigns and believe that will fuel further transactions as we move through the final quarter of the year,” McDonald said.