21/10/2016
Click here to download the UK Leisure Sector - Q3 2016 summary
Summary
In a quarter dominated by the political and potential economic fallout from the Brexit vote, transactional volumes were, not surprisingly, a little subdued during Q3 2016.
The quarter commenced with a change of Prime Minister and a cabinet reshuffle, including the
replacement of Anna Soubry as Minister for Small Business, tasked with the responsibility for the introduction of the Pubs Code. Her replacement didn't, however, derail the Code with its implementation coming on 21st July. An interesting and busy period lies ahead as tied tenants and tenanted pubs companies with more than 500 pubs fully digest its implications.
The sale of the Liberation Group by LGV Capital to Caledonia Investments in July for £118 million provided a clear indication that the potential impact of Brexit will not dilute the appetite of the leisure sector to institutional investors. The largest transaction of the quarter, also in July, saw Odeon and UCI Cinemas sell to AMC Theatres for just under £1 billion, creating the largest cinema operator in the world, with 627 theatres and more than 7,600 screens.
In an age where technology and entertainment continue to merge, it is perhaps also refreshing to see the survival of more a historic leisure property. The administrators, Begbies Traynor, secured the sale of Aberystwyth Pier to a private pension fund and thereby, hopefully, securing the operational future of this attraction that dates fromn 1865.
The quarter ended with the publication of the 2017 Draft Rating List which saw significant regional variations in Rateable Values (RV). London, perhaps not surprisingly, given rental growth over the preceding 7 years, has seen the sharpest increase in RV which has led many to suggest that some businesses already stretched with rising occupational costs will fail to survive. It certainly brings into question the attractiveness of a prime Central London operational site for reasons other than brand presence and advertising. Sadly we will not have to wait long to see the full impact played out on the streets of the capital.
UK Leisure Sector Q3 2016 Highlights
July 2016 -
Pubs: Cornwall-based St Austell Brewery Company acquires fellow West Country brewer and pub company, Bath Ales. The deal includes The Bath Ales brewery, its portfolio of beer brands and its 11-strong pub estate.
Restaurants: Drake & Morgan, the Bowmark Capital-backed group, announces the acquisition of the 11-strong Corney & Barrow Bars business.
Pubs: Liberation Group is bought by Caledonia Investments Ltd from LGV Capital for £118m. Liberation Group has 94 pubs in the Channel Islands and the West Country, two breweries and three wholesale businesses.
Hotels: Whitbread sells its hub by Premier Inn hotel in Kings Cross, London, to Legal & General for £84.5m as part of a sale and leaseback process. Whitbread exchanged agreements on the 389-bedroom hotel in return for a 25-year lease agreement at a rent of £3.5m per annum.
Pubs: Brewer and retailer Camerons acquires Leeds Brewery's pub estate. Camerons will acquire all seven Leeds Brewery pubs.
Leisure: Guy Hands' private equity firm Terra Firma signs a deal to sell Odeon & UCI Cinemas Group to AMC Theatres for £921m.
Pubs: The new Pubs Code is due to come into force after government approved the regulations.
Leisure: Cineworld Group buys five cinemas from Cinema Holdings Limited, the holding company of Empire Cinema Limited, whilst disposing to Empire of the three screen Cineworld Haymarket. Cineworld will pay Empire an aggregate consideration of £94 million.
August 2016 -
Leisure: Sales rise to £420m at Center Parcs in the year to 21 April 2016, up from £386.9m a year earlier.
September 2016 -
Pubs: Stonegate Pub Company acquires ten pubs from JD Wetherspoon. The pubs bring the company's estate up to a total of 664 sites.
Pubs: JD Wetherspoon reports sales rising 5.4% to £1,595.2m in the 52 weeks to 24 July 2016. Like-for-like sales rose 3.4%.
Restaurants: Prezzo, backed by TPG Capital, reports revenue increased to £213.8m for the year ending 3 January 2016, compared with £189.9m the year before. The company had 276 restaurants at the year-end, up from 259 the year before.
Hotels: Portfolio of 55 hotels let to Travelodge is bought by real estate investment trust
Secure Income REIT for £196.2m. The hotels produce £13.7m in rent per year and have an average unexpired lease term of 27 years.
Leisure: Aberystwyth Pier bought out of administration. The pier has been sold to a private pension fund and will continue to be operated and managed by Lee Price.
Contact Details:
Graeme Bunn
Managing Director
T: 020 7280 4740
M: 07776 208085
E: graeme.bunn@fleurets.com
Martin Willis
Chairman
T: 020 7280 4700
M: 07774 671957
E: martin.willis@fleurets.com