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Business Support : Do you think your rent is too high and unsustainable
Nigel Wakefield
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I have been investigating the way Pub Co's have raised all pub rents in the majority of cases to an unsustainable level in respect of turnover, trading conditions and viability. I have raised a number of issues with the Royal Institution of CharteredSurveyors, whose guidelines for valuation would appear to have been cherry picked and misused by a number of their Surveyors creating the massive difficulties that a vast number of lessees are in. Again in my opinion these unsustainable rent levels have been used to over value their estate values to gain further funding for aquisitions. If you agree with these statements please put your comments on the Forum and would you please write to the Valuations Dept, RICS, 12 Great George St, Parliament Square, London SW1 P3AD, with your views and comments, please do not send abusive comments I am relying on their assistance to remove this abuse and help all struggling lessees.
11 Posts(s) found for this thread: Now displaying page 1 of 2
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| Author Name | Opinion | Reply |
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Liam Thomas 17/08/2008 18:41:32 |
Do you think your rent is too high and unsustainable I agree!!!!! This post replies to this thread |
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Nigel Wakefield 17/08/2008 22:25:20 |
Do you think your rent is too high and unsustainable Many thanks Liam, I had the feeling that suddenly everybody's rent was perfectly acceptable, all the people I meet are struggling because of the high rents and the tie totally restricts competitive pricing. The Pub Co's use their RICS Surveyors to do their hatchet work raising rents to unsustainable levels, predicting business potential that is "Pie in the Sky", they have never ever got their hands dirty running a pub, let alone run one to their definition of Competent Operator, they come out with a load of mumbo jumbo to confuse everyone on rent calculations, finally arriving at an outrageous figure. When a Pub Co accepts a business plan from a newcomer to the industry on a lease at £32K rent and turnover of £120K, he would need to increase business by 300% to break even in todays world. How do you justify a rent of £32K on a business turning over £120K? By using RICS Surveyors this legitimizes all their activities regarding rents, valuations of estates and all dilapidations, as one of their learned colleagues said to me a lot of Pub Co Surveyors may have to look to their Personal Liability Insurance if the over valuation hits the headlines or a major Pub Co goes down, my Mole tells me a number of senior beings have grabbed some cash and left in one Pub Co, if he is right then it won't be long before some of the others retire to the cheap property in Spain. If correct sadly with lessees hard earned cash. Please write to the RICS, they are loath to accept my word, but if enough letters come in they can't say that they knew nothing about it. This post replies to Liam Thomas > Do you think your rent is too high and unsustainable |
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| Nigel Wakefield 18/08/2008 14:56:45 |
Do you think your rent is too high and unsustainable I have just had a call from a very well experienced long term licensee who supports my comments and has been asking lessees to write to the RICS, they are all terified of the Pub Co's finding out and what they might do to them. how do these companies manage to intimidate their lessees that are being screwed on unsustainable rents to fail to raise these issues in what a number of us consider the Institution that should be supervising and controlling these abuses of their instructions. edited by: Admin at: 19/08/2008 13:25:16 This post replies to this thread |
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| martin kay 18/08/2008 18:39:19 |
Do you think your rent is too high and unsustainable Nigel, In the absence of an alternative method, I suspect you are actually complaining about inbuilt optimism (probably on both sides in new lettings)? If the alternative is to base on actual (last 12 months performance)then this would totally distort the figures. Unfortunately some who plan or need to exit do not produce startling figures or effort; many for understandable reasons. Other than more realistic/ sensible assesments, do you have a proposal as to how the industry should work? This post replies to Nigel Wakefield > Do you think your rent is too high and unsustainable |
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| Nigel Wakefield 18/08/2008 19:58:44 |
Do you think your rent is too high and unsustainable Martin if a pub is run into the ground and there is a question mark over the figures. The Brulines will give a supposedly accurate record of beer sales and a sensible estimate can be made of the turnover. If a lessee takes one of these pubs the rental level should be reflected in the sensible estimate of the turnover, The lessee has a serious incentive to grow the business and invest in the business, the Pub Co benefit from the tie and will have a long term lessee. If they put an unsustainable rent on the property, the lessee fails and we have revolving failing lessees, sales plummet and the whole thing is a mess. I know that in my leasing days I was delighted if the rent was manageable and profitable for the tenant, I picked up more from the discounts than I would from the unsustainable rent with their success and no hassles, I also ensured that they got a better discount than they could achieve normally. Most major Pub Co's have got to greedy and are dependent on high rents and draconian ties to service their borrowings, if they do as I say their short term future would be catastrophic in terms of cash flow, if they could take my approach I am sure that we would have long term licensees and stability as we used to in the market. The Pub Co's have got too close to the brink and can't stand back, however I had an email from a senior being in the industry saying that a certain brewery rent levels were 8% of the turnover, some people look after their tenants. This post replies to martin kay > Do you think your rent is too high and unsustainable |
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| martin kay 18/08/2008 20:58:31 |
Do you think your rent is too high and unsustainable I'm not sure what, if installed, Brulines will add if the problem is actually alienated customers who no longer come in and the pub is run into the ground as you say. Sensible estimate of the turnover, who determines; is this factual historic, despite any problems, or an estimate of what should be reasonably achieved? This post replies to Nigel Wakefield > Do you think your rent is too high and unsustainable |
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| Nigel Wakefield 18/08/2008 22:00:54 |
Do you think your rent is too high and unsustainable I have always had freehouses and if there is no discernable turnover, you buy it cheaply and build the business up and there is a financial incentive in the end. With run down leases, putting or having unsustainable rents on the property achieves nothing only consistant failure. Unfortunately most of these unsustainable rents are used to enhance the property value and his little to do with business viability, as far as I and others can see. Normally the rent on commercial property is linked to the value of the property, producing anything from 4%-9% return. But by using high rents these Surveyors have reversed the situation and achieved high valuations to the pubs far beyond their true freehouse values, a very dangerous game in a recession, Enron and the Subprime bound together. This post replies to martin kay > Do you think your rent is too high and unsustainable |
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Inez Ward 18/08/2008 22:46:44 |
Do you think your rent is too high and unsustainable Enron indeed Nigel! In one of the major pubcos July 08 Report they have announced "we are further re-assured by our independant valuers, who advise that our pub estate is likely to show a modest valuation uplift at 30.09.08". How can this be? The price of property is falling, beer sales are in decline, forfeitures and surrenders appear to be on the increase as do temporary managers. The whole market is in the middle of the perfect storm so how can they expect a valuation uplift? Can anybody explain because it just doesn't make sense to me. This post replies to Nigel Wakefield > Do you think your rent is too high and unsustainable |
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J Mark Dodds 19/08/2008 00:06:45 |
Do you think your rent is too high and unsustainable Just have a look at the prices of Freehold pubs in any commercial estate agent's portfolio. Unbelievably cheap. Like they were twelve years ago. Property value has plummeted across the UK; this includes the national pub building stock generally. Highly geared PubCos are DEEP in sticky MASSIVE doo doo; they know it and they aren't saying poo to a goose. They are about to receive what they really deserve and may the Lord be truly thankful. edited by: J Mark Dodds at: 19/08/2008 00:09:20 This post replies to Inez Ward > Do you think your rent is too high and unsustainable |
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| Inez Ward 19/08/2008 13:03:46 |
Do you think your rent is too high and unsustainable Nigel is there a specific person or department at RICS that lessees/tenants should address their concerns to? This post replies to Nigel Wakefield > Do you think your rent is too high and unsustainable |
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