HPI provides investors

An attractive annualised Distribution Yield under-pinned by long term leases with strong contracted income growth

Exposure to the attractive Pub real estate sector and potential capital growth of the properties in the Portfolio

Additional growth potential through the acquisition of assets that meet HPI's investment criteria

The HPI Portfolio comprises Pubs, on-site Specialty Stores and accommodation hotels located throughout Queensland, South Australia, Victoria and New South Wales.

The pub tenants provide approximately more than 93% of HPI’s rental income. The remaining rental income is derived from the accommodation and specialty tenants leasing the On-site Specialty Stores including franchisors and franchisees of Quest Apartments, Domino’s Pizza, Nightowl Convenience, Pizza Hut, Subway and The Good Guys.

In Queensland a commercial hotel licence is required to sell packaged liquor for off premise consumption. The majority of HPI’s pubs are leased to Australian Venue Co (AVC) and Queensland Venue Co (QVC), a joint venture between Coles and AVC. The joint venture allows Coles to operate their packaged liquor business in Queensland whilst AVC can provide the expertise of running the pubs.

50 pubs in HPI’s Portfolio are leased to AVC and QVC with a further 6 pubs and hotels is leased to several other experienced operators.

Under the Leases, the tenants have options to extend the lease period for up to 30 years depending on the individual lease.

HPI retains the rights over the liquor and gaming licences in respect of a majority of the Pubs.

In the majority of cases, the original gaming authorities associated with the Pubs revert to HPI typically at the end of the lease term. In addition, HPI typically has the option to purchase any additional gaming licences used in respect of the Pubs.

HPI retains the rights over the liquor and gaming entitlements in respect of the majority of the pub leases. Under the lease the liquor and gaming licences revert to HPI at the end of the lease. For those gaming entitlements that HPI don’t own the option exists to purchase them.

HPI leases all have options to extend the lease for between 5 and 20 years.

Strong rental income growth is expected as most of HPI’s leases contain minimum rental increases. A summary of the property portfolio’s rental increases are summarised below:

Rental Increase CategoryNo. of Properties
Lower of 2x Historical CPI or 4%33
Fixed increases16
CPI Linked9