CLIENT | Lantern Hotel Group – The Australian 19-Sep-13 – Pub buyers develop $600m thirst
One of Boardworx’s clients, the Lantern Hotel Group, are going through a rapid rate of expansion and looking to boost their property portfolio by $100 million.
Whilst other industries are still suffering the after effects of the GFC, the hospitality arena and specifically Lantern Hotel Group, is bouncing back.
Extract from the full article which can be found at, LINK | Lantern Hotel Group Article
ABOUT $600 million worth of pubs in NSW and Queensland are being circled by investors including the Lantern Hotel Group and Redcape Hotel Group.
The sector is staging a comeback five years on from its savaging during the global financial crisis, when some operators collapsed under mounting debt.
The listed Lantern Hotels Group is planning to boost the value of its property portfolio by up to $100 million, while both Redcape Hotel Group and the Riversdale Group, backed by Mark Carnegie, Geoff Dixon and John Singleton, are moving to boost their portfolios with reports both want to float on the Australian Securities Exchange this year.
“There’s plenty for sale. Whether they are assets that fit, or are assets that we would necessarily be interested in, is a different story,” said Lantern Hotel Group executive director Russell Naylor.
“I would expect that Riversdale and Redcape would have also potentially looked at the assets.”
New Zealand’s Pyne Gould owns 29 per cent of the Lantern Hotel Group, which counts Macquarie Group and Simon Marais’ Allan Gray as shareholders. The group has been hungry for acquisitions after a restructure last year.
Riversdale, and Redcape were probably circling larger city venues while Lantern was more interested in hotels in the wider Sydney area, taking a more opportunistic approach, Mr Naylor said.
Lantern, which owns 10 pubs, including the Dolphin Hotel in Sydney’s Surry Hills, recently agreed to buy the Crown Hotel in the same Sydney suburb for an undisclosed price. The group has two other pubs in due diligence.
Lantern was probably competing with Riversdale to buy the Seaview Hotel in Townsville, expected to sell for more than $11m, according to market sources. Lantern was recently the underbidder to Redcape on a Gold Coast property, the Lost City.
While Mr Naylor estimated that Lantern, and most likely Riversdale and Redcape, had looked at about 50 Queensland and NSW pubs in the past six months, the exact number on the market was often difficult to quantify. “There’s always a lot of pubs that are for sale at a price that is not reflective of a price that anyone would like to pay,” Mr Naylor said.
Lantern recently cashed out of its investment with the Penrith Panthers, receiving close to $80m from the property arm of the rugby league club. It was also in the process of selling more non-core properties worth about $35m. The money would be used to partly fund up to $100m worth of investments. Mr Naylor said there was a variety of pub landlords offering properties for sale, including both single and multiple operators.
Some were looking to reduce debt, while others were offloading one property to fund the expansion of another.
“There has been a little bit of distressed selling, but there hasn’t been a lot,” he said. “The pub market has been stable and the underlying demand has been stronger than anticipated.”