MA Financial’s $1.47b Redcape Hotel Group freezes redemptions
Less than two years after MA Financial took its pubs outfit Redcape Hotels Group off the ASX boards with a pitch for rosier valuations, it is struggling to settle the tab on investor redemptions.
Redcape bought the Gladstone Hotel in Sydney’s Inner West for $38 million in 2020.
Street Talk can reveal Redcape’s investors are being told withdrawals are paused until at least December end. It’s a bitter pill to swallow for investors who backed the delist-for-valuation-uplift pitch and now are effectively locked into the unlisted vehicle.
The Redcape Hotels Group owns 35 assets on the east coast, which were valued at $1.47 billion at March end. It generated $91.1 million revenue in the three months which was 2 per cent higher than the March 2022 quarter’s numbers.
Its investment management team, which includes MA hotel management head Chris Unger and fund manager Daniel Hargraves, flagged deterioration in trading conditions at March end which they said had weighed on revenue and earnings.
A letter sent in March to investors highlighted several headwinds for the sector, including cost of living pressures, rising interest rate costs, limited deal activity and Labor government’s gaming regulation reforms in the New South Wales.
Redcape was carrying $645.8 million in net debt, which put its gearing ratio at 42 per cent at the director’s estimate. It had $21.2 million cash and equivalents, and $28 million underway debt. About 60 per cent – or $411.2 million – of its debt was hedged.
More to come
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