Pubcos looking to raise money quickly turn to selling at auction
Pub companies wanting to off-load packages of pubs quickly are looking to the auctioneer. With the strike of the hammer the pub is sold and a price agreed within minutes. Pub companies can sell 30 to 40 pubs in less than two months and get their hands on the cash within 28 days.
Companies who want to invest cash in other areas of their businesses can get a quick turnaround and avoid additional costs such as solicitor's fees.
Tony Webber, auctioneer at property agents Eddisons, says going under the hammer is an efficient and quick way to sell a property.
"Clients know they can sell the property in a short period of time. It's clean, quick and moves money around," he said.
Simon Riggall, director of auctioneering at property company Colliers CRE, sells around 700 pubs a year. He says it's an easy way for companies to off-load a portfolio of pubs and it costs them a lot less time and money than a traditional sale.
"It's a good way to dispose of large numbers of pubs very quickly," he said.
"We deal in bulk and it's a very easy way of selling 30 to 40 pubs."
The majority of pubs being auctioned are either vacant pubs that are being sold for alternative uses or for developments and ongoing businesses or investment properties that people will buy for a rental income.
Mr Riggall says that there are fewer ongoing businesses coming onto the market because it takes longer to sell a trading pub. But: "Quite a few of these closed pubs do reopen as pubs again," he added.
Each property has a reserve price - a minimum at which the owner will sell the property. When the auction sale is agreed, the new owner signs a memorandum to agree the sale and the cash is paid within 28 days.
But auctioning is not a guarantee of a sale. If a property owner puts its reserve price too high then it can mean there is no sale at all.
Only last month the Woolpack at Esholt, West Yorkshire, the pub made famous by ITV soap Emmerdale (pictured), was put up for auction by owner Bradford City Council but failed to reach its reserve price.
