The sale of El Toro Motor Inn by Lantern may not proceed, as stakeholders protest the “surprise” sale of the asset, but the buyer tells a different story.
Last Friday the soon-to-be-gone board of Lantern Hotel Group (ASX: LTN) announced the sale of the Warwick Farm former top-100 gaming pub for $24 million to a partnership fronted by publican Andrew Lazarus.
Major shareholders and the incoming directors held an emergency meeting on Friday afternoon and promptly sacked executive director Russell Naylor, effective immediately. The AFR reported on Saturday stakeholders “were surprised by the sale” and were seeking legal advice on its annulment.
Although the sale price was in fact higher than the value of the property on Lantern’s books, the venue’s drop from #92 to #136 on the OLGR list of gaming venues, and its need of extensive renovation, seems to encapsulate the complaints that saw the directors voted out by shareholders in June.
Major shareholder Millinium Asset Services issued a call for the removal of Brian Mogridge, Russell Naylor and Deborah Cartwright, and installation of the better-qualified John Murphy and Graeme Campbell. The motion was passed by shareholder vote, 55 to 45 per cent.
The incoming directors criticised the level and quality of information provided to shareholders, and cited that properties were “operating at a less-than-optimum level” and that an extensive operational review would be forthcoming.
On this basis many with a stake in the ASX-listed publican were outraged when arguably one of its best assets – located on an enormous 1.4 ha block in the gaming heartland of western Sydney – was sold in atrocious condition, rather than rejuvenated and either sold in better condition or retained and operated.
PubTIC spoke to the purchaser, Andrew Lazarus, who says he bought the hotel in good faith in partnership with Colin Parras, with plans to make it part of the Liverpool growth success story.
“The site’s zoning limits development opportunities,” said Lazarus. “To argue that the hotel is worth significantly more without taking the risk of obtaining zoning and licensing approvals is a nonsense, let alone the fact that the aging buildings need a massive renovation – if not demolition – to change the hotel’s downward trading trend.
“Colin and I have just completed the purchase of the Macquarie Hotel, located just 1.5km, for almost the same price – yet showing a 10 per cent yield, in line with the current market. This is evidence of our strategy, and consistent with our purchase of this hotel on competitive terms.
“We have struck a binding contract with Lantern. We are concerned that some are questioning that fact, because of Lantern’s internal issues.
“We look forward to completing the transaction and providing Lantern a good return for their asset.”