By Andrew Starke
The listed Redcape Property Group has sold six freehold pubs for $57.36 million while a landmark Melbourne hotel has also been put up for sale.
Redcape, formerly Hedley Leisure & Gaming Property Fund, sold four pubs in NSW and two in Queensland that had cost it $72 million to buy and upgrade.
The sale of four of the six hotels were subject to tenant National Leisure & Gaming (NLG) having right of refusal to acquire the properties. NLG did not take up their right.
However the sales, some of which were concluded in November, were delayed when the National Australia Bank-owned Bank of New Zealand Australia took legal action to protect its interests.
NLG’s bank took the measure to ensure it would be protected if the pub operator got into further financial difficulty after the sale.
The six sales – the Cabramatta Club Hotel in Sydney for $21.5 million, the Mount Druitt Cedars Tavern for $12.05 million, the Kooringal Hotel at Wagga Wagga for $7.51 million, the Bushland Beach Hotel in Townsville for $7.2 million, the Plantation Hotel in Coffs Harbour for $6.6 million and the Barrier Reef Hotel in Cairns for $2.5 million – came in at five percent above current book value.
However Redcape had previously announced significant downgrades to the values of hotels in its portfolio making this result slightly misleading.
Executive chairman of Redcape, Colin Henson, noted that the sales demonstrated strong demand for hotel assets and said the property group was encouraged by the ‘significant’ level of interest in other assets.
At the same time, Sovereign Hotel Group has announced its intention to sell the award winning Transport Hotel including Taxi Dining Room and Transit Cocktail Lounge together with Feddish Bar and Restaurant, all located in Melbourne’s Federation Square.
The businesses will be sold via a tender commencing on Wednesday February 3 and closing on Thursday February 25.
Joint selling agents Jones Lang LaSalle Hotels & TJ Board & Sons will manage the tender process.
“The decision to capitalise on this investment will strategically position Sovereign Hotel Group to develop further growth opportunities with other assets that are currently becoming available to the market within the gaming sector,” Managing director of the Sovereign Hotel Group, Mario Scerri, said.
Federation Square is a cultural landmark and entertainment destination of Melbourne, and the Sovereign Hotel Group’s businesses are expected to attract a lot of interest within the hospitality sector, as businesses like these are rarely offered to the market.