Simon Hall Director

Corporate operators are active in the pub market – but where is the real value?

With package transactions in the pub market in early 2012 including the R&L sale to Red Oak, the RBS sale to Heineken and the Enterprise Inns sale to Fullers, you might think that the market for tenanted pubs is flourishing.

With other group deals in 2011 including Clover Leaf, Capital Pubs and Real Pubs, the same might be thought about the managed pub market.

From a distance, the pub market appears very active if not buoyant. However, looks can be deceptive and under closer examination this is not quite the case in all areas of the market, as package deals only reflect a specific part of the market and this activity does not automatically translate to individual property transactions.

There are many different elements that combine to create the “pub market” and it is often dangerous to generalise market activity. For example managed food operations are in strong demand, prime High Street units are now on the target list of a select few national operators, high value sites of all types are in demand in the south east. Additionally secondary fitted high street units are being taken up across the country (if the incentives are right) and bottom end freehold deals are abundant for a variety of alternative uses, as well as continued pub use either as a freehouse or under a fresh managed arrangement.

On the other hand, activity remains low for successful operational units, available on an individual basis. In many cases vendors of profitable units don’t have the pressure to sell and would prefer to retain the asset and income it generates.

When these good quality profitable sites are put up for sale, buyers can often be too focussed on the bottom end pubs or package deals to take advantage of the real opportunity that these operations present.

Rather than the bottom end bargain, or the managed food operation the “REAL VALUE” in
the market could well be considered to be the proven, profitable and operational businesses where required investment may be minimal and profits are immediate.

Assuming you have the finance to be able to proceed of course!