This article is from the Australian Property Journal archive
ASX-listed pubs landlord Hotel Property Investments (HPI) remains untempted by Hostplus and Charter Hall’s takeover proposal, even after the bidders sweetened their offer after being flatly rejected by HPI, which said the overture undervalued its portfolio and potential growth.
The offer has increased from $3.65 to $3.85 cash per HPI security on Friday.
“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 Retail REIT (CQR) said in a statement.
HPI’s portfolio is the only pure-play pub REIT in the S&P/ASX 300 index. Across its 58 assets, 70% are leased to national operator Australian Venue Co (AVC) and its joint venture partner Coles.
In an ASX statement, HPI said: “The board maintains its previously stated position that there is no reason to sell the portfolio in the absence of a compelling offer and reiterates: the offer price does not provide securityholders any premium to HPI’s NTA in contrast to ASX-listed REIT transaction precedents…HPI owns a high quality portfolio that is well positioned for future growth; and HPI’s business is in a strong position and delivering growing returns,”
The new offer is at a 17.7% premium to HPI’s “undisturbed” price of $3.27 per security in March, when CQR and Charter Hall funded a joint venture trust that acquired a strategic stake. It is also at 19.2x HPI’s forecast FY25 earnings.
“There is a significant risk that HPI’s market price will fall if the offer lapses given HPI’s price has significantly increased by 15% since CHC and CQR acquired a stake in HPI in March 2024,” CQR said.
HPI shares were trading at $3.72 following the bidders’ announcement on Friday afternoon.
Earlier this month, HPI chairman Giselle Collins said the previous offer of $3.65 per share “does not compensate HPI securityholders for the value of our portfolio, or the strength and outlook for our business or the stamp duty savings which would accrue to Charter Hall Retail REIT and Hostplus”.
She said the “opportunistic nature” of the offer was demonstrated in the “negligible premium for control and reinforced through the HPI security price trading above the offer price since the announcement of the offer”.
“Our portfolio is unique, difficult to replicate and has long-term strategic value. Our portfolio is well positioned to benefit from strong ongoing rental growth via our attractive lease terms.”
HPI’s portfolio has a 9.1-year weighted average lease expiry with an average option period of a further 19.3 years.
On Friday CQR the strategic rationale of the takeover is “in line with CQR’s stated strategy of investing in high quality, net lease retail assets, whilst partnering with leading convenience retailers to deliver resilient and growing income streams”.
Charter Hall and Hostplus became major pub landlords in 2021 when they acquired former ASX-listed venue over ALE Group in a $1.7 billion deal.
