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Hotel Property Investments HPI

Morningstar Rating
A$3.38 +0.11 (3.36%)
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Company Report

Hotel Property Investments' Outlook Depressed by Rising Interest Rates

A key attraction of Hotel Property Investments is favorable lease terms that provide predictable, growing rental income from long-term leases to Queensland Venue Co. QVC is a joint venture between supermarket giant Coles and private equity-owned Australian Venue Co. AVC manages the day-to-day operations of the hotels, with Coles needing the hotel licences to operate its liquor retailing business under restrictive Queensland laws. There is ongoing uncertainty around Coles' longer-term strategy regarding its liquor business following competitor Woolworths' decision to exit its liquor and hotel businesses.

Price vs Fair Value

HPI is trading at a 3% discount.
Price
A$3.29
Fair Value
A$5.90
Uncertainty
High
1-Star Price
A$5.89
5-Star Price
A$1.39
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Hotel Property Investments' distribution yield is higher than most Australian REIT peers'.

Bears

Potential changes to Queensland's alcohol regulations could hurt pub profitability and the value of pub real estate.

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Trading Information

Previous Close Price
A$3.27
Day Range
A$3.273.42
52-Week Range
A$2.513.61
Bid/Ask
A$3.38 / A$3.39
Market Cap
A$658.77 Mil
Volume/Avg
591,090 / 704,394

Key Statistics

Price/Earnings (Normalized)
24.36
Price/Sales
8.11
Dividend Yield (Trailing)
5.59%
Dividend Yield (Forward)
5.59%
Total Yield
5.61%

Company Profile

Hotel Property Investments is an Australian REIT with a portfolio of freehold pub properties primarily in Queensland. Its portfolio is almost exclusively leased to Queensland Venue Co. on triple-net long-term leases where the tenant is responsible for outgoings (except land tax in Queensland), resulting in relatively low maintenance expenses. Most leases also provide for annual rental increases typically at the lower of 4% or two times the average of the last five years consumer price index.
Sector
Real Estate
Industry
REIT - Diversified
Stock Style Box
Small Value
Total Number of Employees

Competitors

Valuation

Metric
HPI
CQR
CLW
Price/Earnings (Normalized)
24.3634.46
Price/Book Value
0.850.820.74
Price/Sales
8.1110.0312.59
Price/Cash Flow
10.0014.0715.16
Price/Earnings
HPI
CQR
CLW

Financial Strength

Metric
HPI
CQR
CLW
Quick Ratio
0.080.290.53
Current Ratio
0.212.591.73
Interest Coverage
1.78−2.73−7.05
Quick Ratio
HPI
CQR
CLW

Profitability

Metric
HPI
CQR
CLW
Return on Assets (Normalized)
1.65%3.95%−9.42%
Return on Equity (Normalized)
2.69%5.86%−14.37%
Return on Invested Capital (Normalized)
3.85%4.04%−8.53%
Return on Assets
HPI
CQR
CLW
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