Super fund’s move into pubs shocks market
ALH Group yesterday unveiled Australia’s largest ever pub sale as it revealed property funds manager Charter Hall Group and superannuation fund HOSTPLUS had teamed up to buy a $603 million portfolio of freehold properties from the Woolworths-backed group.
The deal shook the industry as it represented the first big move by Australia’s $1.8 trillion superannuation sector into pub ownership.
Industry fund SunSuper has $65m tied up in the John Singleton and M.H. Carnegie & Co-backed Australian Pub Fund but the latest, much larger, play is focused purely on property ownership, rather than running pubs.
Charter Hall and HOSTPLUS have set up an unlisted fund to own the portfolio — which makes up a large slice of ALH’s 329 pubs and 545 retail liquor outlets around Australia — and lease it back to the pub operator, which is run by billionaire Bruce Mathieson, who has a 25 per cent stake in ALH Group, alongside Woolworth’s 75 per cent interest.
Woolworths chief executive Grant O’Brien said the sale of the portfolio — which comprises 54 pubs, 46 of which include a Dan Murphy’s and/or BWS retail tenancy — was in keeping with the retail giant’s strategic agenda to leverage its portfolio to maximise shareholder value.
“Woolworths’ and ALH’s preference is to enter into long- term leases over its premises rather than holding property assets,” he said.
The deal confirms Woolworths’ strategy of not being a long-term holder of property assets. Previously, the company has said it would sell property assets when appropriate market opportunities arose.
Woolworths has sold more than $2.8 billion of property in recent years, with the biggest tranche coming when it created the SCA Property Group with a $1.4bn portfolio of shopping centres as a separate listed entity in 2012. The retailer has also been selling off new shopping centres it developed on balance sheet during the global financial crisis, as well as smaller pubs and liquor stores to private investors.
While the listed ALE Property Group owns about 87 ALH pubs and the Laundy Hotel Group owns 29, the new partnership between Charter Hall and HOSTPLUS is keen on doing more business with ALH.
Charter Hall joint managing director David Harrison said the deal marked the group’s entry into the hospitality sector, and the growth of its retail portfolio through the Dan Murphy’s and BWS retail liquor assets, and emphasised his group’s “strong relationship with Woolworths”.
The deal lifted the HOSTPLUS property portfolio to about $2bn and the group is keen to acquire more pubs.
“Should opportunities be presented in future we’d certainly be interested in looking at those opportunities again,” HOSTPLUS chief executive David Elia said.
The latest sale process drew heavyweight players, with Charter Hall emerging as the early front-runner. It was linked with superannuation fund Telstra Super in early July, but Mr Elia said Charter Hall had reached out to his fund as it undertook the deal.
The initial tranche of properties showed an initial yield of 6.8 per cent, reflecting the strong competition for the assets.
Other listed players ALE Property Group and Hotel Property Investments, which owns 48 Coles-occupied pub and liquor freehold properties, are also invested in pubs but Charter Hall could have an edge due to its tie- up with deep-pocketed superannuation funds.
Source: The Australian - 9th September 2014
