Woolworths-backed ALH has flagged not reopening Melbourne pubs under restricted capacity, as landlord ALE drags the group back to court questioning the quality of management at venues.
From 2 November licensed venues in Melbourne including pubs will be allowed to reopen, on the provision of four square metres of floorspace per person inside, to a maximum of 20 people, and two square metres per person outside, up to a maximum of 50.
Australian Leisure & Hospitality (ALH) has almost 90 pubs in Victoria, and some, such as The Club Hotel in Ferntree Gully, have already posted on social media that they will remain closed until restrictions are lifted further as it “simply isn’t viable for us to trade”.
The Australian Hotels Association Victoria suggests the cap of 20 people inside, whatever the amount of floorspace, is unworkable for many pubs and 75 per cent will remain closed.
The scheme seemingly puts venues at a disadvantage, when compared to public spaces such as parks or beaches, which have neither number limits nor the social tracking systems being used by businesses.
The Victorian Government has flagged “more to say soon” on how and when restrictions will be eased further in metropolitan Melbourne, as it continues to base policy on the public health advice.
ALH counts over 2,700 staff throughout its Victorian pubs – all of whom were stood down when the group, a part of larger Woolworths-Mathieson entity Endeavour, did not meet turnover reduction requirements to receive JobKeeper.
It reports more than 50 of the group’s pubs in NSW have been open since it was allowed on 1 June, and all are open in Queensland, South Australia, Western Australia, Tasmania and the Northern Territory.
Eighty-six of ALH’s 330 pubs around the country are owned by ASX-listed REIT ALE (ASX:LEP), now headed up by Guy Farrands.
Landlord and tenant have been disputing rent increases that ALE claims are due following a rent review in 2018.
The long-running disagreement appeared to have been settled in September, when five independent valuers found the landlord was entitled to only limited increases.
However, following what it says was a “detailed review” of the determinations, ALE is taking issue with the valuations, arguing about the methods used and that they were not done in accordance with the requirements of the rent review provisions of the leases.
It is seeking declarations in Victoria’s Supreme Court that the arbitration be not binding on 19 venues in Victoria – including the Ferntree Gully Hotel.
Key to the error claimed is that the valuers did not consider “what a good average manager would have achieved” at the pubs. ALE also claims a submission from ALH was taken into account, which was not permitted.
ALE cites the importance of the court decision, which it says will be crucial in eight years’ time when an uncapped and uncollared rent review is due for all properties where ALH chooses to renew its lease.
ALE shares reached an all-time high of $5.69 in January before falling 34 per cent late March to $3.78. It rebounded to $5.22 early September before falling below $4.30 again under the weight of the valuer determinations. It closed today at $4.40.