Cheers to Charter Hall as landlord

PROPERTY funds company Charter Hall will become the largest pub landlord in the country through a $1.7bn takeover offer for ALE Property Group.

Charter Hall is teaming up with superannuation fund Hostplus to take over the listed fund, which owns famed hotels including Melbourne’s Young & Jackson, the Breakfast Creek Hotel in Queensland and Sydney’s Crows Nest Hotel.

The funds group will add ALE’S high-profile hotels to its existing collection of pubs, which are run by the Endeavour Group.

Charter Hall’s mixed cash and scrip offer with Hostplus will put it at the top of the pile of freehold pub owners.

Its empire will be larger than private operators Arthur Laundy and Justin Hemmes, although it owns the freeholds rather than running pubs, which is done by Endeavour.

The transaction shows the strong demand for long-leased properties even during the coronavirus crisis, which has shut many pubs in Sydney and Melbourne.

It also shows the march of institutions into the pub game is going to the next level and under Charter Hall’s ownership there is likely to be more buying as it works closely with Endeavour, which has flagged it will be a big buyer.

Charter Hall’s specialist long lease property fund teamed up with superannuation fund Hostplus to make a takeover bid for the pub fund.

The pubs carry long leases and most are in strategic positions and are of high importance to Endeavour, with many properties operating as pubs for more than 60 years. The move came after ALE received an unsolicited bid from the Charter Hall consortium in July and is being backed by the ALE’S independent board committee and Will Vicars’ Caledonia, which has a 33.6 per cent stake, subject to an expert report or higher bid.

ALE chairman Robert Mactier said “the proposal is highly attractive for ALE security holders, as it reflects a material premium to ALE’S trading price and the revised independent valuation of ALE’S portfolio”.