Getting a jump on next week’s AGM, Lantern has listed two of its big assets as news breaks of the top-dollar sale price secured for the Commodore Hotel.
Systematically executing a turn-around strategy to reverse the company’s fortunes has seen the publicly-listed Lantern Hotel Group divest nearly $60 million in assets the plan deemed ‘non-core’.
As it put to market the last of these last month, McMahon Point’s pride, the Commodore Hotel, the Board also announced its recommendations to sell the remaining six pubs and dissolve the Group.
Shareholders are due to meet next Tuesday to decide upon this recommendation, but in anticipation of the green light the Board has already listed two of the gaming heartland assets: Uncle Buck’s in Mount Druitt and the Ambarvale Hotel in Campbelltown.
Both pubs are in the 200s of the L&GNSW list of gaming pubs, but both hold upside potential not realised by the public company operator.
Uncle Buck’s Hotel sits on a big 5,640 m² block zoned B4 mixed use with serious development potential. It boasts a 24-hour licence and draws over $600k passive income annually from 10 retail tenancies and adjoins Westfield Shopping Centre, seeing over 12 million visitations per year.
It has benefited from Lantern’s EGM upgrading, climbing 14 places since its March ranking of #221, and has scope to increase to 30 machines from the 27 currently in operation.
The Ambarvale Hotel occupies an even larger 7,200 m² block with flexible zoning in one of Sydney’s strongest gaming LGAs. The 29 EGMs include 15 valuable permits.
Its large catchment takes in the slated ‘Greater Macarthur Priority Growth Area’, projected to deliver up to 33,000 new homes via a staged land release in coming years, and the recently refurbished pub is pitched to families and locals.
The pubs come to market through CBRE Hotels’ Daniel Dragicevich and Sam Handy, timed to capitalise on the presiding cheap money and market conditions and “unprecedented undersupply” of top-end gaming assets.
“AAA gaming pubs are seldom offered to the market, and we anticipate there will be very strong interest in both of these hotels, which boast irreplaceable core trading attributes and present compelling upside for an incoming operator,” stated CBRE national director Daniel Dragicevich.
LTN’s September quarter report spoke of lifts in revenue and EBITDA of 17.3 and 34.5 per cent respectively, with gaming up by 27.5 per cent. The special distribution to shareholders in August amounted to $17.7m, and another 0.5 cents per security was paid last week.
Nevertheless, the Board suggests that sale prices for the core assets in the current market could provide a better investment result than reinvestment and long-term operation. The completed (and still under contract) sales so far have drawn around $60m, at a premium to book value of 18.5 per cent.
The mandated shareholder vote to sell off the company’s “main undertaking” may not mean its certain demise, but will see another four hot properties on offer in coming months.
“Just three genuine Top-200 gaming hotels have transacted over the course of 2016, and there is expected to be very limited availability of pubs in the gaming segment in the foreseeable future.
“A large proportion of these hotels are in the hands of corporate, institutional or portfolio publicans who are unlikely to have a genuine propensity to sell these assets down in the short to medium term.”
Both hotels are for sale via Expressions of Interest, closing 9 November, 2016.