By James Atkinson
The management of Redcape will soon be able to focus its attentions exclusively on driving the future growth of the company's operating pub portfolio, with spun-off pub landlord business Hotel Property Investments set to list on the ASX early next month, Redcape CEO John Russell (pictured) has told TheShout.
Following a successful investment roadshow, HPI raised $279 million from institutional investors both in Australia and overseas. Shares were acquired at $2.10 each, at the upper end of an indicative range of $2.00 to $2.15 set for the stock.
While Coles continues to review its pub portfolio, investors seem to be confident that the retailer is fully committed to the pubs it leases from Redcape in Queensland, where pub market participation is mandatory for companies if they want to hold retail liquor licences.
HPI lodged its product disclosure statement and prospectus last Thursday. The allotment of shares is expected to take place on 10th December with trading to start the following day.
Redcape CEO John Russell, who is a non-executive director of HPI, said the focus of the streamlined Redcape entity’s investors and management will be on “investing wisely in the existing pubs in terms of capital refurbishment and also looking for sensible acquisition opportunities”.
He said Redcape has already refurbished Willoughby Hotel, the Revesby Hotel and Eastwood Hotel, all of which were multimillion dollar projects.
“There are a great many opportunities for us to improve the business by refurbishing venues, and we’ve acquired a couple of hotels in the course of the last 12 months,” Russell said.
He said Redcape will continue to seek out suitable pubs that meet its preferred specifications: “Large suburban hotels predominantly NSW and Queensland with a good balance of income across bars, food, gaming and retail.”
“When you’re running a portfolio of pubs like we are, it can take just as much effort to run a small pub as it does a big pub. It’s about being efficient with our allocation of resources,” he said.
Commercial Hotel, Mullumbimby sold
Russell confirmed Redcape had recently sold the Commercial Hotel in Mullumbimby, northern NSW, in an auction run by CBRE Hotels. Russell would not rule out further venue sales.
“Just as we’ll continue to look for acquisition opportunities we’ll continue to be diligent about making sure all of the pubs fit in our portfolio,” he said.
“I don’t have any particular plans to sell any assets, but the company can’t afford to fall in love with any pub.”
Russell said Redcape’s investors, Varde Investment Partners and York Capital, are firmly committed to the operating side of the business.
“I think we see that because they’ve been prepared to invest a very large amount of money in the operating part of the business over the last 12 months in particular,” he said.