Christie reports reasons for cheer in pub sector
Licensed sector specialist Christie + Co reports a continued rise of the freehold-freehouse sector – buoyed by the return to the fold of a number of experienced operators tempted back by the availability of irresistible opportunities.
Around 75 per cent, or more, of freehold pubs sold by Christie + Co in 2012 were acquired by experienced and, in many cases, returning operators – 70 per cent of these were local buyers. Their appetite for the freehold-freehouse sector is increasing by the year – as is the licensed sector itself.
According to the British Beer and Pub Association, there were some 17,700 freehold-freehouses in the UK in 2008. Based on sales evidence, Christie + Co estimates the sector to have increased to over 20,000 today.
Of all the pubs the company sold in 2012, 62 per cent remained for pub use and an increasing proportion for some form of licensed use. John Grace, associate director based at Christie + Co’s Ipswich office, said: “Interestingly, there was a decline in the number of pubs being sold for convenience retail use – somewhat bucking the trend and negating the impression held by some members of the media and proponents of the pub sector.”
Christie + Co says the tied lease is not dead but it will evolve and, naturally, pub companies are increasingly prepared and are engaging with their tenants. Christie + Co says that the alarm spread every time a pub closes masks the truth of the situation, as it’s not necessarily the village country pub that is closing but the ‘back-street boozer’ whose clientele disappeared with the decline of the manufacturing industries.
Grace added: “Back in 1999, we stated that the pub sector was over-supplied to the tune of 10,000 pubs. As we enter 2013, 7,000 of those pubs are now closed – so there remains some room for the sector to become even more leaner and keener.”
There are considerable reasons for the pub sector to remain in good cheer. The sector has good leaders, it has excellent and experienced operators and an expanding small and regional pubco army, which is increasingly snapping up some decent-quality pub stock, says Grace. He says: “We should be greatly encouraged by the return of the entrepreneurs to the sector, as we should also be by the reasonable like-for-like sales figures being reported by the managed house operators.
“The managed estate of 9,000 pubs – more than half of which lie with the major operators – is where the investor appetite will remain especially strong, as it will with regional pubcos and family brewers.
“Our real hope for the year ahead is that we will see some further notable and major, transactions – perhaps inspired by private equity – that will breathe further life into this already vibrant sector.”