Sydney’s oldest continually licensed hotel, and home of Australia’s oldest pub brewery, hits the market
JLL Hotels & Hospitality Group has been exclusively appointed to sell the iconic Lord Nelson Brewery Hotel, located in Sydney’s historical beating heart, The Rocks, along with the famed Lord Nelson Brewery Beer brand.
Offered for the first time in 35 years and after fielding numerous unsolicited approaches, the long- time private owners have decided to divest the asset and brand amidst the growing demand for hotels, paired with the seemingly insatiable appetite for quality Australian craft beer brands ready for exponential growth.
‘The Lord’, as it is referred to, is located on the corner of Kent and Argyle Streets, an equal distance between Sydney Harbour’s transportation hub, Circular Quay, and the city’s newest entertainment precinct, Barangaroo. The latter is forecasted to attract 20 million visits per annum, and the all-important Australian Cruise industry is set to bounce back better than ever, which puts the Lord in a promising physical and financial position for the future.
The hotel features a basement cellar containing a fully functional brewery, ground floor public bar with brewery viewing area and original floors and fittings, outdoor footpath seating, first floor fine- dining restaurant and commercial kitchen and two floors of accommodation (9 rooms) with manager’s offices.
Responsible for approximately 90% of craft beer sales under the Lord Nelson banner, is the incredibly popular and award-winning ‘Three Sheets’ Pale Ale. Brewed since 1986, and one of the Australian craft beer industry’s original pale ales, Three Sheets is currently available on tap and in the fridges at over 125 Sydney pubs, restaurants and hotels plus distributed in bottle and can via independent retail throughout Australia. Over the years, Three Sheets has become a household name in the burgeoning craft beer industry.
According to an Ibis World report published October 2021, the Australian Craft Beer trade generates close to $1 billion annually, with forecasts predicting this figure could be as high as $1.3 billion in the next 5 years – a staggering 30% increase.
Having bought the hotel with his business partners in 1986, completing a restoration of the sandstone building to its former grandeur, constructing a basement brewery, and operating it all ever since, Blair Hayden is more than optimistic about the future of the pub and the brand. “We truly love this pub however, after 35 years, we simply don’t have the energy or the resources to take the business to the next level, but we have no doubt that someone will. There are countless opportunities to expand into International markets and to further our already exciting relationships in Australia, including as the bespoke beer provider for Carnival Cruise Lines, brewing the main tap ale, Thirsty Frog, on their Australian ships. When cruising returns, the proposed expansion of the fleet will only offer further opportunities”, provided Blair.
The combined sale of the Lord Nelson Brewery Hotel and Lord Nelson Brewery brand provides an extremely rare opportunity to secure an iconic hotel, together with a much loved Australia craft beer brand. An opportunity for a large brewery to implement economies of scale to further grow the beer distribution, or for a pub group to bolt-on the brand and implement vertical integration strategies to simplify the process and significantly increase profits.
The campaign will be managed by JLL Vice President Kate MacDonald and Managing Director John Musca, along with the full support of the JLL’s Capital Markets and International platforms.
“The recent sale of the Stone & Wood Brewing interests to Lion Nathan for $550 million following the acquisition of Balter Brewery by Carlton United Breweries for a mooted $200 million has highlighted the growing global interest in craft brewing representing an estimated 6% of the total beer market in Australia and growing. The escalation of M&A activity in the craft brewing asset class has seen some astonishing current investment in beer makers highlighting the value attributed to distribution and brand equity in what represents a relatively fragmented market opportunity. Having that underpinned by a very special brick and mortar hotel property in a historical context is a very special offering indeed”, Mr Musca suggested.
“We feel quite honoured to bring such an extraordinary asset and brand to market and feel a real sense of responsibility to ensure that the Lord Nelson legacy lives on in Sydney, and indeed Australia. The current private owners have done a terrific job to create and nurture the beer and brand from infancy, but the potential scale of this product for an outfit with superior resource capabilities is quite extraordinary,” MacDonald offered.
“Everywhere I go, I see the ‘Three Sheets’ Pale Ale logo on taps in pubs all over NSW, and in the fridges of my local retail bottle shops. The sheer volume of sightings I have personally experienced since our appointment to this mandate has truly astounded me, and yet, it is still the result of a shackled production chain and marketing program. Imagine the possibilities.” MacDonald suggested.
National and International Expressions of Interest will be sought with bids closing Tuesday 7 December 2021.