The Redcape reshuffle peaked in December with sale of two of its big-ticket gaming hotels to Sam Arnaout’s Iris Capital.
Transaction of the Cabramatta Hotel in Cabramatta and El Cortez in Canley Heights is reported at more than $180 million.
The two pubs hold a combined 17K sqm and boast approved development upside. The Cabramatta is across two separate land holdings, and benefits from a recent planning gazette, boding additional use and expansion options.
Iris operates a hospitality portfolio and emerging development footprint in multiple states, including Queensland, Northern Territory and New South Wales, and was tempted by the offer.
“Large format Sydney suburban hotels remain very attractive to our company,” advised Arnaout.
The sale by Redcape comes after a turbulent year, with multiple assets divested, notably the Wattle Grove, sold to Tom Francis for $31m, and the Vauxhall Hotel, sold to Orion for circa $42m. These transactions, in September, bolstered the investment fund’s financials and facilitated the payment of redemptions.
Redcape recently updated investors, reiterating its target of about 15 per cent total returns annually, with increased distribution guidance for 2025 Q1, to 2.5¢. The group reports like-for-like earnings for FY26 to date up around 11 per cent.
Finalisation of the sales to Iris follows a break in the sell-down as Redcape acquired three freehold going concern hotels in its newly-favoured region of South East Queensland. The fresh capital will provide it with the cash “to continue its redeployment into other opportunities in line with the Fund’s stated strategy,” says managing director Chris Unger.
“Both hotels are well-known large-format multi-revenue-channelled businesses, with clear upside for Iris,” states HTL Property’s Dan Dragicevich, who managed the deal with colleague Andrew Jolliffe.
Talk around the water cooler is that investors are finally anticipating a downshift in the next interest rate cycle, which should provide a boost to valuations and relieve pressure on finances.
The twin sales also represent the highest price paid for pubs in 2024, taking the consolidated value of hotel sales in metro Sydney to $1bn, “in line with the record set in 2022, when markets of all persuasion rebounded positively,” added Jolliffe.
Redcape declined to comment further on the strategy behind the sales.
