ALE Property: AGM 2015

AGM's are usually fairly dull affairs but ALE Property's this morning potentially offered a little spice after the recent unsolicited takeover offer from 26% shareholder Caledonia Investments.

Alas, it was not to be.

There have been no further developments since the Board swiftly rejected the offer and it maintains that the $3.95 per share all-cash offer 'significantly undervalues' ALE. The company has also since consulted shareholders big and small and, other than Caledonia of course, all apparently support the Board's decision.

In fact, the highlight of the meeting was when one long-term shareholder commented that he hoped to bequeath this 'jewel in the ASX' to his kids. To that end, he added that he would strenuously fight any attempts to 'steal it' from him. His comments were met with a good smattering of applause.

As we've discussed previously – eg see ALE Property: Result 2015 – this shareholder is referring to the material under-leasing of the pub portfolio, to which the significant capital investment in many of the hotels over the years by tenant Australian Leisure and Hospitality, a 75%-owned subsidiary of Woolworths, has likely contributed. So it seems a materially higher offer will be required – if one ever eventuates – to persuade shareholders to sell.

But that is just speculation at this stage. With a 5.1% unfranked forward yield, we continue to recommend you HOLD.

Note: Our Equity Income Portfolio owns shares in ALE Property.