Pelathon Group – established by ASX-listed BlackWall Property Funds, who partnered with Jaz Mooney – now has the opportunity to take the re-structured pub group “to the next level”.
Pelathon Pub Group (PPG) has held three assets worth around $24 million since 2010, and now has mapped out strategic plans to build this to a strong $100 million portfolio.
The recent ASX announcement by Blackwall consolidates years of planning by the two entities, and included news of the investor vote to install Pelathon Fund Management Limited as responsible entity.
Speaking to PubTIC, Mooney stressed their emphasis on “solid” returns and acquisitions that align with the philosophies that saw the partnership bring the Group’s ancestry back from the brink.
“We really understand the history of non-performing pub funds as we watched the fallout during the post GFC period. As the asset manager Pelathon Management Group working strongly with Blackwall was capable of finding underlying ways to keep assets alive, and paying banks back down,” says Mooney.
“We have four properties in the pipeline. We’ll bring those in, and add more as we go – slowly, slowly.
“Our expectation is to return in excess of 10 per cent to unitholders. Less would be considered some sort of failure in this sector.”
Following Blackwall’s acquisition of several distressed pub funds in 2009, the company worked with Mooney’s Pelathon Management Group to turn them around. This involved the merger of the Tankstream and Armada fund and the divestment of several non-core assets, using the capital raised to perform sorely needed capital works on the remaining whilst reducing the debt position.
PPG was formed out of the floundering Tankstream Pub and Leisure Group and Armada Pub Funds, which were operating under “unstainable business models” with Loan to Value ratios well exceeding banking covenants.
Underwriting and management by Pelathon and Blackwall convinced highly anxious banks to stick around, and after recent re-financing the portfolio now sits in a far healthier position, with normal banking covenants.
“We’re now in a position to move forward,” pronounced Mooney.
Focusing on sustainable outcomes, Mooney says they like good regional “meat and two veg” pubs with some gaming and a bit of bottleshop. This agenda begins with the Amaroo Tavern (Moree), Mary G’s (Lismore) and the Victoria Hotel (Wagga Wagga).
“That’s really the way we’d like to go forward, with assets that keep producing year in, year out.
“These three pubs are wonderful performers, and now we want to take the corporate structure to next level – never leaving the customer behind.
“We need to do that by looking at the customer at the far end; we want all types of people that come in, whether to game, or enjoy food & bev, to … pardon the cliché – but enjoy themselves responsibly.
“When they are happy, and return, and talk about us in a nice way, it all returns to the bottom line.”
Mooney says the assets they seek are about “balance” and that those in mind are located in NSW, Queensland and Northern Territory. Big-ticket city venues are not likely to be of interest.