Redcape buys $30m Queensland pub, launches capital raise
Redcape Hotel Group has bought The Orion Hotel in south-east Queensland for $30 million and launched a capital raising to fund more deals as it swings back strongly into expansion phase.
It’s the latest in a string of acquisitions by the hotel fund over the past 12 months, totalling about $250 million. The unlisted fund, one of the biggest of those managed by ASX-listed MA Financial, has accumulated a $1 billion portfolio of hotels in NSW and Queensland.
It also represents quite a turnaround for Redcape, which was forced to freeze redemptions from July 2023 until April last year to protect the fund’s balance sheet. It has made some chunky divestments as part of its return to growth, including the $140 million sale of The Beach Hotel in Byron this year.
That recovery is now fast gaining pace. Along with the Orion purchase, Redcape on Thursday announced it will target a raising of $50 million to $70 million in capital to spend on new venues.
“We’ve got opportunities for acquisitions and incremental growth capex spend,” Redcape’s managing director Chris Unger told The Australian Financial Review.
“We get attractive returns from growth capital spend, where we enhance the venues, upgrade the venues, etc.
“When we put these two levers together, it just gives us the opportunity to continue to grow the return for investors.”
The Orion Hotel – brokered by JLL’s Tom Gleeson and CBRE’s Paul Fraser – stands within the Orion Springfield Central shopping centre in the vast Springfield city development south-west of Brisbane.
Its owner was publican Jim Davies, who also operates Ipswich’s Commonwealth Hotel. He opened the Orion a decade ago.
“I firstly want to thank all my loyal staff over the journey and wish Redcape all the very best for the future with Orion, it is an exciting opportunity for the fund,” Davies said.
Redcape hopes to raise $50 million-plus in fresh capital to fund new acquisitions. It will also increase the fund’s target distribution to 11.25 cents per unit to provide a distribution yield of 7.5 per cent on the new equity it’s raised, plus any capital growth, this financial year.
In the 2025 financial year, the fund’s like-for-like EBITDA growth topped 13 per cent driven by strong growth across the pubs and more than $30 million spent on venue refurbishments.
South-east Queensland was showing many positive indicators similar to those he witnessed across the Sydney market about 15 years ago, in terms of economic investment and development, Unger said.
“I think the Olympics will, of course, be additive and perhaps a cherry on top. We’re just big fans of the area,” he said.
“As interest rates start to come off, if and when, real estate property will be quite [an] attractive proposition once again and I think those parts of south-east Queensland will stand to benefit.”
At the end of 2024, the pub owner and operator spent $66 million buying three Brisbane pubs, purchasing the Lucky Tree Tavern in Durack, The Willow Hotel in Moorooka, and The Commercial Hotel in Redbank.
It also offloaded two Sydney venues – the El Cortez Hotel for about $100 million and the Cabramatta Hotel for $90 million – at about the same time. Both were acquired by Iris Capital, headed by Sam Arnaout.
More recently, businessman Scott Didier purchased The Beach Hotel in Byron Bay from Redcape for $140 million – the second-highest price paid in a pub trade on record. Redcape had bought the hotel from the Liberman family-backed Impact Investment in 2020 for $104 million.
The hotel fund delisted from the ASX in November 2021 after three years as a listed company.
