This article is from the Australian Property Journal archive
ALE Property Group has earmarked further property sales as part of its strategy to buy back debt and reduce gearing.
In the first half year to December 31 2009, ALE sold seven properties reducing its portfolio to 93 pubs. The total value of ALE’s portfolio decreased to $772.4 million down from $804.8 million at June 2009.
But despite the sales, ALE maintained a solid business with revenue rising from $28.6 million in December 2008 to $29.6 million as at December 31 2009.
The group’s distributable profit also rose slightly from $17.1 million to $18.1 million. ALE’s accounting profit after was $10.25 million which includes non-cash adjustments.
ALE confirmed a distribution of 12 cents per security for the period, down from 15 cps in the previous corresponding period.
Managing director Andrew Wilkinson said ALE’s capital management position has been made materially stronger through a capital raising, a series of property sales and debt buybacks.
The capital raising and property sales have added to existing liquidity with cash held on deposit of $130.4 million. Accordingly, net debt has reduced from $571.3 million to $415.8 million. This equates to a reduction in gearing from around 71% to 53.8%.
This strengthening of ALE’s balance sheet has significantly reduced the headroom over debt covenants. The current property values could fall by around 40.2% or the average capitalisation rate on the properties could increase from the current level of 6.47% to around 11.0%. This would be equivalent to a fall in average property values of around 40.2%.
ALE is continuing its proactive discussions with its existing relationship banks and advisers with a view to extending the debt maturities well in advance of May and September 2011.
Wilkinson said the board will provide fully year FY10 distribution guidance once the refinancing plans have progressed to a more advanced stage.
“The significant capital management initiatives undertaken over the past six months have been well received by the refinancing parties ALE is in proactive discussion with.
“The full year distribution is also expected to reflect the results of further property sales and debt buybacks,” he concluded.
Australian Property Journal
