Redcape Hotel Group has bought the Arthouse Hotel in Sydney.
Redcape Hotel Group has snapped up the leasehold interest in the Arthouse Hotel in Sydney’s CBD for about $7m as it expands its holdings in the city.
The move is the latest by the group which also picked up the harbourside Frisco Hotel in Woolloomooloo from Queensland-based Sun Group for about $15m and comes after major trades.
It sold the South Terrace Hotel in Bankstown to Oscars for $54m and bought The Entrance Social Club Hotel from Thomas Hotels for $36m. Redcape bought the Arthouse lease from Alsimas.
The Redcape fund, which is part of MA Financial Group, owns and operates community pubs and hotels. Its portfolio spans 37 pubs and hotels in NSW, Queensland and Victoria. Just two of these venues – Criterion Hotel and Frisco Hotel – are in metropolitan Sydney.
HTL Property’s Dan Dragicevich and Sam Handy handled the sale.
Occupying a prominent position within The Galeries retail precinct on Pitt Street, the hotel was operated by the McBeath family for 26 years and is a Sydney institution. The offer drew significant interest from established hoteliers and new market entrants, driven by its 24-hour liquor license, 21 gaming machine entitlements, and annual revenues of about $8m.
The vendor, Ben McBeath, said Redcape had a “reputation for looking after their staff, which, after 26 years, was so important to us”.
Mr Dragicevich said that opportunities of such scale and accessibility in the Sydney CBD were scarce. “The Arthouse has one of the larger footprints in the burgeoning Midtown precinct giving it a competitive advantage and levers for future earnings growth,” he said.
The Midtown precinct is on the rise, backed by the ANZ Tower development at Liberty Place and the opening of the Gadigal light rail station.
“Our business model is perfectly suited to continue its growth in a flourishing pocket of the city,” Redcape managing director Chris Unger said. “The Arthouse puts icing on the cake on what has been a record financial year for Redcape and we’re well placed to see that continue into the next one.”
Mr Handy highlighted the continued investor appetite for operationally diverse hotel businesses. “This sale reinforces the strength of the NSW hotel transaction market, and in particular high yielding leasehold assets, which in the current elevated interest rate environment are becoming increasingly sought after,” he said.