GOOD TIMES AT ALH’S LISTED LANDLORD ALE

In Finance by Clyde Mooney

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ALE has posted its annual results, with its nine per cent valuation lift and profit increases boding well for the pub industry.

Listed ALE (ASX: LEP) is the largest landlord to Australia’s largest pub group, ALH, owned by Woolworths and the Mathieson family.

ALE comprises 86 freehold hotel properties across five states, all leased to ALH. The reported results included valuations on 33 of the assets by Herron Todd White and CBRE, and the remaining 53 by the directors. (full list of properties and valuations below)

The portfolio came in at $1.08bn – up 9.1 per cent. This backs up an increase in 2016 of more than 10 per cent.

Net profit after tax was reported at $130m, which included value adjustments and finance amortisation. Rental revenue was $57m, with distributable profit of $29.1m. This is an increase of 1.5 per cent, in line with CPI.

Much of the sharp valuation increases stem from the strict rental reviews written into ALH’s leases, which currently average 11.7 years across the 86 properties.

While four properties saw rental increases of more than 10 per cent in the past year, November 2018 will see a good portion of the portfolio due for the next scheduled rental review.

“The 2018 review will be most significant for ALE and we expect a positive result,” stated ALE CEO Andrew Wilkinson.

ALE has also benefitted from plenty of capex works by ALH, adding more than 30,000m² on its properties over the past 14 years.

Notable inclusions in redevelopments are Melbourne’s Young & Jackson, soon to benefit from the CBD South metro station being constructed around it, and the Crows Nest Hotel in Sydney’s lower north shore, benefitting from a recent massive $9m+ makeover. (see video below)

In line with the national shortage and focus on accommodation, the ALE-ALH partnership has brought 428 more rooms online, largely renovated and reactivated existing spaces. ALH boasts around 1900 rooms nationally across its 330+ pubs, predominantly 3-4-star.

ALE is one of the increasingly sought after A-REITs (Australian Real Estate Investment Trust) replacing the traditionally family-owned specialist real estate portfolios. In an educational submission by Wilkinson to the ASX, he notes Australia’s combined capitalisation of $110bn in A-REITs is 12 per cent of the US, and nearly 30 per cent higher than the UK.

Wilkinson suggests the market for pubs is strong and maintains the company is still considering acquisitions.

“ALE and ALH continue to explore opportunities to work together on redevelopment of under-utilised properties for mutual benefit.”

ALE’s share price closed yesterday (8 August) at 4.77 – up just 1pc pre-announcement, but up 160 per cent on its low in April 2009 of $1.83c per security.

 

 

 

New South Wales

Properties 1Net Rent Yield Value
Blacktown Inn Hotel $606,142 4.70% $12,900,000
Brown Jug Hotel $650,415 5.04% $12,900,000
Colyton Hotel $939,562 5.07% $18,520,000
Crows Nest Hotel $931,871 4.90% $19,030,000
Melton Hotel $348,427 4.94% $7,050,000
Narrabeen Sands Hotel $800,122 5.16% $15,500,000
New Brighton Hotel $517,824 4.71% $11,000,000
Pioneer Tavern $646,454 4.65% $13,900,000
Pritchards Hotel $1,679,895 5.76% $29,140,000
Smithfield Hotel $469,145 4.91% $9,560,000
SUB TOTAL $7,589,859 5.08% $149,500,000

Queensland

Properties 1Net Rent Yield Value
Albany Creek Tavern $860,329 4.99% $17,240,000
Alderley Arms Hotel $358,116 4.87% $7,350,000
Anglers Arms Hotel $562,911 5.36% $10,500,000
Balaclava Hotel $626,673 4.93% $12,710,000
Breakfast Creek Hotel $922,616 5.01% $18,410,000
Burleigh Heads Hotel $753,905 5.07% $14,880,000
Camp Hill Hotel $236,413 3.48% $6,800,000
Chardons Corner Hotel $124,778 3.80% $3,290,000
Dalrymple Hotel $607,704 4.82% $12,600,000
Edge Hill Tavern $322,810 5.04% $6,410,000
Edinburgh Castle Hotel $358,592 5.07% $7,080,000
Four Mile Creek $440,746 5.05% $8,725,000
Hamilton Hotel $617,870 4.26% $14,500,000
Holland Park Hotel $628,167 4.55% $13,800,000
Kedron Park Hotel $234,592 5.31% $4,420,000
Kirwan Tavern $586,606 5.06% $11,600,000
Lawnton Tavern $525,418 6.06% $8,680,000
Miami Hotel $677,535 5.14% $13,190,000
Mount Gravatt Hotel $353,619 5.07% $6,975,000
Mount Pleasant Hotel $524,407 5.35% $9,800,000
Noosa Reef Hotel $652,753 5.81% $11,240,000
Nudgee Beach Hotel $323,516 4.79% $6,750,000
Palm Beach Hotel $767,466 5.26% $14,580,000
Pelican Waters Hotel $470,424 5.52% $8,530,000
Prince of Wales $401,571 4.14% $9,700,000
Racehorse Hotel $195,627 3.01% $6,500,000
Redland Bay Hotel $500,506 5.01% $10,000,000
Royal Exchange Hotel $590,741 6.00% $9,850,000
Springwood Tavern $959,324 5.13% $18,710,000
Stones Corner Tavern $593,021 5.60% $10,590,000
Vale Hotel $747,871 5.34% $14,020,000
Wilsonton Hotel $570,011 5.09% $11,190,000
SUB TOTAL $17,096,639 5.02% $340,620,000

South Australia

Properties 1Net Rent Yield Value
Aberfoyle Hub Tavern $396,917 5.75% $6,900,000
Eureka Hotel $358,657 5.98% $6,000,000
Exeter Hotel $241,235 5.52% $4,370,000
Finsbury Hotel $201,753 5.24% $3,850,000
Gepps Cross Hotel $294,267 4.76% $6,180,000
Hendon Hotel $214,751 5.32% $4,030,000
Stockade Tavern $348,484 5.89% $5,920,000
SUB TOTAL $2,056,064 5.52% $37,250,000

Victoria

Properties 1Net Rent Yield Value
Ashley Hotel $470,353 4.94% $9,530,000
Bayswater Hotel $1,179,673 5.49% $21,500,000
Berwick Inn $1,200,035 5.83% $20,580,000
Blackburn Hotel $1,019,649 5.37% $19,000,000
Blue Bell Hotel $252,735 4.83% $5,230,000
Boundary Hotel $1,480,829 5.75% $25,750,000
Burvale Hotel $1,119,099 4.90% $22,840,000
Club Hotel $608,434 5.11% $11,910,000
Cramers Hotel $987,868 5.37% $18,400,000
Deer Park Hotel $831,950 5.37% $15,500,000
Doncaster Inn Hotel $1,313,745 5.31% $24,750,000
Ferntree Gully Hotel & Motel $494,868 5.60% $8,840,000
Gateway Hotel $406,954 5.02% $8,100,000
Keysborough Hotel $1,042,323 4.53% $23,000,000
Mac’s Hotel $795,108 5.48% $14,500,000
Meadow Inn Hotel $937,340 5.36% $17,500,000
Mitcham Hotel $959,274 5.31% $18,070,000
Morwell Hotel $154,134 6.17% $2,500,000
Olinda Creek Hotel $461,598 5.29% $8,730,000
Pier Hotel/21st Century $895,140 5.45% $16,430,000
Plough Hotel $984,795 5.84% $16,860,000
Prince Mark Hotel $1,093,316 5.11% $21,410,000
Royal Exchange Hotel $286,074 5.61% $5,100,000
Sandbelt Hotel $1,249,649 5.22% $23,960,000
Sandown Park Hotel $680,907 5.04% $13,500,000
Sandringham Hotel $541,994 4.33% $12,520,000
Somerville Hotel $328,791 4.64% $7,080,000
Stamford Inn Hotel $1,380,560 4.88% $28,290,000
Sylvania Hotel $641,434 5.05% $12,690,000
The Vale Hotel $622,419 4.67% $13,330,000
Tudor Inn Hotel $629,636 5.05% $12,460,000
Village Green Hotel $1,312,880 5.15% $25,500,000
Young & Jacksons Hotel $572,325 3.54% $16,160,000
SUB TOTAL $26,935,888 5.16% $521,520,000

Western Australia

Properties 1Net Rent Yield Value
Queens Tavern $541,384 5.41% $10,000,000
Sail & Anchor Pub Brewery $270,488 5.98% $4,520,000
Brass Monkey $577,669 6.11% $9,450,000
Balmoral $475,287 6.51% $7,300,000
SUB TOTAL $1,864,828 5.96% $31,270,000

 

GRAND TOTAL

$55,543,278

5.14% YIELD

TOTAL VALUE $1,080,160,000