Redcape Hotel Group has bought a portfolio of pubs and hotels in Newcastle and the Hunter region in a deal worth almost $500 million.

The assets purchased from “pokies king” Sam Arnaout’s company Iris Capital include the Argenton Hotel, Edgeworth Tavern, Hotel Elermore, Gunyah Hotel, Pedens Hotel, QT Hotel Newcastle and Sportsbar, and Sydney Junction Hotel.

Arnaout said: “This transaction represents the successful completion of a strategy we commenced more than a decade ago to identify exceptional regional opportunities, invest with conviction and unlock long-term value through active ownership and development.

“From revitalising iconic hotels to delivering the QT Newcastle and the East End precinct, we leave behind assets that have become integral to the region’s future.”

Redcape described it as “one of the most significant portfolio acquisitions in our history, and in the industry”.

It follows Redcape purchasing Arthouse Hotel in Sydney CBD and the Frisco Hotel in Woolloomooloo.

“We’re excited about these pubs – they’re diversified, resilient, and underpinned by material real estate holdings,” said Redcape managing director Chris Unger.

“They will continue to benefit from growth in the region and our investment in them. This transaction continues our strategy to diversify our portfolio through long-term growth opportunities, boosting its resilience and outlook as a result.”

Why Australian pubs continue to raise the bar for investors

Unger recently wrote a recent opinion piece on why Redcape Hotel Group, a fund managed by MA Financial, believes Australian pubs continue to appeal to investors.

“Over the past three years, Australian households have faced one of the most challenging economic environments in decades, with rising interest rates, elevated inflation and increasing living costs placing pressure on household budgets and discretionary spending,” he said.

“Despite these headwinds, Australians have continued to prioritise social experiences and hospitality spending. 

“The fundamental appeal of pubs has remained consistent over time. They generate recurring cashflows, benefit from diversified earnings streams, possess significant barriers to entry and occupy an important place within local communities. 

“As economic conditions improve and investor demand for resilient real assets continues to grow, we believe Australian pubs remain well positioned to deliver attractive long-term outcomes.” 

Read Unger’s full opinion piece here.