Pubcos have missed a trick on premiums
Pub companies are missing out on thousands of pounds by not charging premiums for quality managed houses being converted to lease, according to Christie+Co director Colin Wellstead.
He says that a lack of freehold outlets means that prospective buyers expect to pay a premium for a leasehold.
"I genuinely believe the market has missed a trick by not seeking premiums. With the severe shortage of quality freehouses, buyers are willing to pay a premium for a quality lease opportunity."
Christie + Co is in the process of marketing a second batch of former Spirit Group managed houses, on behalf of new owner Punch Taverns.
"The average turnover of this first phase of properties was £440,000 and we are generally achieving premiums of between £20,000 and £70,000 per unit.
"The second batch of 249 properties has an average turnover of £490,000 and, with a large number of potential lessees already registering their interest, we're aiming to achieve premiums at a similar level," he added.
Despite making premium payments, Wellstead said that new lessees will still make a profit (on reassignment) after the initial two-year non-assignable period.
Wellstead claimed that a managed house division needs between 250 and 500 pubs to make it a viable operation.
"Some of the regional brewers are particularly vulnerable and they need to take a close look at their managed house estates and consider their options," he said.
Your comments
Ken Nason via email, 29/08/2006Correct me if I am wrong but surely any "premium" charged on a lease is usually a measure of the goodwill element in the business.
This is based on the efforts and work of the existing licensee based on the success(or other) of the business.
Surely it is cannot be viewed as yet another income "opportunity" for the big boys.
As, in many cases, the manager will no longer be running the pub, the product range will change, and the ethos and style of the old company will no longer be in evidence, how can anyone other than an opportunist stone squeezer possibly expect a "premium"in the true sence of the word?
Now if it had truthfully been referred to as an auction then that would at least have been honest rather than misleading.
Perhaps the next stage will be an invitation to applicants for sealed "premium" bids for these prime leases. After all maximum money appears to be the only driving force these days.
