Pub veterans have sold three Queensland pubs to MA Financial

The pub market is running almost as hot as the weather, with a sector heavyweight buying three Queensland watering holes.

MA Redcape Hotel Fund has bought the Commercial Hotel in Redbank

The pub market is making a comeback as summer drives drinkers into taverns with investors also striking a more bullish note by snapping up three well-known pubs in Queensland for $66m.

Sector heavyweight the MA Redcape Hotel Group bought the trio of pubs in the state’s southeast as it continues to expand beyond its heartland in Sydney’s suburbs as many Queensland properties offer higher returns.

The fund’s return to buying also shows its confidence that pub values have stabilised and that there is appetite among investors in the unlisted to back an expansion. The unlisted trust purchased The Lucky Tree Tavern in Durack, The Willow Hotel in Moorooka and the Commercial Hotel in Redbank.

MA Redcape Hotel Fund managing director Chris Unger said the fund would look to acquire assets with an emphasis on properties that offer significant potential for redevelopment and refurbishment in order to unlock value.

“This tactical management of our portfolio may also include the divestment of some assets as accretive market forces determine,” he said.

MA Redcape Hotel Fund has also bought The Willow Hotel in Moorooka.

The Willow Hotel and Lucky Tree Tavern were sold by publicans Peter Braithwaite and Brendan Lawless; while the Commercial Hotel in Brisbane’s Redbank Plains was sold by industry veterans Patrick Ryan and Peter Filipovic.

HTL Property brokered the sales of the three freehold going concern hotels in southeast Queensland, with agents Daniel Dragicevich, Glenn Price, and Andrew Jolliffe, handling the properties.

HTL’s Mr Dragicevich said there had been a “shift in the thinking” among pub buyers this year across Queensland, with purchasers prepared to be more active in their search for assets that added to their portfolios.

HTL’s Mr Price said that Gaming Machine Authority values across Queensland were at record levels, and both on and off premise trade was growing, which was drawing large corporate groups, institutions and private syndicates to the market.

The firm’s head, Mr Jolliffe, said there had been a flurry of December sales that had reset benchmarks across most states in Australia for both capital city and regional markets.

He said a number of family offices were looking to plough funds into the area next year. “We are forecasting an increased volume of transactions for the next 12 months when compared to the most recent years,” he said.

Redcape also reaffirmed its two-year total return target of about 15 per cent and boosted its distribution guidance in a sign of its renewed confidence in the market. It is also in advanced due diligence on further venues which are expected to complete in the near term, taking the total capital reinvested to $120m, after it sold off other pubs earlier this year to meet redemptions.

The acquisitions are expected to provide a blended initial yield of about 11.5 per cent with more upside to come as the manager takes on the pubs. The yield is much higher than on the fund’s sale of the Eastwood and Australian Hotel Brewery which were around 7 per cent.

In a year of recovery, Redcape’s trading performance was strong, with year to date like-for-like venue earnings up 11 per cent, and the fund also refinancing debt.