Hotelier couple Michael Wiggins and Joanne Cassar have exchanged contracts to purchase Redcape’s Top50 south Sydney venue, the St George Hotel.
Built 1893 by one Aaron Brown, the two-storey St George Hotel casts an imposing figure on Canterbury Road in Belmore, around twenty kilometres south-west of the Sydney CBD in gaming heartland.
It is an historic high-performer on the Liquor & Gaming list of NSW pubs, and while its ranking has slipped to #43 in the past year reports of a record quarter are likely to see ground reclaimed.
The ASX-listed Redcape Hotel Group (ASX: RDC) says divestment of the asset comes as the group has reached the apex of its value uplift at the Hotel.
“The sale of the St George Hotel, Belmore, is in line with our approach of actively managing the portfolio to maximise returns for our securityholders,” offers Redcape CEO Dan Brady.
Announcement of the deal yesterday included affirmation RDC’s guidance for FY20 remains unchanged post-settlement, anticipated by February 2020. The entity announced in August expectation of full-year distributable earnings of 9¢ per share and distribution of 8.75¢ per share. On market close today RDC was trading at 1.07, unchanged for the past few days.
2019 has seen the Moelis-backed group acquire multiple new venues, most recently a long-term lease on the Pig n’ Whistle in Redbank Plains.
The St George Hotel sale at $47.1 million represents a 2.7 per cent premium to June 2019 book value.
Completion of the sale is still subject to condition precedents. Brady would not elaborate except to say this is “procedural”, likely involving approval of licences transfer.
RDC plans to pay down debt following settlement, having announced securing a new facility in its FY19 results.
“The funds from the sale will further strengthen our balance sheet with gearing reducing to 36 per cent being at the lower end of our target gearing range of 35 – 45 per cent and provide funding capacity for additional value enhancing acquisitions.”
Stepping in at Belmore, fresh from their sale of the Oxford Hotel at Drummoyne to Arthur Laundy in July, Wiggins and Cassar are ready for their next chapter.
“We’ve been looking for a couple of years for a pub like that,” explains Michael. “It’s a good pub and it’s doing quite well at the moment.”
Redcape reportedly last did work to the Hotel in 2015, and Wiggins says not too much will change.
“Basically plan on doing a full gaming room renovation, some nice overhead lighting like everyone’s doing these days, and that’s pretty much about it.”
