The new board of Lantern Hotel Group has begun its portfolio shake-up, announcing the divestment of three “non-core” assets from its books.
The ASX-listed Lantern (LTN) released news yesterday it would be selling three of its 17 pub assets, amid its “strategic review of the business”.
Two of the three pubs are freeholds: the Brisbane Hotel, in Perth, operated by Geoff Hayward’s award-winning Capital Management WA, and Alberts – the last of its New Zealand assets, located in Palmerston North.
The third is the LTN owned and operated Dolphin Hotel, in Surry Hills, the sale of which the group says is based on its proximity to ‘core’ asset the Crown Hotel, less than a kilometre away.
LTN purchased the Crown from the Savage family in late 2013 for $15.5 million, as part of an expansion strategy slated at the time. The Crown was a consistent top-150 gaming venue at the time of purchase, but has slipped into the 200s in recent times.
Following financial figures released in October, new gun directors John Murphy and Graeme Campbell, and CEO John Osborne, have cited their duty to “continually review where the company’s focus, and strategic direction, is best placed,” said the public announcement.
“A key theme of the strategic direction is to create a platform for growth by focusing on improving the performance of a core portfolio of hotels that are scalable and offer a multi-faceted and diverse range of leisure and entertainment experiences.
“In terms of the Dolphin Hotel, we are of the considered view that we are already heavily represented in the Surry Hills area with our other investment in The Crown Hotel at the other end of the suburb, and as such feel it appropriate to rationalise our position by testing the market for the Dolphin Hotel in a market that is recognising value in well-positioned multi-revenue based city fringe hotel operations.”
Agent Ray White Hotels has been exclusively appointed to manage the Dolphin campaign, and CBRE Hotels will manage that of the Brisbane, in Perth.
Ray White’s Andrew Jolliffe told PubTIC interest in the Dolphin is likely to be diverse, given the market conditions of finance availability, investment property values, industry health and the ‘legislative horizon’.
“We’ve seen some really significant transactions take place over the past 18 months, and we wholly expect a not dissimilar transactional landscape for the foreseeable future.
“The potential acquisition of the Dolphin Hotel is a very exciting proposition, with a strong cash flow history in place and patent upside opportunities to deliver further profitability.”
Ray White has managed a number of high-profile sales in the area just this year, with Dean Haritos’ Light Brigade selling to the Bayfield family, and Mitchell Waugh’s newly-formed Public House Management Group (PHMG) snapping up both the Royal in Paddington and the Ryan family’s famous Woollahra Hotel.
Managing the freehold of the Brisbane, CBRE’s Ryan McGinnity cites the desirability of the prominent 1176 m² block, less than a kilometre from the Perth CBD.
“The property not only comprises one of the most successful pub venues in Perth, but it’s situated on prime Perth real estate, which will be keenly sought after by investors,” said McGinnity.
“With a long term lease until 2068 (including options), this freehold property is supported by one of Perth’s, if not Australia’s best venue operators, presenting an outstanding investment opportunity.”
The Dolphin Hotel is being sold via EOI closing 26 November 2015, and The Brisbane freehold is being sold by Public Tender closing 3rd December.
*FOR MORE ON 2015’s MASSIVE YEAR IN REAL ESTATE, CHECK OUT THE MAJOR FEATURE IN THE LATEST PubTIC MAGAZINE
