In a crescendo years in the making, investment bank Moelis is believed to have secured an SIV fund purchase of the lucrative Redcape portfolio for circa $700 million.
The AFR reports Moelis has broken with a proposed partnership with publican Nelson Meers, and is close to a deal for the complete portfolio for an Asian-backed Significant Investor Visa (SIV) fund.
The parties are believed to have negotiated a new deal for the Group, comprising 26 pubs and associated retail premises in both NSW and Queensland, made of top performers in the L&G list of gaming pubs, such as Canley Heights’ El Cortez (#1) and Eastwood Hotel (#3).
Redcape as it exists today is the amalgamation of the former, listed NLG, and what was originally Tom Hedley’s Redcape Hotel Group. Goldman Sachs purchased the two entities, combining the largely freehold Redcape business with the NLG operators.
Further readjustment by the New York hedge fund saw it divest its interests to fellow US hedge funds York Capital and Värde Partners. In late 2013 came the spin-off of 41 Coles-managed freeholds in the form of Hotel Property investments (HPI). The A-grade REIT underwent an IPO, listing at around $1.91 and currently trading at $2.97 with a market cap of $440m, representing a 49.9% gain.
Other rumoured suitors to the manicured Redcape collection have included a proposed partnership between fund manager Charter Hall and Australia’s biggest publican, ALH. There has also been continued scuttlebutt about a potential float, then last September Goldman Sachs was officially given the nod to engage in a high-stakes trade sale of the portfolio.
And when Redcape recently listed its only Victorian asset, the freehold of Bendigo’s All Seasons Hotel, the gossip was rife, with speculation of a Lantern-style sell off set to flood the market.
But this time, the challenge to price the high-performing Group, which continues to churn out ever-increasing EBITDA in a market of contracting yields – known as a ‘high-quality problem’ – seems to have finally been met, in keeping with sources previously cited by PubTIC.
Redcape declined to comment on the ongoing negotiation.