By Clyde Mooney
Despite the difficult economic climate of the past few years, Australia's largest listed freehold owner of pubs has painted a healthy picture of its finances at its AGM this month.
Having completed $500 million in capital management to strengthen its fiscal position, Australian Leisure and Entertainment (ALE) yesterday said it is carefully managing its opportunities while the going is good.
The overall value of ALE's property portfolio grew a healthy 6.2 percent, bolstered by a CPI-based rental increase and stronger capitalisation rates, according to its independent research.
Net gearing on assets was reduced from 68 percent to 52 percent after beginning at 88 percent at the time of the company's inception in 2003, with average debt terms now increased to 7.3 years.
A healthy 99.4 percent of ($31.2 million) distributable profit was returned to stakeholders in the form of $0.1995 per security, which was 7.8 percent above the guidance figures set out for the year.
The final $72 million of outstanding ALE notes were redeemed in September, fully paid and funded from cash balances.
However, the temptation to expand its operations is being put on hold, with the board taking a conservative view on pending acquisitions.
"The board's current view is that, while we remain interested in identifying attractive opportunities in the market, acquisitions are considered to provide the necessary accretion given the current costs of capital requires by the funding markets. Optimisation of the existing portfolio, a review of the hedging arrangements and any new capital management initiatives will remain ALE's key priorities in the current market conditions," says Peter Warne, ALE Chairman.
ALE currently owns 87 properties, predominantly in Queensland and Victoria and entirely leased to Australian Leisure and Hospitality (ALH).