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Public Hospitality Group

12%

Per Annum Return

Interest Paid Quarterly

Discount to IPO Price

Max LVR

PUBLIC is on a mission to create Australia’s premier millennial lifestyle network of hospitality venues.

Equitable Investors Pty Ltd ATF Public Hospitality Unit Trust (“PUBLIC”) is a lifestyle, accommodation and hospitality business undertaking a capital raise to repay debt & fund growth. The team has identified a market gap in accommodation, sitting between the traditional short and long stay markets. They plan to exploit this gap by transforming underutilised assets in unique neighbourhoods into vibrant and bespoke lifestyle and accommodation experiences, at accessible prices.

The company is raising $43m ahead of an anticipated listing via a Secured Convertible Note

Upon listing, investors can elect to redeem their notes, or convert to stapled securities at a 15% discount to the IPO price

Interest will be paid to investors until 30 November 2022, regardless of conversion or redemption.

Public Hospitality Group

Public Hospitality Group

Sophisticated Investors

To be considered for this investment product; applicants must supply evidence they qualify as a Sophisticated Investor.

Business and Property Assets
  • 14 hotels located in some of the most desirable suburbs of Sydney, Melbourne & Regional NSW (“Properties”); and
  • the operating company Public Hospitality Operating Co Pty Ltd (“Opco”).
Raising and Use of Proceeds
  • Raising up to $43 million
  • Secured loans to vendors to repay existing mezzanine debt and fund the properties’ capex and some working capital.
Transaction Structure
  • Redeemable Secured Convertible Note
  • All asset security including registered 2nd Mortgages over 8 Properties (“Secured Properties”).
Proposed IPO
  • Targeting Q2 2023 listing of stapled securities in PUBLIC and Opco.
Investment Terms Summary
Issuer

PUBLIC

Amount

Up to A$43 million (driven by LVR) of which:

Public Unit Trust: $42.95m OpCo: $0.05m

Type

Secured Convertible Note

Term

April 2023 with intent to IPO in Q2 of 2023

Coupon

12% p.a, paid quarterly (Mar, Jun, Sept, Dec) until

conversion (IPO) or redemption. Interest guarantee for period to 30 Nov 22, regardless of prior conversion or redemption

Redemption

Prior to IPO (at election of the noteholder) or at term (if no IPO prior)

Conversion

If not redeemed, all Notes will convert to stapled securities at the time of the IPO at a 15% discount to the IPO price 

Security

All asset security over Public Unit Trust and its assets including loans to vendors and Reregistered 2nd mortgages over eight Secured Properties with total LVR (including Senior) not to exceed 75% of Freehold valuation of $242m

Board

2 noteholder representatives (including Thorney) on Board of Manager of the Public Unit Trust

Purpose

Loans to vendors to replace mezzanine debt and

progress development of the properties

Investment Highlights

ASSET SECURITY

Backed by a prime real estate portfolio of over $378m on a freehold (leased) basis and in excess of $477m on a going concern basis. 

DIVERSIFIED REVENUE

15 venues, 14 owned, with diversified revenue streams including 230+ rooms, functions, events, and gaming – fully operational by mid 2022.

RAPID GROWTH
Projected full year EBITDA of current properties over $30m, before venue management agreements and any additional property acquisitions.
GROWING MARKET

Access to the growing co-living market segment, addressing the needs of the fast growing 18-35 Millennials demographic.

The Properties

*Do not form part of security pool **Operated Asset owned by third party

($’000s)First Mortgage ValuationValuerStabilised EBITDA13rd Party Rental Income2Going Concern Implied Val.Senior DebtCurrent Junior Debt3Proforma Registered 2nd MortgageProforma LVR%
SECURED PROPERTIES
The Arts Hotel461,250Egan4,60451569,85934,95011,00011,00075.00%
The Exchange Hotel, Darlinghurst4 41,600CBRE3,600-51,43124,9606,2406,24075.00%
The Strand, Darlinghurst4 33,100Egan3,221-46,00818,3005,6006,53075.00%
Rose Shamrock & Thistle27,000Egan2,024-28,91316,0002,7504,25075.00%
Camelia Grove, Alexandria4 26,000Hymans2,171-31,01814,8504,5004,65075.00%
Clifton, Kew22,800Hymans1,75531027,53012,0005,1005,10075.00%
The Norfolk Hotel, Redfern4 19,000Hymans1,910-27,29210,8003,2503,45075.00%
The Vine Hotel11,400Castle1,124-16,0515,0001,7501,75059.20%
Subtotal242,15020,409825298,103136,86040,19042,97074.30%
EXCLUDED FROM SECURITY POOL
Empire, Annandale34,500Egan2,76410640,33315,5003,000
The Saint20,000Hymans2,016-28,79612,000-
Ballina Beach House15,500Hymans1,987-28,3909,0002,500
The Exchange, Balmain25,800Egan2,236-31,94814,7903,163
The Town Hall Hotel, Balmain23,000Egan1,52726023,87914,0003,163
The Kurrajong Hotel, Erskineville18,000Egan1,791-25,58710,3203,163
Subtotal136,80012,322366178,93478,61014,990
TOTAL378,95032,7311,191477,037215,47055,18042,97072.20%
Freehold Valuation is the basis of the Convertible Note LVR covenant of 75%
1.Excluding Rental Income. 2.EBITDA capitalised at 7%, Rental Income capitalised at 4.5%. 3.Junior Debt on Secured Properties to be repaid with proceeds from Convertible Note. Junior Debt on Properties Excluded From Security Pool will not be refinanced at this time because interest is already pre paid. 4.Included Properties in Senior Refinance per signed term sheet.

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Investment Documentation

Information Memorandum

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Trading Update

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