Redcape has furthered its portfolio shakeup and Gallagher Hotels has traded up, seeing sale-swap of the Criterion in Sydney and Crescent Hotel in Fairfield, in a transaction worth a combined $70 million.
The high-profile sale and purchase deal reflects the ongoing variations in boardroom strategies, as both groups look to deploy capital and capitalise on trading fundaments in very different geographical markets.
Mid-2022 the Gallagher gang took the title to the Campion family’s Longueville Hotel, culminating a century of ownership. Late 2023 the group then trimmed the balance sheet with sale of the Meadowbrook Hotel.
The Gallaghers have now picked up the freehold going concern of the Crescent Hotel in Fairfield, which ranks Top80 on the Liquor & Gaming list of NSW pubs, for a price sources say was north of $47 million.
It marks a return to the booming west of Sydney for Pat Gallagher, who has previously held such institutions as PJs in Parramatta, now called the General Bourke under Iris Group.
“Having owned and operated several venues in Sydney’s west throughout our group’s history we cannot wait to play a key role in providing heightened amenity and a sense of fun for the Fairfield community,” says Gallagher, group MD.
MA Redcape Hotel Fund (Redcape) has been executing a strategic sales programme that has realised around $200 million.
In 2023 the group sold The Grove in Mackay, the Aspley Hotel in Brisbane, then Shaftston Hotel in Brisbane and Central Hotel in Shellharbour, then the Mt Annan Hotel, and in November both the Eastern Creek Tavern in western Sydney and the Unanderra Hotel in Wollongong – while not ruling out further adjustments to the books.
Parent entity Moelis similarly divested the Taylor Square twins, the Courthouse and Kinselas Darlinghurst, to up-and-coming operator developer Virtical.
Following the sales, and extension of a $150 million debt facility, Redcape has announced it is “reopening for applications” and will start to process redemptions.
Selling at Fairfield, it picks up the leasehold interest of the Criterion, ranked 173 with L&G, for circa $22 million, noting its ability to enhance the portfolio by capitalising on what is sees as opportunities and by recycling existing assets.
“This deal is testament to that, and we look forward to building on the great business that Patrick and Angela Gallagher have built at The Criterion and equally wish them much success at the Crescent Hotel,” offers MD Chris Unger.
The group attributes EBITDA growth since the September quarter to the confluence of consistent revenue and cost management, facilitating an increase in distributions to 2.0 cents per unit for March 2024.
“We are buoyed by the resilience of the pub sector, both in liquidity and operational performance,” continues Unger.
“Customers are continuing to visit their local pubs though they are understandably more mindful of value.”
The sale-swap marks the largest pub deal of 2024 to date, amid marked momentum in the pub sector nationally, and was brokered by JLL Hotels’ John Musca and Ben McDonald.
“With varying investment mandates and portfolio aspirations, this deal perfectly aligns with the corporate focus for both Redcape and Gallagher Hotels at this time,” says McDonald.
