ING Pub Fund in bid to save Icon Venues

By Andrew Starke

ING Real Estate Entertainment Fund (IEF), a publicly listed property trust, has revealed plans to prop up its major tenant, Icon Hospitality, through refurbishments and rent assistance.

The pub fund has been granted a five year extension from lenders despite declaring a loss for the six months to December 31, 2009.

At its half year results briefing the company announced a loss of $24 million for the period, compared to a loss of $28.9 million recorded for the same period a year ago.

IEF committed itself to investing $8 million upgrading the venues that Icon leases, which include The Bourbon in Kings Cross and the Martin Place Bar.

It will also provide Icon with a $1 million rent reduction and waive rent increases until June 30, 2014.

Another tenant, Alchemy Hotels Management, went into administration in January.

“The challenging operating conditions have the potential to impact both the funds revenue and the value of its assets,” said CEO Daniel Hargreaves. “We are working proactively with key tenants to develop strategies to minimise these issues.”

The Icon strategy includes a number of components:

• IEF will invest $8 million on its Icon venues over the next three years to refurbish Icon venues to improve venue quality and customer amenity.
• Icon’s rent will be reduced by $1 million, increases for the next three years will be waived and the operator will have the benefit of a three month rental deferral to rebase their rent expenses within the business.
• IEF will take a call option over approximately 50 percent of Icon’s business which can be exercised at any time over the next five years, which allows the fund to participate in the forecast improvements in operating performance and leasehold value.
• IEF will take a put/call options over Icon’s FF&E which will enable the fund to preserve operational assets in the site in the event there is any default in the future.