Pelathon has continued its big plans for expansion, paying $6.25 million for Lantern’s Courthouse Hotel as it completes its exit from the Sunshine State.
The Cairns’ Courthouse Hotel is an “institution” in north Queensland. It was the official Court building until 1998, constructed in 1922 as part of a scheme to create employment for returning World War I soldiers.
Lantern has been shedding what it sees as ‘non-core assets’ to focus on Sydney. An ASX announcement by the listed group (ASX: LTN) reported the sale price as a 28 per cent premium to its book value at the end of 2015.
But Pelathon has made a specialty of transforming strategic regional operations, targeting specific aspects to create its own goldmines.
“We really understand the history of non-performing pub funds as we watched the fallout during the post GFC period,” CEO Jaz Mooney told PubTIC. “As the asset manager Pelathon Management Group working strongly with Blackwall was capable of finding underlying ways to keep assets alive, and paying banks back down.”
Mooney says strategies this time include actively engaging with the local Council and community to reinvigorate the historic hotel and retain its place amongst other prized landmarks in the area.
The pub was marketed by CBRE Hotels Glenn Price, Daniel Dragicevich and Paul Fraser, who note despite the relative lack of activity in regional areas compared to south-east Queensland, but suggest the Courthouse sale demonstrates the “continued strength of the market in leisure based areas” such as Cairns.
“They were drawn to the Courthouse due to its steady trade and location in one of the key economic and tourist regions in the country,” offered Price.
While Mooney says “Our expectation is to return in excess of 10 per cent to unitholders … less would be considered some sort of failure in this sector” the ASX-listed Lantern is consolidating. The announcement from Chairman Graeme Campbell and CEO John Osborne cited its divestment of non‐core hotels “is continuing with sale processes for the Lawson Park Hotel Mudgee and the Central Hotel Bundaberg”.
