By Andrew Starke
The listed Redcape Property Fund (RPF) has again reported heavy losses for the 2010 financial year although the sale of two pubs from its portfolio should assist the debt-ridden company.
RPF recorded a loss of $6.751 million for the year on the back of declining pub valuations and the increased cost of managing its debt.
The group lost $8.213 million over the course of the 2009 financial year when it was still trading as Hedley Leisure and Gaming.
RPF’s property portfolio comprised 104 properties in June last year but this has been reduced to 92 including 79 pubs and 12 bottle shops based mainly in Queensland and NSW, with a small number of properties in Victoria and South Australia.
43 of RPF’s properties are leased to Coles Group.
RPF executive chairman, Colin Henson, said the decline in pub values triggered in late 2007 by the Global Financial Crisis was ongoing but had moderated in recent months.
“The Redcape Property Fund continues to sell pubs in a measured and strategic way, and despite external factors it is pleasing that sales continue at prices typically above valuation,” he said.
“Interest in Redcape’s freehold pubs has been high among pub operators and those who recognise value in the pub industry. Cash released from the sale of pubs is being applied to the reduction of bank debt.”
During the 2010 financial year, RPF reduced its bank debt by $110.6 million by selling 12 pubs, selling its shareholding in the ALE Property Group and surplus cash from operations.
Two further property sales have been agreed since the reporting period with RPF confirming it had exchanged contracts to sell the Mount Creek Tavern in Queensland for $7.25 million and the Wattle Grove Hotel in Sydney’s west for $8.6 million.
Both were sold at or above June 2010 book value.
RPG’s share price rallied from an all-time low of 14c last week to be trading at 18.5c at 1pm today (Aug 30).