Still holding (My breath)NLG pub sales 'show confidence is up'By...

Still holding (My breath)

NLG pub sales 'show confidence is up'
By Maurice Dunlevy
The Australian
June 23, 2009 12:01am

LISTED pub operator National Leisure & Gaming has jettisoned two underperforming Queensland leaseholds through sales to Woolworths-controlled Australian Leisure & Hospitality Group.

The sales are worth a combined $12.5 million and involve the Magnums venue at Airlie Beach and the Blue Pacific Hotel on Bribie Island.

NLG chief executive Andrew Jolliffe described the sales as positive outcomes in an unpredictable market, with the troubled hotel group making a tidy profit after effectively paying nothing for its Airlie leasehold and $3.5m for the Bribie Island hotel business.

NLG earlier owned the freehold of the Airlie pub, which it onsold to the private Aussie Leisure Group, but retained the leasehold. It's understood to have received about $8m from the latest sales.

NLG yesterday hailed the sales as highlighting a return of investor confidence in the hotel sector.

"We expect these deals to set a benchmark in regard to the value of premium leasehold values, given that they represent arguably the most reliable case of willing buyer, willing seller in the leasehold market for some time," Mr Jolliffe said.

Despite the bullish prediction, the sector remains on a knife edge. Listed pub groups Hedley, ALE and ING continue to be concerned about falling valuations, even though the sector has mostly recovered from smoking bans.

Gaming turnover at about 30 NLG hotels in NSW dropped a disastrous 20 per cent in the wake of bans introduced almost two years ago.

However, in January NLG reported business had returned to pre-smoking legislation levels.

NLG's immediate problem is next month's deadline to repay $200m of mezzanine debt.

"NLG continues to actively review its portfolio of assets with the view that whatever non-performing or non-strategic assets can be divested at financially accretive levels will be," Mr Jolliffe said. Yesterday's sales were off-market and were brokered by CB Richard Ellis.

Buyer ALH operates more than 280 licensed venues and more than 450 retail liquor outlets across Australia. NLG shares closed unchanged at .07c.