Charter Hall empty-handed after ‘best and final’ offer for pub owner
Fund manager Charter Hall and superannuation fund Hostplus were unsuccessful in their attempt to buy pub landlord Hotel Property Investments with an improved takeover offer.
The new offer values HPI, which owns a $1.3 billion portfolio of 59 venues leased to Queensland Venue Company – a joint venture between Coles Group and Australian Venue Co – at $757 million. The offer was sweetened by 5.5 per cent – from $3.65 to $3.85 per unit – and declared “best and final”.
HPI rejected the approach: “The board maintains its previously stated position that there is no reason to sell the portfolio in the absence of a compelling offer,” the company said.
Pubs owned by HPI include big Brisbane venues such as the Regatta Hotel and Crown Hotel; the West End Hotel in Adelaide; and the Gregory Hills Hotel in western Sydney.
Charter Hall’s initial offer of $3.65 per unit – or $710 million – was rejected by the HPI board as “materially undervaluing the pub owner and its growth prospects”. Units in the trust were last trading at $3.74, down 2.4¢.
“The improved offer price has been declared best and final and will not be increased, in the absence of a competing proposal – noting no competing proposal has emerged, and the bidder considers the likelihood of one emerging is low,” Charter Hall said in its ASX announcement.
Charter Hall noted its revised offer was at a 17.7 per cent premium to HPI’s last “undisturbed” price of $3.27 per unit on March 28. That was the date when Charter Hall and its ASX-listed subsidiary Charter Hall Retail REIT acquired a 14.8 per cent stake in the pub fund.
Together with Hostplus, Charter Hall now owns 18.56 per cent of HPI. To succeed with its takeover offer, Charter Hall needs a minimum 50.1 per cent acceptance from HPI unitholders. Its offer closes on November 4.
Charter Hall, with the backing of Hostplus, is the country’s biggest pub landlord, with a multibillion-dollar portfolio. Three years ago, it acquired the country’s then-biggest listed pub landlord, ALE Property Group, for $1.7 billion.
Speaking at the Financial Review Property Summit last month, Charter Hall CEO David Harrison talked up the fund manager’s appetite for hospitality assets, saying everyone wanted to either represent Australia at the Olympics or own a pub.
But he said Charter Hall viewed pubs as just another type of convenience retail asset backed by long leases that it could “institutionalise”, as it has done with neighbourhood malls, petrol stations and childcare.
“From our perspective, we don’t want to be an operator,” he said. “We want to be a freehold [pub] owner and lease the real estate to the best in each sector.”
