By Andrew Starke
ALE Property Group has generated a small profit for the year to June 30 following a program of refinancing and pub sales.
The pub landlord reported a profit of $50.2 million, up 2.7 percent on the 2010 financial year, while also revealing an increase in property valuations.
ALE said a valuation of its 87 properties found that these had increased by 6.2 percent to $713.85 million over the past year.
"The appointed independent valuer, Urbis, assessed the volume of comparable sales evidence during FY11, plus the 17 sales by ALE in the previous years,” said ALE managing director, Andrew Wilkinson.
”They also noted evidence of continuing levels of demand from individual private investors for smaller value, high quality properties (such as ALE’s).
”Our 87 properties have an average value of $8.72 million. Urbis noted that most of the comparable properties were of a lesser quality than ALE’s in terms of location, lease structure and tenant strength.”
Wilkinson added that ALH, ALE’s tenant at all 87 of its properties, had continued to perform well.
”It is pleasing that ALH has consistently increased its profitability above CPI since its acquisition by the joint venture of Woolworths Limited and members of the Bruce Mathieson Group,” he said.
For the year ending 30 June 2010, ALH Group reported revenue for its more than 280 pub businesses of around $2.9 billion.
Additionally, ALH has completed refurbishments involving significant capital expenditure at a large number of ALE properties and added 18 Dan Murphy’s developments on ALE’s land.
”Of particular note is the redevelopment of the New Brighton Hotel (NBH) at Manly Beach in Sydney,” said Wilkinson.
”By October 2011 a reconstruction of all but the outside walls of the NBH is expected to be completed at a cost to ALH of around $10 million.
”These improvements revert entirely to ALE on expiry of the lease and all future market rent reviews assume that all the improvements are ALE’s.”
However the two remain at loggerheads over the lease of the Vale Hotel in Mulgrave, Victoria.
In early 2008, ALH commenced proceedings in the Supreme Court of Victoria in relation to the lease of the property.
On 16 December 2009, Justice Judd delivered judgment in the proceedings which endorsed ALE’s interpretation of the relevant provisions of the lease.
On 23 April 2010, Justice Judd made orders reflecting the findings set out in the judgment of 16 December 2009, including an order that ALH pay ALE’s costs.
ALH is now appealing the 23 April 2010 judgment and orders to the Victorian Court of Appeal.
The appeal is being heard this week but judgment is likely to be reserved, with a final judgment possibly still a number of months away.