Redcape Hotel Group Pty Ltd (ASX: RDC) has stepped back into the buyers’ circle. At the time of writing, the Redcape share price is trading flat at $1.00 despite the company announcing it has acquired the Gladstone Hotel in Dulwich Hill, Western Sydney, for $38 million. The deal does, however, represent Redcape’s first acquisition since it returned to full operations and resumed dividend distributions to shareholders.
How has the Redcape share price been performing?
Redcape owns and operates a portfolio of 33 pubs and hotels across New South Wales and Queensland. The company’s shares first began trading on the ASX on 30 November 2018.
From there, the Redcape share price gradually moved higher with little volatility, for a gain of 9% by 4 March 2020.
I’m sure you know what happened next.
Like most every share trading on the ASX, especially those tied to hospitality and leisure, the Redcape share price was savaged during the wider COVID-19 market rout.
From 4 March through to 20 March, the share price dropped a gut-wrenching 61%.
Since then, Redcape shares have rebounded strongly, up more than 127% from the March lows. Year to date, the Redcape share price remains down nearly 11%.
By comparison, the All Ordinaries Index (ASX: XAO) is down nearly 1% since 2 January.
A word from Redcape’s CEO
Commenting on Redcape Hotel Group’s $38 million acquisition of the Gladstone Hotel, CEO Dan Brady said:
We are delighted to announce the addition of such a quality asset to our portfolio. Being our first acquisition since returning to full operation and with distribution reinstated, the purchase signifies a return to our strategy of active portfolio optimisation and growing sustainable distributions for our securityholders over the long term. Our vision is to create and nurture sociable and sustainable communities.
Brady added his company plans a major refurbishment program for the Gladstone Hotel, including a focus on developing hospitality professionals. “We look forward to immersing ourselves in the Dulwich Hill community and learning about the Gladstone Hotel’s customers and staff as we look to drive even better outcomes for our staff, our customers and our securityholders.”
With the same family holding ownership of the hotel for the past 40 years, Redcape expects the asset to benefit from its operational platform and refurbishment capabilities.
The company stated it will fund the acquisition from its existing resources. It expects settlement before March 2021, subject to customary conditions.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
More reading
- What’s lifting the Platinum Asset Management (ASX:PTM) share price today?
- Landlease (ASX:LLC) share price falls on subdued earnings
- Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade
- ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks
- Orthocell (ASX:OCC) share price jumps 17% on positive clinical trials
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post What will new acquisition mean for Redcape (ASX:RDC) share price? appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/3nFz9bH
Leave a Reply