ALH Group, Charter Hall in record breaking SA pub purchase

The Emu Hotel in Morphett Vale has set a new record for the highest price paid for a pub in SA as part of a $100m sell-off of venues across Adelaide.

The Emu Hotel in Morphett Vale has sold for $32m, setting a new record for the highest price paid for a single pub in South Australia.

Hotel operator ALH Group has partnered with property investor Charter Hall to take over the venue, which includes a drive-through bottle-shop, 40 gaming machines and 7300sq m of freehold land.

A separate bottle-shop in the adjoining Morphett Vale Shopping Centre is also included in the sale.

The deal forms part of a $100m sell-off of venues across Adelaide.

GM Hotels has sold the Emu Hotel, Christies Beach Hotel and Lodge Hotel in Brahma Lodge, for a total of close to $75m, with local family operator RD Jones Group picking up the Christies Beach venue, and Sydney-based Harvest Hotels acquiring the Lodge Hotel and The Aussie Inn in Hackham in its first foray into South Australia.

The $32m sale of the Emu Hotel has set a new record in SA. Picture: Keryn Stevens

Harvest Hotels raised $50m from investors last month as part of a push into the Adelaide pub market, and plans to spend $250m on large suburban venues over the next three-to-five years.

While family groups still control a significant share of South Australia’s pub market, Harvest Hotels director Chris Cornforth said institutional investors were circling given the lower pricing when compared to the eastern states.

“We’ve seen institutional capital go harder at pubs in Sydney, Brisbane and Melbourne as well, and we think in Adelaide that a similar theme is going to play out,” he said.

“There’s a lot of bigger groups going into the market and we still see some good value in some really big pubs in good quality areas that are growing, hence why we’re going in there.”

Recent changes to the state’s gaming legislation, including the introduction of note-accepting poker machines, and fewer Covid-19 disruptions are also behind the renewed interest in South Australian pubs.

Australian Venue Co. recently acquired the Saturno Group’s eight venues and four bottle shops in Adelaide, Victoria’s Black Rhino Group has picked up 11 pubs since its first South Australian acquisition last year, and fund manager Duxton Pubs has continued its buying spree since 2020, with close to 20 suburban and regional assets.

GM Hotels has been looking to offload the Christies Beach, Emu and The Lodge hotels since 2019, when it put a portfolio of six pubs on the market.

GM Hotels managing director Greg Maitland said local pub ownership was going through a “period of transition”.

“We’re very happy with the outcomes in what is a significant period of transition for the Adelaide hotel trading landscape following recent changes in gaming legislation and wish all purchasers every success with these irreplaceable large-format suburban assets.”

Sydney-based Harvest Hotels has acquired The Lodge Hotel as part of an aggressive push into the SA market.

JLL Hotels & Hospitality Group’s John Musca, who brokered the sale of The Emu Hotel, said the Australian pub market was attracting strong interest from investors as the industry continued its recovery from Covid-19.

“No matter where you are in the country, the largest, quality hotel assets will always attract the most astute capital and operators due to their irreplaceability, and the Emu transaction is no exception to this acquisition approach.”

With The Lodge Hotel coming with 12,157sq m of land, and The Aussie slightly larger at 13,270sq m, Mr Cornforth said there was the potential for development of additional accommodation at both sites.

Harvest Hotels operates a $230m portfolio of regional hotels across NSW.