HPI own a suite of pubs across Australia, worth $4.06/sh as at 31 December. Valuations were revised 3.3% lower at the half year result, however shares are currently priced at an ~18% discount to NTA.
Recent transactions suggest an increase to the cap rate which would lower valuations for example HPI bought a Queensland pub on an initial yield of 6.2%, around 1.5% above the yield on NTA suggesting valuations have further to fall. The current discount to NTA is reasonably appealing and the stock is on a ~5.5% yield. Demand for quality hotel real estate remains strong and the company is geared at the lower end of the target range, a positive as interest rates climb.