Is the brewery sector a new real estate niche for investors?
Recently, Greene King, Britain’s biggest pub owner, has agreed to sell its entire business to CKA Group., a real estate group run by Hong Kong’s richest family. The sales price was £2.7 billion ($3.3 billion). The Suffolk business is the United Kingdom’s biggest pub owner, with about 2,700 pubs, restaurants and hotels across the country.
CKA said it was particularly attracted to Greene King because of its “established position in the U.K. pub and brewing market, freehold and long leasehold property estate, and resilient financial profile.”
George Magnus, economist and non-executive chairman-designate of CK Bidco, said in multiple local media outlets, “CKA’s strategy is to look for businesses with stable and resilient characteristics and strong cash flow-generating capabilities.
“The U.K. pub and brewing sector shares these characteristics, and we believe that this sector will continue to be an important part of British culture and the eating and drinking-out market in the long run,” noted Magnus.
And the 2,700 pubs will act as a recession-proof asset, with similar characteristics to infrastructure, reported The Financial Times.
Another U.K. pub deal completed was the sale of a portfolio of 18 pubs on behalf of Wadworth to national pub company Red Oak Taverns. The assets located across the south and southwest of England will strengthen the Red Oak Taverns’ presence in the area, bringing its estate to 179 pubs across the United Kingdom. The purchase price was not disclosed.
Simon Chaplin, senior director at Christie & Co., who handled the sale, said, “This is further proof of the continuing strength in the pubs market as the sale attracted interest from numerous parties looking to acquire these assets in a popular and attractive part of the country. We were pleased to have secured a buyer in Red Oak who have a proven track record of investing in their estate and tenants.”
In the United States, Ninkasi Brewing, the 35th largest craft brewery in the United States, established in 2006, made a strategic partnership with EPR Properties, and Legacy Breweries, a new venture that aims to acquire craft breweries in the United States.
ScanlanKemperBard in conjunction with a joint venture with ReCap Real Estate Investment on behalf of Reinsurance Group of America, acquired the Original Rainier Brewery, a mixed-use collection of designated landmark structures in Georgetown, a revitalized historic industrial neighborhood of Seattle.
The Original Rainier Brewery property has a total of 187,466 rentable square feet and consists of four buildings: the Bottling Plant, Malt House, Brew House/Warehouse and General Office. The property was built in the early 1900s to house the Seattle Brewing and Malting Company, the predecessor to the Rainier Brewing Company.
The historic brick and timber structures, in tandem with convenient local amenities, have attracted more than 50 tenants across a multitude of industries, creating a community of thriving creative industrial businesses. Tenants include Fran's Chocolates, Patagonia, KEEN Footwear, REI and Elysian Brewing Company. The properties are currently 92 percent leased.
On the development side, breweries buildings can present attractive repositioning projects.
Turnbridge Equities and institutional investors advised by J.P. Morgan Asset Management have acquired the former Ballantine Brewery property, a five-building, 1.1 million-square-foot, 22-acre last-mile industrial portfolio located at 400 Ferry Street, in Newark, N.J., for $61 million. The property comprises five buildings on six separate sites, totaling over 1.1 million square feet of industrial warehouse space. It is 85 percent leased to multiple tenants, most of which serve the Port of Newark and the 17.8 million people located within an hour’s drive.
Turnbridge and J.P. Morgan Asset Management plan an extensive, multimillion-dollar renovation and repositioning of multiple buildings as well as potential ground-up development opportunities on other portions of the property.
“The Ballantine Brewery is the largest offering of existing real estate in the Port submarket, New Jersey’s most vital industrial and manufacturing market,” said Thomas Walsh, JLL managing director, who represented the seller and the buyer, in a statement. “This was a terrific value-add opportunity for Turnbridge and J.P. Morgan to thoroughly renovate and reposition the property for use by multiple tenants. There are not many opportunities remaining in the Port submarket for small to midsize industrial tenants to find well-located and modern industrial space.”
