The feeding frenzy of Lantern’s pub sell-down has ended with the sale of the Crown Hotel to Damian Kelly’s Peak Investments for $26.1 million.
The ASX-listed Lantern Hotel Group (LTN) has executed a well-publicised and highly strategic divestment program of 16 assets that began as a debt rescue mission in late 2015, and gaining momentum and results, was voted by shareholders as the preferred exit strategy.
In a hot market starving for prized stock, the LTN sales have been seen as golden opportunities for strong operators eager to optimise what were fundamentally great operations not worked to their potential.
The Crown achieved one of the higher premiums, the $26m representing 51 per cent above last financial year’s book value, but will still likely prove another prudent acquisition for Peak Investment’s measured expansion.
Kelly told PubTIC he liked the look of it from the start.
“We have been fairly deliberate in our approach to acquisitions, but the Crown was an asset that attracted from the outset.
“Great cash flow and strong property fundamentals suit our investor group well, and we look forward to continuing the strong growth that Lantern has achieved in such a short period of time.”
Peak has engaged acclaimed operator Jason Marlow to manage operations at each of its properties, which already counted the Corrimal Hotel and Parramatta’s Rose & Crown.
LTN’s future is not certain, although the most likely scenario is its forced de-listing from the ASX, having relinquished its primary business. Since announcing the sell-off, its share price has risen 80.3 per cent, to currently trade at $0.11.
LTN engaged Ray White director Andrew Jolliffe and CBRE Hotels director Daniel Dragicevich to execute the sell-down. Dragicevich, who sold Peak the Rose & Crown two years ago, says the very public campaign has seen the focus of key market forces.
“We’ve been privileged to be heavily involved in Lantern Hotels’ divestment program, with the Crown Hotel sale bringing to a close what has been a very successful outcome for the shareholders.
“This private funds management style of purchaser is becoming more and more prevalent in the current climate and provides genuine competition for the traditional pub families when quality assets are put to market.”
Jolliffe saw the start of the sell-off for Lantern, and reports the average price of those with which he’s been involved approaches $20m.
“We were very grateful to be selected to kick off the deftly executed divestment strategy by Lantern Hotels with the Dolphin Hotel, a little further up the road in Crown St, and we are equally delighted to have been engaged to sell the last of the listed entity’s hotel assets in the form of the Crown Hotel.
“The market competition exhibited was yet another patent illustration of the imbalance between the weight of well-capitalized and well-informed hospitality, and property groups chasing hard yield in an ever-diminishing pool of available A-grade assets.”