ALE Property Group (ASX:LEP) FY17 Results

Company Presentations

by Clive Tompkins

ALE Property Group (ASX:LEP) Managing Director, Andrew Wilkinson and Chairman, Robert Mactier discuss the company’s FY17 results and strategy.

Robert Mactier: It’s a privilege to be invited to take over the chair of ALE Property Group Limited (ASX:LEP). And I take over the chair from Peter Warne, who was Chairman from, or during the 14 years that ALE has been listed. And that’s a period where unquestionably ALE has outperformed the market, so they are indeed big shoes to fill.

My background is in investment banking, the provision of capital markets and mergers and acquisition advice to our corporate client base. I currently act as a consultant to the investment bank, UBS. And in addition, I’m also Chairman of WPP AUNZ Limited (ASX:WPP), which is the largest marketing and communications group in Australia. And up until earlier this year, I served for 10 years as a director of Melco Crown Entertainment (SEHK:200) in Macau.

ALE is, as I would have expected it to be, a very professionally and conservatively managed company, with an unwavering focus on value creation for our security holders and the prudent management of risk.

Andrew Wilkinson: Our financial year ’17 was another good year for a number of reasons. Our distributions increased again 100 per cent tax deferred. The value of our properties also increased significantly and our gearing is now at an all-time low. High quality commercial properties in Australia are transacting at all-time low yields. ALE’s quality properties increased this year by around nine per cent, to over $1 billion. Why?They’re high quality properties in good locations. And that reflects a yield on our properties, or a capitalisation rate, of just over 5.1 per cent.

This year, we completed very successful refinancing. We issued $150 million in the Australian corporate bond market at a rate of four per cent, which included the credit margin of 1.5 per cent, a very competitive outcome. Our listing was back in 2003 and over the last 14 years, there has been a very good return. The one dollar invested in 2003, today is around $4.50/$4.60. Including accumulated and reinvested distributions, that one-dollar has turned into nearly $15. That’s a 22 per cent return on average, over those 14 years. Again, it was another good year and we’re looking forward to explaining the results in some detail to our investors.

Robert Mactier: ALE is very well prepared for the forthcoming November 2018 rent review, and we look forward to the commencement of that process. In addition for the 2018 financial year, we would expect that dividends would continue to grow at least in line with CPI. And we would expect them to be 100 per cent tax deferred.

Finally and very importantly, we continue to seek to work very constructively with ALH Group, as our tenant, and to seek to ensure that we continue to grow the profitability of the hotels. And where possible, to continue to develop those hotels to enhance profitability further. I look forward to meeting with our investors at the results briefing in August, and at the Annual General Meeting in October.