Lion Nathan and the lure of high property prices

Lion Nathan told the market in March that it had received three expressions of interest in the sale of its Newmarket (Auckland) brewery site and was currently reviewing if it should sell the brewery and how much the relocation and construction of a brewery on a new site in Auckland would cost.

The decision is a “50-year decision” for Lion Nathan. The brewer has to consider whether to reinvest in the brewery or move on. An outcome of the strategy review is expected to be made public in May.

Obviously, you do not give up an address like “380 Khyber Pass Road” easily unless there is money to be made. Lion has been sitting on this 5.2 hectare site for about 150 years. With a capacity of 1.4 million hl of beer annually, the Newmarket brewery claims to be New Zealand’s largest. However, Newmarket is coming up quickly as another business district within the city of Auckland. Property prices have been soaring.

Developers have speculated the site could sell for up to NZD 150 million (EUR 80 million) for mixed development.

For the 12 months to 30 September 2006 Lion Nathan reported that earnings before interest and tax in New Zealand fell 3.9 percent to NZD 86.7 million (EUR 47 million). Bearing that in mind, the board’s decision could be unequivocal.