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Profits flow to pub punters

Author: Enotia Support
News Date: 21/4/2015 3:33 PM
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Sydney Morning Herald (NSW Metropolitan, 2 March 2006)

ALE Property Group's solid interim result is a reflection of the growth in the pub market - and it's not all from merely selling beers to customers on a hot day.

Revenue from poker machines and entertainment such as trivia nights has increased dramatically, making pubs lucrative.

The recent sale of Fitzgibbons Hotels in Brisbane for almost $65 million has started what is forecast to be another strong year of pub sales in Australia.

ALE managing director Andrew Wilkinson said his group's good result was attributable to a number of factors, including higher than expected CPI revenue growth and tight cost management.

"Looking ahead, it is clearly a vendors' market, and patience and discipline are required in identifying acquisitions," Mr Wilkinson said.

Jones Lang LaSalle Hotels research shows pub yields continue to hover at or above 10 per cent in an environment typified by new investors and portfolio consolidation.

"Much of the interest, often speculative, focuses on large investors such as Woolworths, Coles or the Taverner Group and the

competitive nature of their deals," said Tony Bargwanna, senior vice president of Jones Lang LaSalle Hotels.

"Interest continues to be driven by buoyant trading conditions, competition in the retail liquor industry and growth in gaming."

Woolworths received a major boost when it formed a joint venture with Bruce Mathieson of ALH to acquire more assets.

"More recently Woolworths [Bruandwo Pty Ltd] acquired the $380 million Taverner Hotel Group - expanding … [its] portfolio by 33 pubs and in the process achieving a 10-per-cent-plus yield," Mr Bargwanna said.

Coles had concentrated more on acquiring leasehold interests.|

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