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May 10, 2010
Pub Companies Unload Portfolios
There was an interesting series of articles in the Campaign for Real Ale’s monthly newsletter, ‘What’s Brewing.’ Admiral Taverns pub company has put up 150 pubs for sale, most of them as freeholds, through Christie’s. Admiral has suffered like many pub companies by lower pub going and increased beer taxes. Admiral’s choice to sell the pubs as freeholds rather than tenanted leases indicates that it is unconfident that these pubs could ever be profitable in the pubco’s corporate structure if at all.
At the same time pub company Mitchells and Butlers is selling 300 of its ‘wet-led,’ or drinks based, pubs and bars to focus on food led pubs. The pub giant sees food based pubs a more sustainable business plan than drinks based, as many in the industry are doing.
These sales will mean that pub property will flood the market in the next few months with very few companies to buy them up. Investors continue to have an unfavourable view of the pub industry and are cautious to buy failing pubs. Many of these pubs may remain unsold or be sold at rates much lower than nearby retail space would go for, making them good potential investments for a better run pub or conversions.