Woolworths Considers Divesting Property

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Thursday, May 29th, 2014
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Woolworths may sell its chain of hotels and liquor stores.

The retailer is investigating options to divest part of its property portfolio, including its holdings in the ALH Group of hotels and its liquor store chain.

“These options include single property sales, portfolio property sales and the creation of separate vehicles to own the assets,” Woolworths said on Wednesday.

“Any divestment would involve the relevant Woolworths group business retaining operational control of the properties through a leasehold interest in the relevant premises.”

Woolworths says while no decisions have been made, the move is in line with its strategy of maximising shareholder value.

It has disposed of about $2 billion worth of property assets since mid 2010.

Its comments came after The Australian Financial Review reported that Woolworths was considering spinning off its portfolio of pubs to a separately listed $600 million real estate entity.

Woolworths’ ALH Group is made up of 323 hotels, while its 537-strong liquor store chain includes the BWS stores.

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Woolworths is considering selling its pubs and liquor stores, but analysts say the retailer is in no rush to offload the assets.

The conglomerate confirmed it is investigating options to divest part of its property portfolio, including its holdings in the ALH Group of hotels and its liquor store chain.

Any decision would likely involve selling property, leasing it back and retaining control of the liquor businesses, analysts say.

Woolworths said it was investigating options such as single property sales, portfolio property sales and the creation of separate vehicles to own the assets.

“Any divestment would involve the relevant Woolworths group business retaining operational control of the properties through a leasehold interest in the relevant premises,” Woolworths said in a statement.

While no decisions have been made, the move is in line with its strategy of maximising shareholder value, Woolworths says.

It has disposed of about $2 billion worth of property assets since mid 2010.

IG market analyst Evan Lucas said it could be cheaper for Woolworths to sell the assets and lease them back.

“Considering their hotels division has been doing quite nicely I don’t think they’re willing to do it right now,” Mr Lucas said.

“But you never say never because once these rumours are out there all of a sudden you see buyers hanging around and if a buyer gives them a premium for their assets it reduces their costs then they’re going to do it.”

Mr Lucas added that it was unlikely that Woolworths’ would be swayed by anti-poker machine activists who have targeted the company in recent years.

“They’re certainly aware that it comes with some negative connotations and the ethical investment community tends to stay away from Woollies because of gambling,” he said.

Woolworths’ ALH Group is made up of 323 hotels, while its 537-strong liquor store chain includes the BWS stores and Dan Murphy’s.

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