Challenger Wine Leases Two Vineyards to Foster's Group Ltd.

From Staff Reports

The Challenger Wine Trust  has agreed to lease two vineyards at Griffith, New South Wales, to global beverages firm Foster's Group Ltd. (FBRWY.PK), the leading alcohol company in both Australia and the Pacific region.

The Cocoparra and Woods Vineyards had previously been leased to Cranswick Estates, a fully-owned subsidiary of West Australian-based winemaker Evans & Tate Ltd, which is now under receivership.

CWT said the Foster's lease closely followed the remaining balance of the prior Evans and Tate lease, including the initial term expiring in 2013, as well as the subsequent dual  five-year options to renew. Once the lease was executed, Foster's occupies nearly 4% of CWT's portfolio.

"This is a fantastic outcome for CWT. Not only have we negotiated a new lease to a high-quality tenant in FGL, we have been able to secure a rental income in fiscal 2008 that ensures no lost income for CWT on these properties," CWT fund manager Nick Gill told The Brisbane Times newspaper.                                  
                                                                                                                                                                
The Gnangarra vineyard at Manjimup, Western Australia, is the only vineyard previously leased to Evans & Tate in the CWT portfolio that has yet to be leased anew. CWT said talks were continuing with a number of parties to either lease or purchase the vineyard.

Foster's Group Ltd. (FBRWY.PK) is only quoted on the U.S. Pink Sheets. As well as beer, it has a substantial wine operation. And as most folks know, being aware of the brand, Foster's Lager has good market penetration across the English-speaking world.

With sales of $4 billion, it has a P/E of 17 and has recently been growing around 12% per annum, giving it a PEG ratio of 1.4. Its market capitalization is $13 billion, so there's plenty of liquidity internationally, preventing a “pink sheet” investment from getting out of line with its underlying value.

News and Related Story Links:

• The Brisbane (Australia) Times:
  Challenger leases vineyards to Foster's.

• Money Morning Investment Report:
  Thirsty for Profits? Ten Ways to Play the Worldwide Beer Market.