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Uber fund manager Charter Hall is strengthening its presence in the booming pub industry with a cash and stock offering for the country’s largest pub owner, ALE Property (LEP).
It is valued at $ 1.7 billion and will be carried out by Charter Hall Long WALE REIT (CLW) and the Hostplus super fund.
ALE Property is the primary owner of the newly listed Endeavor Group, and its new managing director Guy Farrands took over earlier this year following the resignation of longtime CEO Andrew Wilkinson. Mr Farrands said the group received an unsolicited approach from the consortium in July.
The offer to ALE shareholders, which the board of directors recommended, is 0.4080 securities in the real estate trust managed by Charter Hall and $ 3.673 in cash for each ALE security.
Based on the closing price of Charter Hall Fund securities last Friday, the proposal has a implied value of $ 5.88 per ALE security. Taking into account the debt, the overall value of the transaction is $ 1.68 billion.
CLW fund manager Avi Anger said he believes the deal is attractive and designed to provide significant benefits to LEP and CLW holders.
âThe transaction is in line with CLW’s strategy to invest in high quality real estate assets which are primarily leased to corporate and government tenants under long term leases,â he said.
âWe are delighted to be able to continue our partnership with Hostplus, one of Australia’s leading retirement funds, by investing in high quality pubs and liquor outlets leased from Endeavor Group. “
Following the transaction, CLW will remain Australia’s largest and most diversified long WALE REIT, with an estimated market capitalization of approximately $ 3.8 billion.
The deal includes a nationwide portfolio of 78 high-quality pubs leased to Endeavor Group, Australia’s largest pub operator and liquor retailer through Dan Murphy’s and BWS stores, which will increase CLW’s exposure to Endeavor Group as a tenant, which has a current market capitalization of approximately $ 12 billion.
ALE said 100% of the rent was collected during COVID-19 and the average lease was 7.5 years, with 10-year renewal options.
As part of the evaluation of the proposal, ALE discussed the terms of the offer with Caledonia, ALE’s largest equity holder, who also agreed to the transaction.