Redcape has bucked recent trends and sold its suburban heartland pub, the Doonside Hotel.
The Doonside occupies a big 7,278sqm town centre site in the western Sydney suburb, around 50 kilometres out of the Sydney CBD.
Features include public and lounge bars, TAB, drive-thru bottleshop, beer garden, extensive car parking, and gaming room with 26 gaming machines. In keeping with Redcape’s strengths, it has climbed 31 places in the past year, to be #149 on L&G’s list of gaming venues.
Significantly, it also has 16 first floor ensuite accommodation rooms not currently in use.
The freehold going concern has transacted to an unnamed buyer for $21 million, representing a strong 8.4 per cent return, representative of the strength seen in hotel investments.
“In what continues to be the most sought-after asset class in the country, the hotel profile appears a natural and strategic fit for the incoming purchaser,” offered John Musca, JLL national director, who brokered the off-market transaction.
Since its wholesale acquisition by Moelis Australia, Redcape has executed its own aggressive acquisition campaign, picking up the gaming-centric Crescent Hotel and Andergrove Tavern in November, and the Wattle Grove in February.
Redcape CEO Dan Brady says despite the growth, the latest sale is in fact in line with the Group’s plans.
“As Redcape continues to grow, it is important that we are disciplined in the way we utilise our capital.
“With numerous capital-intensive projects currently underway, and recent acquisitions capable of above market growth, the divestment of the Doonside Hotel supports this strategy.”
Although Redcape specialises in optimising gaming venues, the incoming stands to benefit from the revival of the upstairs accommodation, as pubs continue to find market in the much-cited shortage of hotel rooms nationally, and greater viability of online booking systems, particularly for budget options.
“A lot of publicans are starting to realise the income potential of these rooms and reinstating and activating them as new revenue streams,” offers Musca.
Australia’s biggest publican, ALH, has been steadily increasing its stake in this market through its ‘Nightcap Hotels’ division, which to date operates budget accommodation in 28 of the group’s 340 food & beverage hotels.