Australia’s most prominent gaming group has taken another step toward IPO aspirations with a return to Wattle Grove and acquisition from the Malouf family.
In 2010 Hedley Leisure – the ancestral base of Redcape Hotel Group – sold the western Sydney Wattle Grove Hotel tenanted by National Leisure & Gaming (NLG) to the Maloufs for around $8.6 million, at a premium to the FY10 book value.
Hedley had purchased the Hotel from Iris Group three years prior, for $13.5 million.
In 2011 the listed leasehold-based NLG failed, many of its leases reverting to the freehold owners.
More than seven years later, the pub conveys a very family-friendly environment with a midnight licence, “mouth-watering menu” and amenities including gaming room with 25 EGMs, producing a ranking of #259 on the Liquor & Gaming list of NSW hotels.
It is located adjacent to a shopping centre, and the business includes a bottleshop within the shopping centre on a five-year lease.
Executing Moelis’ plans for wholesale acquisitions toward a potential IPO of the Group, Redcape has now bought back the Wattle Grove, as well as the off-premise business, for $25 million, representing a return circa nine per cent.
“The blended yield reflected the unusual circumstance whereby two separate assets formed part of the transaction, a freehold going concern hotel and a separate leasehold bottleshop located in the shopping centre,” offered JLL Hotels’ national director, John Musca, who brokered the off-market deal.
Redcape is not the only pub group backed by big finance considering a float, with KKR also steering the formerly gaming-free Dixon group toward the greater tangibility of hospitality assets underpinned by gaming revenue.
As some economic indexes appear to mirror ultimately dangerous patterns from pre-GFC, speculation on the two entities has helped drive watercooler talk in financial circles of the steam coming out of the commercial market.
“Key demand drivers continue to pervade, however there’s been some commentary around yield compression driving opinions of a plateauing market for mature assets,” offers Musca.
In contrast, ALH’s largest landlord, the listed ALE, continues to report steady performance across its portfolio, entirely leased to the group dubbed by media wowsers ‘Australia’s biggest poker machine operator’.