Last drinks as 300 struggling pubs pay for pokie greed

NSW pubs are paying the price for putting pokies ahead of punters, it seems. Picture: Kelly Barnes. Source: The Daily Telegraph

The Daily Telegraph reports industry sources said the banks had lost patience with loss-making corporations and heavily indebted individuals who bought pubs at the height of the boom, only to see values plummet by 40 per cent.

Australian Hotels Association secretary Colin Waller said rumours sweeping the industry pointed towards banks seizing control of 300 distressed pubs - almost one in five of the state's hotels - setting the scene for the mother of all firesales.

Sources also claim a renowned pub identity, squarely in the sights of the big banks having amassed substantial debt, is hanging on to his portfolio by a thread.

"I think the banks are only starting to realise the folly of their own lending practices,'' Mr Waller said.

They were lending to anyone and up to 90 per cent of the value to people with no experience.

The value of those hotels are now 40 per cent down

"The grapevine is saying the banks are about to move ... and the rumour is there are as much as 300 hotels, which is just under 20 per cent (of all pubs in NSW), which could soon be placed under bank management."

The majority of pubs on the chopping block are owned by corporations that were heavily reliant on the pokie dollar and which bought assets at inflated prices from 2003 and 2008.

But sources said that in their pursuit of pokie revenue, they neglected their primary asset - their drinkers.

When pokie revenues started to dip, suddenly the pubs realised their public bar was empty.

"I estimate 50 or 60 forced sales early in the new year. That's on top of the thousand odd hotels that are currently for sale in NSW," one pub owner said.

"Any suggestion that pubs have turned the corner is ridiculous. There will be a tsunami of foreclosures next year. The bankers are becoming very impatient.

"I play golf with the bankers, they tell me it is bad, very bad. They have had enough and are ready to move. It is frightening."

The biggest collection of sales is tipped to come from the debt-ravaged Redcape Property Fund and ING Real Estate Entertainment Fund, with the pair having lost a combined $357 million in the last two years, while Woolworths is likely to cull its under-performing assets.

Both companies could not be reached for comment.

One under fire corporation is pub lessee National Leisure and Gaming.

Its recently departed CEO Andrew Jolliffe confirmed that the banks were circling several big players, but maintained it would be difficult for the lenders to proceed with a mass clean-out.

"There are simply not enough buyers," he said.