ANNUAL REVIEW 2016

QUALITY

  • INCOME
  • GROWTH
  • OPPORTUNITIES
 

ABOUT ALE AND ALH

ALE Property Group (ASX: LEP) is the owner of Australia's largest portfolio of freehold pub properties. Established in November 2003, ALE currently owns 86 pub properties across the five mainland states of Australia. All of the properties are leased to Australian Leisure and Hospitality Group Pty Limited (ALH) with a remaining weighted average lease term of around 12 years plus options for ALH to extend.

ALH currently operates around 320 licensed venues and more than 550 retail liquor outlets across Australia.

For the year to June 2015 ALH’s Revenue was $3,949 million and EBITDAR was $773 million, up 4.1% pcp.

ALH continues to be Australia's largest pub operator.

logos

Three Layers of Value

Results Highlights

During the year ALE's strong results were evident across the property portfolio, capital management matters and equity performance.

DISTRIBUTION 20cps
DISTRIBUTION
TAX DEFERRED
100%
STATUTORY
PROPERTY VALUES
$990m
AVERAGE
LEASE TERM
12years
NET
GEARING
45%
DEBT
MATURITY
4.4years
HEDGE
MATURITY
9years
13 YEAR
TOTAL RETURN
23%p.a.

Property Results

ALE’s properties increased in value again this year to around $1.0 billion. The average value of the 86 properties at 30 June 2016 was $11.5 million.

Properties

5.54%

Weighted Average
Capitalisation Rate

33

Properties

$479.0m

Valuations at
June 2016

$14.5m

June 2016
Average Value

5.46%

Weighted Average
Capitalisation Rate

32

Properties

$309.2m

Valuations at
June 2016

$9.7m

June 2016
Average Value

5.37%

Weighted Average
Capitalisation Rate

10

Properties

$138.7m

Valuations at
June 2016

$13.9m

June 2016
Average Value

5.81%

Weighted Average
Capitalisation Rate

7

Properties

$35.0m

Valuations at
June 2016

$5.0m

June 2016
Average Value

6.47%

Weighted Average
Capitalisation Rate

4

Properties

$28.7m

Valuations at
June 2016

$7.2m

June 2016
Average Value

For more details on any of ALE’s properties,
please visit our Property Compendium website

A material difference between bond and cap rate movements
The current spread between ALE's capitalisation rates and government bond rates of around 3.5% is at one of the highest levels in 10 years.

Capital Results

During FY16 ALE paid a higher distribution, reduced gearing, extended hedging and maintained an investment grade credit rating.
ALE’s strong total returns continue to outperform all the major indexes over the short and long term.

Year In Review

ALE’s Chairman and Managing Director share their perspectives on 2016 and the outlook.

Chairman's & Managing Director’s Message

ALE delivered a superior performance during the 2016 financial year. The Group’s achievements included increasing property valuations and an enhanced capital position. These achievements saw ALE increase distributions, reduce gearing and deliver returns to securityholders that again outperformed the AREIT index by a material margin.

Peter Warne
Chairman
Andrew Wilkinson
Managing Director

Operational Review

ALE’s properties increased in value by 10% to around $990 million during the year. The current values reflect both the strong demand for properties like ALE’s and the reductions in interest rates. It is anticipated that the positive prospects for additional rental growth from future market rent reviews will increasingly impact values in coming years.

Board & Management

The Board of Directors and Management team have extensive experience covering property, finance, risk management, compliance and capital management. The Management team remains stable with Board renewal and transfer of institutional knowledge now well advanced.

board of directors

B.A, FAICD | Independent Non Executive Director, Chairman of the Board

Experience and expertise

Peter began his career with the NSW Government Actuary’s Office and the NSW Superannuation Board before joining Bankers Trust Australia Limited (BTAL) in 1981. Peter held senior positions in the Fixed Income Department, the Capital Markets Division and the Financial Markets Group of BTAL and acted as a consultant to assist with integration issues when the investment banking business of BTAL was acquired by Macquarie Bank Limited in 1999. Peter is Chairman of Macquarie Group Limited and OzForex Group Limited and a board member of ASX Limited. He is also on the board of NSW Treasury Corporation.

Peter graduated from Macquarie University with a Bachelor of Arts, majoring in Actuarial Studies. He qualified as an associate of, and received a Certificate of Finance and Investment from, the Institute of Actuaries, London.

James McNally

B.Bus (Land Economy), Dip. Law | Executive Director

Experience and expertise

James is an executive and founding director of the company. James has over 20 years’ experience in the funds management industry, having worked in both property trust administration and compliance roles for Perpetual Trustees Australia Limited and MIA Services Pty Limited, a company that specialises in compliance services to the funds management industry. James’ qualifications include a Bachelor of Business in land economy and a Diploma of Law. James is also a registered valuer and licensed real estate agent.

Pippa Downes

BSc (Bus Ad), MAppFin, GAICD | Independent Non Executive Director

Experience and expertise

Ms Downes is a director of the ASX Group clearing and settlement facility licensees and their intermediate holding companies. She is also on the panel of the ASX Appeals Tribunal. Pippa is also a director of the Pinnacle Foundation. Ms Downes was a Managing Director and Equity Partner of Goldman Sachs in Australia until October 2011, working in the Proprietary Investment division. Ms Downes has had a successful international banking and finance career spanning over 20 years where she has led the local derivative and trading arms of several of the world’s leading Investment Banks. She has extensive experience in Capital Markets, derivatives and asset management.

Prior to joining Goldman Sachs in 2004, Ms Downes was a director and the Head of Equity Derivatives Trading at Deutsche Bank in Sydney. When Morgan Stanley was starting its equity franchise in Australia in 1998 she was hired to set up the Derivative and Proprietary Trading business based in Hong Kong and Australia. Ms Downes started her career working for Swiss Bank O’Connor on the Floor of the Pacific Coast Stock Exchange in San Francisco, followed by the Philadelphia Stock Exchange before returning to work in Sydney as a director for UBS.

Pippa was previously an appointed Director on the Board of Swimming Australia and the Swimming Australia Foundation. Pippa graduated from the University of California at Berkeley with a Bachelor of Science in Business Administration majoring and Finance and Accounting. Pippa also completed a Masters of Applied Finance from Macquarie University in 1998.

Nancy Milne

OAM, LLB, FAICD | Independent Non Executive Director

Experience and expertise

Nancy has been a professional non-executive director for over a decade. She is a former lawyer with over 30 years’ experience with primary areas of legal expertise in insurance, risk management, and corporate governance. She was a partner with Clayton Utz until 2003 and a consultant until 2012. She is currently Chairman of the Securities Exchange Guarantee Corporation, deputy chairman of the State Insurance Regulatory Authority and a director of Pillar Administation. She was previously a director of Australand Property Group, Crowe Horwarth Australasia, State Plus and Novion Property Group (now Vicinity Centres).

Nancy has a Bachelor of Laws from the University of Sydney. She is a member of the NSW Council of the Australian Institute of Company Directors and the Institute’s Law Committee.

Paul Say

BSc(Bus Ad), MAppFin, GAICD | Non-executive Director

Experience and expertise

Paul has over 30 years’ experience in commercial and residential property management, development and real estate transactions with major multinational institutions. Paul was Chief Investment Officer at Dexus Property Group from 2007 to 2012. Prior to that he was with Lend Lease Corporation for 11 years in various positions culminating with being the Head of Corporate Finance. Paul is a director of GPT Metro Office Fund and Frasers Logistic & Industrial Trust (SGX listed).

Paul has a Graduate Diploma in Finance and Investment and a Graduate Diploma in Financial Planning. He is a Fellow of the Royal Institute of Chartered Surveyors, Fellow of the Australian Property Institute and a Licensed Real Estate Agent (NSW, VIC, QLD).

additional members

management team

Andrew Wilkinson

B.Bus, CFTP, MAICD | Managing Director and Chief Executive Officer

Experience and expertise

Andrew was appointed Managing Director of the Company in November 2004. He joined ALE as Chief Executive Officer at the time of its listing in November 2003. Andrew has around 35 years’ experience in banking, corporate finance and funds management. He was previously a corporate finance partner with PricewaterhouseCoopers and spent 15 years in finance and investment banking with organisations including ANZ Capel Court and Schroders.

Andrew Slade

BEc (Actuarial Studies) | Capital Manager

Experience and expertise

Andrew joined ALE in July 2005. He has more than 20 years’ experience in investment banking and structured finance. Andrew spent 10 years with Oxley Corporate Finance, where he was involved with a range of structured, project and property finance transactions, the latter involving major Australian companies and listed property trusts.

Andrew has also acted as principal of Slade Financial Consulting, where he has provided advice on structured property and asset-based financing arrangements for public and private sector projects. Andrew has a Bachelor of Economics degree, majoring in Actuarial Studies, from Macquarie University.

Don Shipway

BCom (Prop Econ), MCom (Prop Dev), AAPI (CAM) | Asset Manager

Experience and expertise

Don joined ALE in September 2010 as Asset Manager. Don has a Bachelor of Commerce (Property Economics) from the University of Western Sydney and a Master of Commerce (Property Development) from Sydney Graduate School of Management.

Don has over 15 years’ experience in the corporate real estate sector, holding national management roles with Retail Adventures and Metcash Limited, specialising in property, lease and asset management. Don is an Associate member of the Australian Property Institute, a Certified Asset Manager (CAM) and a licensed real estate agent.

Michael Clarke

BCom, MMan, CA, ACIS | Company Secretary and Finance Manager

Experience and expertise

Michael joined ALE in October 2006 and was appointed Company Secretary on 30 June 2016. Michael has a Bachelor of Commerce from the University of New South Wales and a Masters of Management from the Macquarie Graduate School of Management. He is an associate member of both the Governance Institute of Australia and the Institute of Chartered Accountants in Australia and New Zealand.

Michael has over 30 years’ experience in accounting, taxation and financial management. Michael previously held senior financial positions with subsidiaries of listed public companies and spent 12 years working for Grant Thornton. He has also owned and managed his own accounting practice.

Brendan Howell

BA (Hons), MBA, SAFin, GAIDC, CCP | Compliance Manager

Experience and expertise

Margaret joined ALE in July 2016 as Compliance Manager. Margaret holds a Masters of Business Administration, a Bachelor of Arts (Honours) degree, a Graduate Certificate in Compliance Management, is a graduate of the AICD Company Directors Course and is a senior associate member of FINSIA, a graduate member of AICD and an accredited Certified Compliance Professional and member of the GRC Institute.

Margaret has over a decade of compliance and governance experience covering licensing matters, compliance and risk management in the areas of equities and derivatives, funds management and wealth management. Prior to this she spent over 15 years in senior corporate affairs roles within the financial services sector.

B.A, FAICD | Independent Non Executive Director, Chairman of the Board

Experience and expertise

Peter began his career with the NSW Government Actuary’s Office and the NSW Superannuation Board before joining Bankers Trust Australia Limited (BTAL) in 1981. Peter held senior positions in the Fixed Income Department, the Capital Markets Division and the Financial Markets Group of BTAL and acted as a consultant to assist with integration issues when the investment banking business of BTAL was acquired by Macquarie Bank Limited in 1999. Peter is Chairman of Macquarie Group Limited and OzForex Group Limited and a board member of ASX Limited. He is also on the board of NSW Treasury Corporation.

Peter graduated from Macquarie University with a Bachelor of Arts, majoring in Actuarial Studies. He qualified as an associate of, and received a Certificate of Finance and Investment from, the Institute of Actuaries, London.

B.Bus, CFTP, MAICD | Managing Director

Experience and expertise

Andrew was appointed Managing Director of the Company in November 2004. He joined ALE as Chief Executive Officer at the time of its listing in November 2003. Andrew has around 35 years’ experience in banking, corporate finance and funds management. He was previously a corporate finance partner with PricewaterhouseCoopers and spent 15 years in finance and investment banking with organisations including ANZ Capel Court and Schroders.

B.Bus (Land Economy), Dip. Law | Executive Director

Experience and expertise

James is an executive and founding director of the company. James has over 20 years’ experience in the funds management industry, having worked in both property trust administration and compliance roles for Perpetual Trustees Australia Limited and MIA Services Pty Limited, a company that specialises in compliance services to the funds management industry. James’ qualifications include a Bachelor of Business in land economy and a Diploma of Law. James is also a registered valuer and licensed real estate agent.

BSc (Bus Ad), MAppFin, GAICD | Independent Non Executive Director

Experience and expertise

Ms Downes is a director of the ASX Group clearing and settlement facility licensees and their intermediate holding companies. She is also on the panel of the ASX Appeals Tribunal. Pippa is also a director of the Pinnacle Foundation. Ms Downes was a Managing Director and Equity Partner of Goldman Sachs in Australia until October 2011, working in the Proprietary Investment division. Ms Downes has had a successful international banking and finance career spanning over 20 years where she has led the local derivative and trading arms of several of the world’s leading Investment Banks. She has extensive experience in Capital Markets, derivatives and asset management.

Prior to joining Goldman Sachs in 2004, Ms Downes was a director and the Head of Equity Derivatives Trading at Deutsche Bank in Sydney. When Morgan Stanley was starting its equity franchise in Australia in 1998 she was hired to set up the Derivative and Proprietary Trading business based in Hong Kong and Australia. Ms Downes started her career working for Swiss Bank O’Connor on the Floor of the Pacific Coast Stock Exchange in San Francisco, followed by the Philadelphia Stock Exchange, before returning to work in Sydney as a director for UBS.

Pippa was previously an appointed Director on the Board of Swimming Australia and the Swimming Australia Foundation. Pippa graduated from the University of California at Berkeley with a Bachelor of Science in Business Administration majoring in Finance and Accounting. Pippa also completed a Masters of Applied Finance from Macquarie University in 1998.

OAM, LLB, FAICD | Independent Non Executive Director

Experience and expertise

Nancy has been a professional non-executive director for over a decade. She is a former lawyer with over 30 years’ experience with primary areas of legal expertise in insurance, risk management, and corporate governance. She was a partner with Clayton Utz until 2003 and a consultant until 2012. She is currently Chairman of the Securities Exchange Guarantee Corporation, deputy chairman of the State Insurance Regulatory Authority and a director of Pillar Administation. She was previously a director of Australand Property Group, Crowe Horwarth Australasia, State Plus and Novion Property Group (now Vicinity Centres).

Nancy has a Bachelor of Laws from the University of Sydney. She is a member of the NSW Council of the Australian Institute of Company Directors and the Institute’s Law Committee.

BSc(Bus Ad), MAppFin, GAICD | Non-executive Director

Experience and expertise

Paul has over 30 years’ experience in commercial and residential property management, development and real estate transactions with major multinational institutions. Paul was Chief Investment Officer at Dexus Property Group from 2007 to 2012. Prior to that he was with Lend Lease Corporation for 11 years in various positions culminating with being the Head of Corporate Finance. Paul is a director of GPT Metro Office Fund and Frasers Logistic & Industrial Trust (SGX listed).

Paul has a Graduate Diploma in Finance and Investment and a Graduate Diploma in Financial Planning. He is a Fellow of the Royal Institute of Chartered Surveyors, Fellow of the Australian Property Institute and a Licensed Real Estate Agent (NSW, VIC, QLD).

B.Bus, CFTP, MAICD | Managing Director and Chief Executive Officer

Experience and expertise

Andrew was appointed Managing Director of the Company in November 2004. He joined ALE as Chief Executive Officer at the time of its listing in November 2003. Andrew has around 35 years’ experience in banking, corporate finance and funds management. He was previously a corporate finance partner with PricewaterhouseCoopers and spent 15 years in finance and investment banking with organisations including ANZ Capel Court and Schroders.

BEc (Actuarial Studies) | Capital Manager

Experience and expertise

Andrew joined ALE in July 2005. He has more than 20 years’ experience in investment banking and structured finance. Andrew spent 10 years with Oxley Corporate Finance, where he was involved with a range of structured, project and property finance transactions, the latter involving major Australian companies and listed property trusts.

Andrew has also acted as principal of Slade Financial Consulting, where he has provided advice on structured property and asset-based financing arrangements for public and private sector projects. Andrew has a Bachelor of Economics degree, majoring in Actuarial Studies, from Macquarie University.

BCom (Prop Econ), MCom (Prop Dev), AAPI (CAM) | Asset Manager

Experience and expertise

Don joined ALE in September 2010 as Asset Manager. Don has a Bachelor of Commerce (Property Economics) from the University of Western Sydney and a Master of Commerce (Property Development) from Sydney Graduate School of Management.

Don has over 15 years’ experience in the corporate real estate sector, holding national management roles with Retail Adventures and Metcash Limited, specialising in property, lease and asset management. Don is an Associate member of the Australian Property Institute, a Certified Asset Manager (CAM) and a licensed real estate agent.

BCom, MMan, CA, ACIS | Company Secretary and Finance Manager

Experience and expertise

Michael joined ALE in October 2006 and was appointed Company Secretary on 30 June 2016. Michael has a Bachelor of Commerce from the University of New South Wales and a Masters of Management from the Macquarie Graduate School of Management. He is an associate member of both the Governance Institute of Australia and the Institute of Chartered Accountants in Australia and New Zealand.

Michael has over 30 years’ experience in accounting, taxation and financial management. Michael previously held senior financial positions with subsidiaries of listed public companies and spent 12 years working for Grant Thornton. He has also owned and managed his own accounting practice.

BA (Hons), MBA, SAFin, GAIDC, CCP | Compliance Manager

Experience and expertise

Margaret joined ALE in July 2016 as Compliance Manager. Margaret holds a Masters of Business Administration, a Bachelor of Arts (Honours) degree, a Graduate Certificate in Compliance Management, is a graduate of the AICD Company Directors Course and is a senior associate member of FINSIA, a graduate member of AICD and an accredited Certified Compliance Professional and member of the GRC Institute.

Margaret has over a decade of compliance and governance experience covering licensing matters, compliance and risk management in the areas of equities and derivatives, funds management and wealth management. Prior to this she spent over 15 years in senior corporate affairs roles within the financial services sector.

More Information

This is an interactive version of ALE Property Group’s 2016 Annual Review.
 

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