Charter Hall’s $810 million pub fund
by Leon Gettler
Charter Hall has teamed up with Hostplus to create a second $135 million pub fund which has purchased three new assets in Victoria and Queensland, which are currently operated by the ALH Group (ALH).
The new assets are the Seaford Hotel and Royal Ferntree Gully Hotel, both in Melbourne and the Kondari Hotel Resort. It’s also picked up vacant land in Hervey Bay, Queensland.
As a result, the new Long WALE Investment Partnership (LWIP2) has eight pubs. Some of them are conveniently located next to a Dan Murphy's or a BWS retail tenancy, with the potential for expansion to include a bottle shop.
All up, it takes the total portfolio value in the LWIP series to $810 million.
It’s a portfolio that comprises 62 properties predominantly located across Australian metropolitan areas. The second fund has pubs that include the Blue Pacific Hotel, Bribie Island and Irish Finnegan's, Townsville and Miller's Inn, all in Queensland.
Significantly, the deal strengthens Charter Hall’s relationship with Woolworths which is the firm’s biggest customer. In effect, ALH manages the asset owned by Charter Hall.
It comes with a weighted average lease expiry from 18.9 years to 19.0 years with occupancy at a solid 100 per cent.
Charter Hall and Hostplus each committed an initial 50 per cent or $151 million equity investment in the first LWIP created in September 2014.
Charter Hall's head of retail, Greg Chubb told Fairfax Media it was a solid investment and that the fund would continue to explore opportunities in the hospitality sector.
“The LWIP2 investment partnership with Hostplus delivers a stable income stream secured by high quality investment products that offer access to long leased assets with strong tenant covenants in growing markets. We will continue to be acquisitive of these assets where the underlying fundamentals meet the investment criteria," Mr Chubb said.
2nd March 2016
