Redcape has given a fresh boost to the portfolio reshuffle, selling three more of its A-grade pubs to two different buyers, for a total value of over $136 million.

The latest three hotels to exit the Redcape stable are the Kings Head Tavern in Hurstville, the Australian Brewery in Rouse Hill, and the Eastwood Hotel.

The high-performing Eastwood and the very large-format Australian Hotel & Brewery will be acquired by Sonnel Hospitality, which is the newly branded hospitality arm of the Nelson Meers Group, created to drive the company’s commitment to hospitality investment.

Sonnel says its goal is to “set new benchmarks for community-focused dining and entertainment” through a focus on quality f&b as well as contemporary pub-style accommodation. The group recently unveiled the extensively renovated Guildford Hotel, as a full-spectrum family-friendly hotel.

The dual acquisition is another milestone for Sonnel, offering that it brings a clear vision to deliver spaces that “are not just venues but vibrant parts of the local culture”.

Australian Hotel and Brewery

Redcape acquired the Kings Head Tavern in late 2019 for $23 million, in a deal that saw it sell the Royal Hotel at Granville for around $28 million.

The Kings Head Tavern is now under the purview of Melbourne’s Francis Venues, formerly known as IPR Hotels, owned by Ian Francis and son Tom. The group already holds a collection in the southern capital, including the Summerhill and Edwardes Lakes hotels in Reservoir, and the former Zagame’s of Ballarat, Berwick and Boronia.

The three assets represent a diverse mix of business styles. Both Eastwood and the Australian Hotel & Brewery have previously been detailed as core assets of Redcape.

It bought the Rouse Hill brewpub from Momento in 2018 for around $50 million. The Colosimo family had opened the greenfield site in 2010, and built it to be a stalwart of the sprawling and rapidly growing Hills district.

Redcape has now divested over $300 million in assets from its portfolio in under a year. In August 2023 went the Aspley Hotel in Brisbane, and then The Grove, then the following month the Shaftston Hotel Brisbane and Central Hotel in Shellharbour, followed in November by the Eastern Creek and Unanderra, and then the Mt Annan Hotel the same month, and this year the group swap-sold the freehold going concern of the Crescent in Fairfield with Gallagher Hotel’s lease on the Criterion in Sydney.

The sales are said to have achieved yields ranging from 7-7.5 per cent and greatly strengthened the group’s balance sheet, facilitating a distribution for Q4 of 2.30¢ per unit.

Still holding over 20 venues in the collection, Redcape says it remains on track to also achieve its 2.30¢ target distribution next quarter.

“This strategic move is part of Redcape’s active portfolio management strategy aimed at enhancing Fund earnings and returns for investors,” says MD Chris Unger.

“We will now look to redeploy this capital into new assets that enable us to continue to build on our strong returns track record.”

The trifecta transaction was managed off-market by HTL Property’s Andrew Jolliffe and Dan Dragicevich, who found strong interest in the assets from local operators as well as south of the border.

“All three accurately reflect the key fundamentals exhibited by AAA grade hospitality indexed commercial property holdings, and accordingly continue to be highly sought after investment vehicles,” explains Dragicevich.

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