HPI announces major assets sale and capital investment program

SYDNEY , AUSTRALIA: HPI has announced the sale of four key assets to Australian Venue Co. for a total consideration of $48.6 million. The sale, structured in two tranches, will see the immediate reinvestment of proceeds into a capital investment program aimed at upgrading other properties within HPI’s portfolio.

The transaction is set to deliver multiple benefits to HPI securityholders, including the sale of assets at their current book value and the redeployment of sale proceeds at an attractive initial yield of 7.5%. This yield represents a premium compared to other investment opportunities available to HPI.

Additionally, the deal promises improved certainty on future rental cashflows through venue enhancements and increased lease tenures resulting from various lease extensions.

The sale also serves to de-risk HPI’s portfolio by divesting certain venues and further strengthens the relationship with its major tenant.

The properties involved in this strategic divestment include Hotel Allen in North Ward, QLD; Ball Court Hotel in Sunbury, VIC; Royal Mail Hotel in Tewantin, QLD; and Woodpecker Bar & Grill in Burpengary Meadows, QLD. These assets, identified for disposal based on sustainable rent and strategic fit, will be acquired by a subsidiary of Australian Venue Co. for future redevelopment.

Settlements for Hotel Allen and Ball Court Hotel are expected to deliver $23.7 million as soon as practicable, with the remaining two properties, Royal Mail Hotel and Woodpecker Bar & Grill, set to follow within 12 months, contributing an additional $24.9 million. Throughout this period, HPI will continue to collect full rent on the divested assets.

This move is part of HPI’s ongoing strategy to curate its portfolio, having divested eight assets for $99.6 million since FY20 and acquired 22 assets for $271.7 million, marking its entry into new markets.

Concurrent with the asset sales, HPI has committed up to $50 million to a Capital Investment Program in collaboration with Australian Venue Co. This program will enhance several venues across the portfolio, with an initial investment of approximately $23.7 million across nine venues in Queensland and South Australia.

These enhancements aim to improve food & beverage offerings and upgrade indoor and outdoor spaces. An additional $26.3 million is anticipated to be invested following the settlement of the final two properties in 2025.

HPI has ensured appropriate controls over the development work and a framework for potential future lease extensions across the portfolio. This proactive approach is expected to bolster HPI’s position in the market and provide a solid foundation for future growth.

Paul Waterson, Australian Venue Co. Chief Executive Officer, commented: “Australian Venue Co. has a proven track record of enhancing its venues through strategic investment. We are confident that the capital investment program announced today with our landlord, HPI, will deliver material operational improvements and transform these venues into modern properties that become the cornerstone of local communities”.

Blair Strik, acting Chief Executive Officer, commented: “despite challenging capital markets conditions, we remain committed to implementing initiatives to further enhance HPI’s market leading portfolio and drive long-term securityholder returns.

The strong pricing outcomes on these asset sales reflect the attractive fundamentals of the sector in which we operate, and the asset enhancement program provides an efficient recycling mechanism to deploy capital into higher return investments that enhance the quality of our assets”.

CL Hotels acquires Circa 39 Hotel in Miami Beach, plans major renovation and rebranding