Redcape, one of Australia’s largest pub groups, has placed two pubs in Far North Queensland on the market. Redcape’s 35-venue portfolio is placed within a fund financially backed by MA Financial Group.

The two Mackay pubs, Shamrock Hotel and The Grove Hotel are both large-format pubs on large landholdings. HTL Property and JLL are jointly handling the EOI sale process. Redcape’s portfolio

Redcape managing director, Chris Unger, indicated the likely sale of assets in a recent note to Fund investors; taking advantage of an asset class which enjoys the support of key operational and lending stakeholders, as evidenced by recent sales upon the national landscape.

“As we have demonstrated in the past, a key strength of the Redcape Group is the ability to leverage the depth and quality of the portfolio to selectively recycle capital through successful divestments. Fuelled by an amazing team of people, both The Grove and Shamrock have performed strongly for us over many years providing all-encompassing hospitality experiences for their communities,” said Unger.

Recent Redcape activity

In an investor update on the June 2023 quarter, it was reported Redcape’s revenue for the quarter was $92.5m which translated to venue earnings of $23.9 million for the period.

The Fund noted that the operating performance of Redcape’s venues over the June 2023 quarter was variable due to deteriorating consumer confidence stemming from the increasing burden of rising interest rates and general cost of living pressures on households. The corresponding reduction in consumer spending had impacted revenue growth in the June quarter and resulted in a 4.7% like-for-like decline on the prior June 2022 quarter, which had benefited from post-lockdown consumer momentum. Despite the year-on-year decline, Redcape venues continued to trade ahead of pre-COVID trading levels.

Patron activity remained stable in the June quarter, with Publinc active member visitations averaging ~3.04 visits per month with an average spend of $74 per visit, consistent with the March 2023 quarter. Active membership data across the quarter was also consistent with the same period last year, with slightly less spend per visit, but an increase in visitation frequency.

The investor update also noted the increase in patronage and support around major sporting events and key promotional/marketing activities.

Redcape’s investor update noted that a downturn in consumer spending was likely for the remainder of the year, as interest rate pressures take effect. Despite this, the fund remains optimistic in the performance of its portfolio and the pub industry as a whole.

“The Manager remains confident in the fundamentals of the sector given the relatively affordable entertainment that pubs provide and the role that pubs play as the social meeting hubs of communities.

“The Manager is confident in the quality of Redcape’s assets and the ability of its team to deliver its investment targets for the Fund. As economic indicators stabilise and we move past the peak in interest rates, the Manager expects portfolio growth initiatives should assist to lift earnings and improve underlying Fund performance.”

With regards to the sale of the Shamrock and Grove Hotels, MA Financial Group remains confident that the large landholdings and multiple revenue streams of the pub assets in a growing regional area will attract plenty of interest from all over the country.

Shamrock Hotel.

Regional hub interest continues

“We’ve been fortunate to manage the sales of multiple FNQ based hotels to Sydney-based investors in the past month, indicating to us a robust and still particularly fertile transaction platform for cross border investment by both corporate and private entities,” stated HTL Property’s managing director, Andrew Jolliffe.

“Mackay is a significant regional centre in Far North Queensland, and the subject hotels illustrate the best examples of multi-faceted and highly profitable hospitality businesses; with the ability for a successful party to create a solid investment base should scale be an important objective,” concluded JLL’s Tom Gleeson.

The two hotels are being sold separately or in one line, via an EOI sale process concluding September 13, 2023.

Redcape also recently divested the Aspley Hotel in North Brisbane for $10.5m, selling the hotel to a local operator.

Vanessa Cavasinni

Vanessa Cavasinni is the managing editor of Australian Hotelier and Club Management, trade publications for the pub and club sectors respectively. Vanessa has been at the helm of Australian Hotelier since...

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