News: ALE Property Group building on growth

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Transcription of Finance News Network Interview with ALE Property Group Managing Director, Andrew Wilkinson

 

 

Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from ALE Property Group is Managing Director, Andrew Wilkinson. Andrew thanks for joining us.

 

Andrew Wilkinson: Thank you for having me.

 

Carolyn Herbert: ALE Property Group is Australia’s largest listed freehold owner of pubs. What are the highlights from your latest annual results?

 

Andrew Wilkinson: This year we saw our distribution increase, the value of our properties increase by nearly 10 per cent and ALE Securities perform very well, through the year.

 

Carolyn Herbert: What was ALE’s distribution for FY15?

 

Andrew Wilkinson: The distribution was 16.85 cents, up from 16.45 cents the previous year. It was 100 per cent tax deferred and that exceeded guidance on both counts.

 

Carolyn Herbert: Could you tell us where the value of properties moved throughout the year?

 

Andrew Wilkinson: They increased by 10 per cent to nearly $900 million. We have 86 properties spread through the five mainland capital cities of Australia, mainly in Melbourne and Brisbane. Our valuers CBRE, they had regard to the high quality of not only the location, but the tenant and the lease arrangements. And the interesting thing is they had fairly limited regard, to the longer-term value coming from the market rent reversion. 

 

In that respect, we’d encourage our investors to look to the publication we made back in 2013, wherein we looked at a portfolio value analysis, around what that future market rent might mean. Since that time, the profitability of the properties has become even stronger and interest rates have fallen, nearly one per cent.

 

Carolyn Herbert: What are the key features of ALE’s capital structure?

 

Andrew Wilkinson: Today the balance sheet is very strong. We have an investment grade credit rating, we have long-term hedging, we have long-term funding. Our debt maturity is spread across the next two, five and eight years. It’s a very secure and low-cost structure, where the average fixed rate today is 4.35 per cent.

 

Carolyn Herbert: How have ALE’s listed securities performed this year?

 

Andrew Wilkinson: They performed strongly. The total return, both distribution and security price increase together, has been 34 per cent. Over the last 12 years, an average of 22.5 per cent. Put in very simple terms, if you invested $1.00 back in 2003 at our IPO, that would be worth around $10.50 today. That’s seen us outperform all the other indexes.

 

Carolyn Herbert: Tell us about ALE’s gearing levels?

 

Andrew Wilkinson: We’ve seen the value of our properties increase significantly this year, nearly 10 per cent to $900 million. That’s seen our gearing fall from 51 to around 48 per cent. We do have a target gearing range between 50 and 55 per cent. And the Board is giving consent to a range of options, which will see us restore that gearing to that level, over the next few years. We’ll consult with security holders and update at our Annual General Meeting in October.

 

Carolyn Herbert: Andrew finally, are there any other aspects of the general market conditions you’d like to discuss?

 

Andrew Wilkinson: It’s a strong property market out there at the moment. We look at a range of acquisitions and we’re continuing to exercise, the discipline that has seen security holders enjoy strong returns. We’re going to stick with that policy.

 

Carolyn Herbert: Andrew Wilkinson, thank you for the update on ALE Property Group.

 

Andrew Wilkinson: Thank you very much.

 

 

Ends