ASX-listed Lantern Hotel Group is forging ahead with its turnaround, announcing the sale of further assets, particularly the landmark Bowral Hotel for $6.35 million.
Following a shareholder vote to oust the existing Lantern (LTN) board mid-2015, the newly-appointed Chairman John Murphy and CEO John Osborne have led an orchestrated plan to reverse the company’s flagging profits.
They have since divested a number of “non-core assets” including Surry Hills’ The Dolphin to Christian Denny’s dynamic hotel group, and now the NSW Southern Highlands stalwart Bowral Hotel to an as yet unnamed “experienced Sydney-based hotelier”.
In their announcement yesterday to the ASX, Murphy and Osborne disclosed that the Bowral sale price of $6.35 million represented a 22 per cent premium to the 2015 book value. It follows the freehold sale earlier this month of the tenanted GPO Hotel in Brisbane’s Fortitude Valley for $5.25 million, which achieved a 28 per cent premium to its end of 2015 book value.
Both assets were marketed via EOI campaigns through CBRE Hotel’s Daniel Dragicevich, along with Ben McDonald in NSW and Glenn Price in Brisbane.
“The [Bowral] sales campaign was a success on every level, attracting over 50 genuine enquiries throughout the process and 13 initial offers,” reported Dragicevich.
“The eventual purchaser was an existing hotelier and industry identity who was a ‘great fit’ for the asset and will significantly enhance the current offering for the benefit of the Southern Highlands region as a whole.
“The current strength of the hotel market continues to drive sales results of this quality and we expect no slowing down in the near term.”
An Investor Update by LTN on 9 May disclosed success building from the new operation strategy and measures taken during the December quarter to improve financials.
The company reported a strong March quarter resulting in a 9.7 per cent increase in operating revenue, and cost-cutting resulting in a 29.3 per cent improvement in EBITDA for the core hotels, as compared to the previous corresponding period (PCP).
These improvements include an 18 per cent lift in gaming revenue at core venues, greater profitability in food and overall margins through efficiency and productivity initiatives, and an 8.2 per cent reduction in ‘support services expenses’.
The Update also noted placement of an “experienced team … to lead a growing business” and an employee share option plan aligned to the interest of security holders.
Sales exceeding book value, coupled with active debt reduction and ongoing primary debt refinancing see the Board considering a return of excess capital to shareholders.
LTN CEO John Osborne is extremely happy with the Bowral Hotel sales outcome.
“CBRE Hotels has managed the sales campaign with the upmost integrity and transparency and yielded a great result for our shareholders – we are extremely pleased with the result.”
LTN also noted in the ASX announcement it has listed the Lawson Park Hotel in Mudgee. This is being marketed by regional specialists Manenti Quinlan.
