Opportune Redcape picks up struggling Sydney hotel, set to relaunch with refurb

Pubs and hotels operator Redcape Hotel Group (ASX: RDC) has jumped on an opportunistic acquisition to add the Gladstone Hotel in Dulwich Hill, NSW to their portfolio with plans to refurbish the establishment in readiness for a re-launch.

The acquisition comes amid Gladstone Hotel being classified as a ‘Going Concern’ which has only been further emphasised through the coronavirus pandemic where hospitality was one of the industries most negatively affected.

“We are delighted to announce the addition of such a quality asset to our portfolio,” said Redcape CEO, Dan Brady.

“Being our first acquisition since returning to full operation and with distributions reinstated, the purchase signifies a return to our strategy of active portfolio optimisation and growing sustainable distributions for our Securityholders over the long term.”

“Our vision is to create and nurture sociable and sustainable communities. As a Dulwich Hill fixture, The Gladstone Hotel will undergo a major refurbishment program and will be supported by Redcape’s operational platform, focused on developing hospitality professionals and driving positive social impact through our Communities program.”

A Freehold Going Concern acquired for $38 million, the Hotel has been in the same family ownership for the past 40 years and is situated within a busy commercial area where the relaunch will benefit from wider marketing and vertical integration into Redcape’s network.

Heavily hit by COVID-enforced closures to their venues through the peak of the pandemic, Redcape reported a 12.3% decline in revenue for FY20 to $259.3m and operating EBIT down 14.8% to $57.1m.

With the gradual easing of hospitality restrictions, the Company has bounced back from the pandemic well with operating EBITDA of $24.1m for the Quarter ending 30 September 2020, a 23.5% increase on the previous corresponding period.