Property market booms on
Tycoon and Laurel/Globe owner Robert Tchenguiz was conspicuous by his absence at the world's largest property show in Cannes last week. The little matter of getting together a cool £4bn to bid for Mitchells & Butlers prevented his annual visit to the fleshpots of the French Riviera. But brother Vincent was there, holding court on the largest and most gilded of all the floating palaces on the harbour front, the one, incidentally, on which nearly 60 years ago Churchill, Roosevelt and Stalin had met near Yalta to arrange the carve up of Eastern Europe.
If the deals being done last week were not quite of that magnitude, it was not for the want of finance. Amid the flood of champagne, the talk at Cannes was of the wall of investment money looking to find a home in bricks and mortar or cement and steel in some shape or form somewhere.
The property market boom of the past decade, it seems, is set to "boom on" for some while yet. Compared to shares and gilts, the returns on property still look highly attractive. That's why people awash with cash like the Landesbergs and the Rosenbergs, the joint owners of Admiral Taverns, who were both in town last week, the Reubens, and the backers of London and Edinburgh Swallow Group, Alan Bowes' friends, the Khalastchi family, will all be looking for more pubs to invest in for at least the next 12 months or so.
Licensees struggling to make ends meet will be struck by the contrast in
fortunes of owners and operators. Trading conditions are tough in pubs across the land, yet the property companies are paying up to 12 times Ebitda to take on these often struggling portfolios.
Not all believe these historically very high pub prices are sustainable. Amongst them may be City and individual Mitchells & Butlers' shareholders, who will have to decide if cash in hand near or at the top of the market is better than hanging on to a steady performer with decent but unspectacular potential.
Another bidder may emerge - and M&B may have a dart at Whitbread to complicate matters. But having been thwarted at Spirit, Tchenguiz will be even keener to succeed this time. We must all wait eagerly to see just how optimistic is his reading of the property runes.
