EVT puts hotels first with $500 million property recycling plan

• Hotels deliver another record result
• Approximately $500 million of potential property sales identified
• Rothschild & Co engaged for group structure review
• Cinema earnings benefit from the Fewer, Better strategy
• Thredbo valuation falls amid weather and investment pressures

Hotels take the lead in EVT’s next phase

EVT Limited (ASX:EVT) is putting its property portfolio to work. After a year of growth across hotels, entertainment and Thredbo, the group has identified approximately $500 million of potential non-core property divestments to fund further hotel expansion and potentially return capital to shareholders.

The programme includes the George and Market Street precinct in Sydney, George Street in Sydney, selected German freehold properties and other hotel and property assets. EVT said the process would be conducted on a value-first basis over a targeted three-year period, although timing, structure and the final asset mix remain dependent on market conditions and satisfactory outcomes. The group intends to retain QT Sydney under a hotel management agreement if the George and Market Street precinct is sold, preserving exposure to hotel earnings without retaining the underlying property.

Structure review adds a second strategic option

EVT has also engaged Rothschild & Co to assess recommended options for the group’s structure, with an independent committee of three directors overseeing the process. The annual report is explicit that the review may not lead to a transaction or any change to the structure, making this an option under assessment rather than a transaction in waiting.

The strategic pivot is visible in the Hotels and Resorts division. EVT launched Connect Hospitality after acquiring the Pro-invest hotel management business, acquired QT Auckland, expanded into new markets and added management agreements across Australia, New Zealand, Fiji, Thailand and Southeast Asia. Management said the group now has two complementary hotel platforms: its owned and branded portfolio, and Connect Hospitality’s third-party hotel management operation.

Cinema growth comes from fewer, better sites

Entertainment also improved, helped by a stronger and more diverse film slate and the continued “Fewer, Better” strategy. EVT reported higher admissions in Australia and Germany, while earnings growth outpaced admissions as premium formats, pricing and a more efficient site portfolio lifted operating leverage.

The group expanded its IMAX, ScreenX and DX footprint and ended the year with fewer cinema locations than at the beginning of the prior year. Management believes further lease exits and renegotiations could generate additional annual EBITDA over time, but that opportunity depends on executing the remaining portfolio changes without weakening the customer proposition.

FY2027 starts with both momentum and weather risk

EVT expects EBITDA growth in Hotels and Entertainment in FY2027, subject to film performance, weather and broader market conditions. The hotel division is expected to deliver another record year, with contributions from QT Auckland, Connect Hospitality and the QT Queenstown redevelopment. EVT said the timing of the Queenstown works and the temporary impact of LyLo Gold Coast construction would defer some earnings benefits rather than eliminate them.

Thredbo is the less comfortable part of the outlook. The resort’s valuation declined from $500 million to $450 million, reflecting recent trading conditions and the capital required for chairlift and snowmaking upgrades. EVT says the valuation remains above carrying value, but the resort’s dependence on snow and the disclosed concentration of climate-related physical risk at Thredbo make capital allocation there a continuing point of tension.

Capital recycling now meets execution risk

The balance sheet gives EVT room to pursue its plans: the group completed a debt refinancing, increased its secured facilities and remained compliant with financial covenants. It also declared a final dividend after year-end and said the Board would consider special dividends as divestment proceeds arrive.

That optionality is conditional, however. George Street has attracted detailed reviews from several parties but had not produced a definitive outcome by the reporting date. Meanwhile, the structure review could reshape the group, or conclude without a transaction. The next test is therefore not whether EVT has identified assets to sell, but whether it can convert those assets into capital at acceptable values while delivering the hotel earnings now embedded in its strategy.

Bottom Line?

EVT has outlined a credible capital-recycling path, but the investment case now turns on sale execution, hotel integration and the resilience of Thredbo earnings.

Questions in the middle?

• Can EVT complete the proposed property disposals at values that justify redeploying capital into hotels?
• Will the group structure review produce a transaction, or simply sharpen the existing asset-light strategy?
• How quickly will QT Auckland, Connect Hospitality and the Queenstown redevelopment translate into recurring cash earnings?