By Clyde Mooney
Triggered by Woolworths-backed ALH’s announcement this week of the sale of 54 freehold properties to a new REIT player in pubs, talk is emerging of its significance in a bigger play by the biggest publican.
Electing to not follow the example of recent pub portfolios leveraged into IPOs, ALH reported to the ASX it intends to divest the freehold title of 54 of its pubs to giant Real Estate Investment Trust (REIT) Charter Hall Group (CHG).
The $603 million deal is a confidence boon for the pub industry, but little more than a strategic toe in the water for CHG – the largest third-party property manager and keeper of an $11.5 billion portfolio.
This transaction heralds a significant new industry strategy for the 75 per cent supermarket giant-owned ALH, which has made clear it sees its future lying in operations and not property.
However, sources have revealed to TheShout – Pub Sales that the massive freehold sale is possibly the first step in a plan to create a new landlord entity capable of strategic alliances with the 300+ venue strong ALH in the future.
It is public record that the pricing structure of the lease agreements between ALH and ALE (Australian Leisure & Entertainment) Property Group is set for significant readjustment of up to 10 per cent in 2018, and likely much more again in 2028.
ALE owns 86 properties leased solely to ALH, and the rental burden – widely considered below market rate – will undoubtedly increase dramatically.
TheShout – Pub Sales spoke to ALE managing director Andrew Wilkinson, who stated he was unable to comment and quite surprised at the suggestion ALE may be soon become ripe for a takeover by LWIP – the new wholesale investment partnership created by CHP and already backed by Hostplus.
Whilst unable to shed any light, Wilkinson did report that the listed company’s investors report satisfaction with the "prospects for ALE".
“ALE security holders regularly feed back that they are very happy with their investment.”
Following the transfer to LWIP, Woolworths will have effectively divested more than $2.8 billion of property assets since mid-2010, with no shortage of eager buyers ready to take up the blue-ribbon assets.