ALE Makes Good on Pub Sales Despite Deflated Market

By Ian Neubauer

A prediction by ALE Property Group that five hotels it placed on the market last month would attract high yields despite a 30 per cent fall in pub values has rung true after two of its Sydney properties sold for $11.74 million this week.

“All the research we are getting shows that if you have an established hotel with long-term corporate tenant, the freehold interest in this space is continuing to trade at high levels,” ALE managing director, Andrew Wilkinson, told TheShout on May 20.

ALE fetched $7.83 million for the sale of the Kirribilli Hotel and $3.91 million for the sale of the Pymble Hotel this week, representing an average capitalisation of 6.42 per cent.

Both properties were acquired by private investors and are leased to operator Australian Leisure and Hospitality for 19 years, with the option to extend the leases thereafter.

Commenting on the sales yesterday (Jun 16), Wilkinson said he was pleased with the strong interest the properties attracted from mutual partners.

“This sets a strong precedent for another three hotels ALE will be putting to auction in Melbourne on Wednesday 24 June,” he said, referring to the upcoming sale of the Elsternwick, Rose Shamrock & Thistle and Rifle Club Hotel.    

ALE will apply the proceeds of the Kirribilli and Pymble Hotels to debt reduction and to increase its surplus cash balance.

ALE shares were trading at $2.34 at 3:00pm today (Jun 17) compared to $2.30 seven days ago.

[Wed 17/06/2009 03:07:13]