Pub Fund Responds to Tenant Troubles

By Andrew Starke

The listed pub fund, ING Real Estate Entertainment Fund (IEF) has rejected media claims that it is in financial difficulty, claiming it enjoys ‘a constructive and transparent relationship’ with lenders.

However the fund appears to be fighting for survival on several fronts as one of its tenants, the Alchemy Group, has entered voluntary administration, while its largest tenant, Icon Hospitality Management, may require a rent deferral period.

The Alchemy Group is the tenant at The Premier Hotel and MJ Finnegan’s in Newcastle.

An ING spokesperson told The Sydney Morning Herald that the fund had given the two hotels a ‘rent holiday’, which meant it was now owed $340,000.

IEF is currently in talks with Icon Hospitality Management, which runs the Bourbon in Kings Cross and the Martin Place Bar among others, as part of its strategic review and debt renegotiation.

“The fund is working through a number of scenarios in conjunction with Icon and its lenders,” an IEF spokesperson told TheShout. “As part of the refinancing package being discussed, the fund is currently considering providing Icon with a two month rent deferral period.”

Last year the fund flagged further sales from its portfolio of 36 pubs and 15 clubs in Australia and New Zealand as it struggles to service debt.

At the time (Aug 31), the company warned investors in a full year results statement that it was in danger of breaching its banking covenants if the value of its portfolio of pubs falls any further or if any of its pub tenants cannot pay their rent.

The fund and the Commonwealth Bank are in negotiations to refinance $180 in loans by February 28.

“IEF clarifies that the fund continues to enjoy a constructive and transparent relationship with its lenders,” said a spokesperson. “It remains in detailed discussions regarding the refinancing of its debt facility expiring at the end of February 2010.”

IEF will hold its Annual Unitholders Briefing on February 22 when it is expected that management will provide the market with an update on these talks and reveal the fund’s financial results for the six months to December 31 2009.

[Wed 20/01/2010 02:16:07]