By Ian Neubauer
ING Real Estate Entertainment Fund has sold more than $20 million of pub assets as part of a divestment program to reduce its debt.
ING posted a statement yesterday (May 19) on the Australian Securities Exchange saying it had sold the Terry Hills Tavern in Sydney for $13.5 million and the Shamrock Hotel in Toowoomba for $7 million.
It said the proceeds would be used to reduce its debt from $261 million to $240 million, with more pub sales likely on the horizon.
“Further capital management initiatives are required to improve the fund’s balance sheet and provide a stable capital structure,” ING said in the statement.
It added that one of its flagship pubs – the Exchange Hotel in Brisbane – was doing a roaring trade following the completion of a major refurbishment project, but that some of its operators were doing it tough.
“The pub industry has weathered both legislative and economic burdens over the past year,” it said. “In addition, the more restrictive credit conditions have placed cashflow pressure on some of our operators. These include Club Swans in Sydney, Alchemy Hotel Group in Newcastle and the Courthouse Hotel in Cairns.”
ING inferred it was offering some of these tenants relief in the form of short-term rental discounts in line with its focus of long-term profitability, which includes strategies to recover income shortfalls in the long term.
ING Real Estate Entertainment Fund is part of the ING Real Estate business, a global fund with more than $215 billion of assets under management in 22 countries. For a listing of its Australian properties, click here.
ING Real Estate Entertainment Fund shares were trading at 16 cents at 2:00pm today (May 20) – compared to $15.5 cents seven days ago.
