By Vanessa Cavasinni, editor Australian Hotelier
After having sold one of their last non-core hotels and placed two of their core gaming hotels on the market, Lantern Hotels will ask securityholders at next week’s annual general meeting to approve a sell down of the group’s entire portfolio.
The ASX-listed Lantern Hotels this week announced the sale of the Commodore Hotel in North Sydney for $14.5 million to an undisclosed Sydney hotelier, followed by the placing of two western Sydney hotels – Ambarvale Hotel and Uncle Bucks Hotel – on the market. Both of these gaming-focused hotels were previously listed as core hotels.
The sale in the last twelve months of Lantern’s non-core hotels has strengthened the group’s financial standings, halving the company’s gross debt from $80 million on 31 December 2015, to $40 million at 30 June 2016.
Following on from this strategy, Lantern released a notice of the annual general meeting, which will take place next Tuesday 25 October, where the board of directors will seek approval to instigate a sell-down strategy of the group’s entire portfolio.
In the annual report, Chairman Graeme Campbell and CEO John Osborne outlined the reasons for this potential strategy:
“The improved operating performance and the establishment of a more stable capital structure has allowed the Board to focus on developing a strategic direction for the Group.
“The Board is of the view that the current business is sub-scale and that growth via acquisition in the current strong and tightly-held market in a value accretive manner may be difficult to achieve.
“Having considered the various strategic options, the Directors have formed the view that it would be in the best interests of the Group to obtain the flexibility of undertaking an orderly sell down of the Group’s remaining hotels (including all core hotels). Given the strong market for the Group’s properties, the Directors believe there is real opportunity to realise premium value on the Group’s property portfolio.”
If the sell-down strategy is approved, the board will distribute the proceeds from the hotel sales to securityholders progressively. If the sell-down strategy is not passed, the Lantern Hotels board will only look to divest The Brisbane, Ambarvale Hotel and Uncle Bucks Hotel, and will continue to operate the core hotels within the portfolio.
Lantern wasn't the only hotel group to go down this road – in November, Riversdale said it was placing its portfolio on the market as well.