'I'd rather own a pub like the Lion than over-priced tech stocks'
A trio of well-known South Australian hoteliers, including Duxton Asset Management chairman Ed Peter has bought one of Adelaide’s best known pubs, The Lion Hotel on the city fringe.
The heritage-listed hotel, built as the Lion Brewery in 1871 and an adjacent office block which combined create a 5000sq m site, was acquired by newly formed Duxton Pubs Group, founded by Mr Peter and his business partners Brett Matthews (whose family own Matthews Hospitality) and Martin Palmer of Palmer Hospitality Group.
Collectively, the three investors own and operate around 16 pubs in South Australia including the Stirling Hotel, Uraidla Hotel, Crafers Hotel, 2KW Bar & Restaurant, and Paloma Bar and Pantry.
The Lion Hotel at 183 Melbourne Street in North Adelaide, which they bought from long-time owners and operators Tim Gregg and Andrew Svencis, is the first acquisition for Duxton Pubs Group.
Mr Peter, the former regional head of Deutsche Asset Management and founder of alternative asset manager Duxton, told The Australian Financial Review the group had “line of sight” on a number of other pub opportunities with plans to bring other investors onboard.
“The economy is going to be just awful over the next three to four years. But by buying carefully and buying the right assets, you can do OK out of that,” he said.
Mr Peter declined to say what Duxton paid for The Lion Hotel and neighbouring office building, which had been listed in October last year with $17 million expectations.
Industry sources indicated it sold for less than that. “It was a fair price for all parties concerned,” Mr Peter said.
With pub trading “not going to be too amazing in this environment” he said it was important to buy intelligently and “something that will not sink you immediately”.
“Equities are massively overvalued and most assets are totally mispriced,” said the former Deutsche boss.
While he said pubs were “not going to blow the lights out” investors were much better off owning them and the type of “late cycle” assets that Duxton owns (vineyards, dairy farms, cattle stations and water rights) than tech stocks.
JLL Hotels & Hospitality Group’s Will Connolly and Roger Klem negotiated the sale of The Lion Hotel.
“The sale is a significantly positive step for the South Australian hospitality market as it continues its return to normality following COVID-19 restrictions,” Mr Connolly said.
He said the adjacent office building provided solid holding income prior to any longer term redevelopment of the site, which may include mixed use, commercial, residential or short term visitor accommodation.
