By Andrew Starke

The ING Real Estate Entertainment Fund (IEF) has flagged further sales from its portfolio of 36 pubs and 15 clubs in Australia and New Zealand as it struggles to service debt.

The company warned investors in a full year results statement that it is 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.

IEF CEO, Daniel Hargreaves, said successful refinancing was a key priority for management, along with pursuing asset sales and possibly raising new equity as part of a wider capital strategy.

“This has been a demanding year for the Fund and its operators,” he said. “We have endured significant challenges that have tested our resilience on a number of fronts.”

The fund reported a $54.1 million full-year loss compounded by a $41.9 million cut to the value of its properties.

It also owes about $240 million to the Commonwealth Bank. 

The company revealed that recent asset sales had improved its loan-to-value ratio but declining pub values mean it remains just under the 60 percent level that would constitute a breach.

The property fund recently sold three of its hotels, the Mattara and Jewells in Newcastle, and the Elephant and Wheelbarrow in Brisbane’s Fortitude Valley for a combined $21.6 million, which was 16 percent lower than their carrying value of $25.7 million.

Aside from bank debt and tough trading conditions, the pub trust also blamed smoking bans for its predicament.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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