Redcape continues the portfolio build, signing for two more freehold assets in SEQ, for a combined $66 million.
These acquisitions follow the recent purchase of three other venues in the Sunshine State by MA Redcape Hotel Fund, now joined by The Prince Consort in Brisbane’s Fortitude Valley, and Saltwater Creek Hotel in Helensvale, for a total investment of $145 million.
The Prince Consort, previously knowns as the Elephant Arms, and Elephant and Wheelbarrow, is a landmark of the Valley, established in 1888.
Simon Tilley and Nick Wills’ outfit wrangled the very large-format pub from Riversdale in the days before the pandemic struck, in early 2020. While all pubs were closed they took the opportunity to refurbish, reopening as the Prince Consort in November the same year.
The heritage-listed hotel has a reputation as a premier entertainment destination and was awarded Queensland’s Hotel of the Year in 2023.
Team Tilley & Wills cite “portfolio hygiene” as the primary motivation behind the sale, having just purchased seaside destination venue Aanuka Beach House in Coffs Harbour. They maintain they are “ebullient about SEQ” but are headed toward more accommodation-style properties.
“It’s been a great business and we’ve had a great time in the Valley, but it’s a young man’s game,” offered Wills.
“The Prince has been amazing. We’ve had a lot of fun, and it’s been hugely successful, but we’re exploring things more in line with our strategic direction.”
The Prince adds a high-profile, multi-faceted hospitality asset to the Redcape portfolio, while the Saltwater Creek Hotel is seen as an outstanding growth opportunity courtesy of Redcape’s refurbishment capability. Within a growing Gold Coast corridor, the well-established suburban pub already caters to a strong local community, and also strengthens the group’s expanding retail liquor presence.
“The Prince Consort and Saltwater Creek both present outstanding opportunities to enhance our portfolio and team with their unique market positioning and earnings potential,” says Redcape MD Chris Unger.
The group reports a sixth as yet unnamed acquisition is under conditional contracts.
Redcape has been actively managing its portfolio in recent times, having fended off financial stresses, now aiming to diversify earnings and generate greater distributions for its investors.
After a major sell-down throughout 2023 and 2024, it offers its trading performance during 2024 validates its investment strategy, seeing like-for-like earnings up 11.5 per cent and reaffirmation of the 15 per cent total return target range.
This has seen the Fund upgrade its quarterly distribution target 25 per cent on last year to 2.50 cents per unit.
It recently updated investors that all investor redemptions had been cleared, and Unger bodes that continued strong results and these acquisitions “position us well” for further gains in investor returns.
“Our operational initiatives are proving effective at introducing new customers, and our refurbishment program is also driving improved earnings.”
Sale of The Prince was through TBRE’s Tony and Molly Bargwanna, while the deal on the Saltwater Creek was done direct.
Redcape expects both properties to settle before the end of March, and says it remains active in pursuing both additional acquisitions and refurbishments, holding more than $30 million in growth capital earmarked for FY25.
