Redcape (ASX: RDC) today announced it had sold the St George Hotel in Sydney’s Belmore for $47.1 million, making it the largest gaming hotel sale in the country for the year to date.
The hotel was sold off-market to private buyers Michael Wiggins and Joanne Cassar, who earlier this year sold the Oxford Hotel in Drummoyne to Laundy Hotels for $41.75 million. The gaming-focused hotel is ranked 43 in New South Wales for gaming machine net profit.
The sale was handled by John Musca, National Director of JLL Hotels & Hospitality, who was not available for comment.
Redcape’s CEO, Dan Brady, said the sale would maximise return for investors in the publicly-listed company.
“The Australian pub industry is highly fragmented and has been very active. The sale of the St George Hotel, Belmore is in line with our approach of actively managing the portfolio to maximise returns for our security holders. The funds from the sale will further strengthen our balance sheet with gearing reducing to 36% being at the lower end of our target gearing range of 35-45% and provide funding capacity for additional value enhancing acquisitions.”
The $47.1 million sale price represents a 2.7 per cent premium to the June 2019 independent valuation.
Redcape has reaffirmed that its guidance for FY20 remains the same after the settlement of the sale of St George Hotel.
“The reaffirmed guidance today is reflective of the existing portfolio trading well year to date and general industry conditions being favourable. With access to existing capital and a belief the market still presents good acquisition opportunities, we will continue to look at value accretive refurbishments and acquisitions,” stated Brady.
The sale follows a strong FY19 for Redcape, with the group reporting total revenue for the year of $285.2m, up 17.4 per cent and EBITDA of $42m; and $46.5m in distributable earnings.
Settlement of the sale of St George Hotel is expected before February 2020.