Coles and Australian Venue Co extend leases with HPI
28 January 2020, Written by Business News Australia
Executives at Hotel Property Investments (ASX: HPI) will be in good spirits today after a lease extension was reached with a major tenant for its pubs and taverns across Queensland.
Queensland Venue Company (QVC), a joint venture between Coles Group (ASX: COL) and Australian Venue Co, has agreed to extend 28 leases with HPI that were due to expire in June and December next year.
Melbourne-based HPI says these properties account for 57 per cent of gross rental income as at 31 December 2019, and now its Weighted Average Lease Expiry (WALE) will be lifted from 3.8 years to 11.8 years.
In FY19 the group earned a rental income of $46.8 million, split between its leases to QVC and Australian Leisure & Hospitality (ALH), the latter which is undergoing a merger with 75 per cent owner Woolworths Group's (ASX: WOW) drinks business.
HPI has 43 properties in total, mostly in Queensland except for a few in South Australia. The group's most valuable properties include The Regatta in Toowong ($50.2 million), the Crown Hotel in Lutwyche ($37.9 million) and Ferry Road Tavern in Southport ($32.1 million).
For eight of the properties with extended leases, HPI has offered a $3 million discount to the base rent payable under the current leases.
In conjunction with the lease extensions HPI has committed to a $30 million capital expenditure program across the portfolio over a two year period commencing in early 2020.
The works program has been agreed between HPI and QVC to improve the quality and operational performance of the hotels.
The capital expenditure will be funded predominantly from existing undrawn debt facilities.
The positive news was unable to prevent HPI shares being drawn down with the rest of the ASX today, trading 2.4 per cent lower at $3.25.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Author: Business News Australia