Australia’s largest pub landlord is bolstering the bottom line, listing three southeast Queensland hotels, showing book value of close to $20 million.
The listed ALE Property Group (ASX:LEP) owns the freehold on 86 pubs around the country. Its results for half-year ending 31 December 2020 showed a combined portfolio value of $1.226 billion. All are leased to the Woolworths-backed ALH.
Rarely divesting its blue-ribbon assets, ALE has announced a campaign on two properties in Brisbane and one closer to the Sunshine Coast.
The Pelican Waters Tavern at Caloundra holds a “stunning” 8,695sqm waterfront location, 100 kilometres north of Brisbane, with sports bar, gaming room, separate bistro with outdoor dining deck, 65 parking spaces and a strong-trading BWS. It generates $448k (+GST) annual net income for ALE.
The Kedron Park Hotel is on a 6,008sqm site, featuring sports bar, family bistro, kids play area, gaming room and 105 parking spaces. It generates $229k (+GST) annual net income for ALE.
Kedron is a busy suburb nine kilometres north of the Brisbane CBD and 10 kilometres east of the Airport.
Also in Kedron is the Edinburgh Castle Hotel, on 4140sqm close to a Coles, Hungry Jacks, KFC, Subway and several other roadside traders. It provides a sports bar, gaming room, separate bistro, 65 parking spaces and strong-trading BWS, and nets ALE $345k pa.
All three pubs are leased until 2028, plus four ten-year options (to 2068), with annual CPI rent adjustments and market review at the time of options. All are Triple Net Leases, meaning the tenant is responsible for all outgoings and repairs.
Australian Leisure & Hospitality (ALH) is Australia’s largest pub operator, and 85.4 per cent owned by the Woolworths-owned Endeavour Group, which the supermarket giant is still planning to divest, likely through an IPO spin-off.
ALE’s website lists the Pelican Waters Hotel value as $7.6 million, the Edinburgh Castle as $7.5 million and the Kedron Park as $3.4 million.
Recent half-year results announced showed the Queensland portfolio of 32 properties valued at $390.7 million, with weighted average adopted yield (WAAY) of 4.78 per cent.
ALE reported a surprising 232 per cent in net profit after tax (NPAT) of $68.1 million, mostly ($51.6m) coming from a 4.4 per cent increase in the value of its assets since 30 June, 2020. Distributable profit rose 14.8 per cent to $17.9 million.
The company also reports ongoing litigation with ALH over select rent reviews on Victorian properties from 2018, but championed its portfolio as “highly resilient during COVID-19” with “all pub rent paid when due”.
The three freeholds are on the market individually or in one line through Burgess Rawson Queensland’s Glenn Conridge, who notes they all hold “multiple revenue streams, which underpin the strength of these investments”.
All three properties will go to auction 31 March through Burgess Rawson at Crown Casino, Melbourne.
ALE shares closed today at $4.60 – still significantly down (18.7pc) on their high of $5.66 in January 2020.
