Smart money continues to stalk Australian pubs, with rumours Charter Hall and ALH are contemplating a snap buy of Redcape before it goes to the open market.
Business Spectator reported that Charter Hall Group may team up with the country’s largest publican, the 75 per cent Woolworths-owned Australian Leisure & Hospitality (ALH) to offer $650 million for the Redcape portfolio of 24 pubs.
Redcape has been in the news with steps toward an Initial Public Offering that saw UBS and JPMorgan value the company at $500 million – based on 15.4-17.5 forward profit.
Investors reputedly suggest the company’s worth should reflect more like 13-15 times profit, and the recent volatility in stock markets may yet see the valuation tighten further.
PubTIC spoke with Charter Hall about the plans, but no official information was available. The big newcomer to the Australian pub market has been strategically buying freeholds mostly listed to ALH since the emergence of the Long WALE Investment Partnership(s) with Hostplus.
The owner + operator model of Charter Hall and ALH would likely see the greatest potential realised of the portfolio, with Woolworths likely to open a platoon of Dan Murphy’s alongside the hotels.
However Redcape’s owners, hedge funds York and Vrde, are looking for the most profitable use and exit from the asset, and Business Spectator says ‘sources’ suggest the IPO is the “preferred option”.