The Redcape share price is flat in early trade today after the company announced it has acquired two pubs in Queensland for $27.5 million.
The post Redcape (ASX:RDC) share price on watch after hotels acquisition appeared first on The Motley Fool Australia. –
Pubs operator Redcape Hotel Group Pty Ltd (ASX: RDC) has continued its buying spree, announcing today that it has acquired two pubs in Queensland for $27.5 million.
In early morning trading, The Redcape share price rose marginally by 0.5% to 95.5 cents but has since retreated to its opening price of 95 cents.
Redcape advised it has acquired the Shafston Hotel in Kangaroo Point, and the Aspley Hotel in Aspley, for a total amount of $27.5 million. This increases its portfolio in Queensland to eight hotels.
There will be no capital raising as the acquisitions will be funded from existing resources, with settlement anticipated prior to June 2021.
Previously owned by an offshore hospitality vendor, Redcape says the hotels will now be owned and operated by a proven local operator who understands Australian suburban communities, and the important role pubs play as social meeting places.
The company says the new hotels will be revitalised by “considerable capital investment”.
Today’s acquisition represents Redcape’s second major acquisition in a month. In late November, the company announced that it had acquired the Gladstone Hotel in Dulwich Hill, Western Sydney, for $38 million.
Redcape chief executive Dan Brady says that these acquisitions are part of the company’s long term strategy.
“The incorporation of these two Queensland hotels into the portfolio following the acquisition of the Gladstone Hotel in Sydney’s inner west last month, provides further evidence of a return to our strategy, post the COVID-19 trading disruption,” he said.
Today’s acquisitions bring the company’s total portfolio to 35 hotels under management.
In September, Redcape reported positive trading results for the first quarter of FY21, and said it expected to deliver earnings higher than the equivalent period last year.
The company reported earnings before interest, tax, depreciation, and amortisation (EBITDA) of $24 million in the first quarter, up from $19.5 million.
In that announcement, Redcape also said that it would reinstate dividends after suspending them temporarily during the pandemic lockdown period.
The Redcape share price in 2020
The Redcape share price has lost almost 15% this year, after shutting down most its establishments in the early part of the year due to the government-imposed restrictions.
The share price began the year at $1.11, but dropped to as low as 44 cents in March at the height of the lockdown period. It has since bounced back to today’s levels, but still a long way off from its 52-week high of $1.135.
Redcape currently commands a market value of $525 million.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.