Value perception gap blighting property deals, says operator

The market for certain freehold pubs is currently being distorted by a large gap between what vendors and prospective buyers believe a site is worth, according to one operator.

Mark Jones, chairman of Premium Bars & Restaurants (PBR), said his group wanted to develop its Bel And The Dragon food-led business, but that it would be taking "a couple of months out" from acquiring sites for the brand in the current climate.

"There's a valuation gap between what vendors believe a pub is worth and what potential acquirers think they should pay for it," Jones said. "In some cases it's like a Mexican stand-off."

"We've looked at sites where there is a 20 per cent variation in that perception of worth," he added.

Despite this, prompted in part by a cautious approach by the banks, deals can still be done, he believed.

"Corporate activity among the smaller operators will take place despite the market's issues as shareholders press for realisation of value through mergers and deals," he said. PBR had around £5.5m to spend on sites as appropriate, he added.

Jones was speaking as PBR announced turnover for the six months to December 31 2007 up 95 per cent to £35.4m, driven by the acquisitions of the Living Room and Bel And The Dragon brands, and operating profits of £2.1m, from £500,000 in 2006.

PBR planned to add three more Living Room sites in the next 12 months, he said.

The group had disposed of most of its wet-led sites, but smoking continued to be a problem for late night venues.

Of the remaining seven night clubs PBR operated, four had "decent solutions", while the remaining three were trading for cash.

Meanwhile, the well-documented problems being experienced by the country's High Street operators "would continue for several years to come," Jones predicted.