Hamish Champ: Living in Enterprising times
Enterprise Inns announces its annual results tomorrow. Doubtless the numbers will make for interesting reading.
Yet while there're currently some 'sell' recommendations on the company's stock, City types aren't expecting any nasty surprises, believing the numbers will be within "expectations".
As well as the performance of its pubs it will be interesting to see if Enterprise talks about selling off a sizeable chunk of its estate in the same way Punch Taverns did when it recently confirmed it was looking to offload around 500 underperforming boozers.
Enterprise may want to sell much of what now constitutes the tail of its estate, but what kind of price would it get for 'bottom-end' pubs?
Sales of individual pubs here and there are always going through. But packages? At anything even close to book value? That's a trickier one.
The alternative use market is drying up, so we're led to believe. And a company like Enterprise is reluctant to sell an individual pub to someone who'll continue to run it as just that, a pub.
Plus, where it might have sold a package to a company which could add it to its own existing portfolio, such companies are facing the all-too-familiar trading and financing issues.
It will also be interesting to see if Enterprise gives any more details about its recent property valuation. In a recent trading update the company said it'd had its estate assessed, an exercise which had resulted in a modest uplift in value.
Now I'm not questioning the skill of whoever it was Enterprise commissioned to value its estate.
It's just I thought that we were in the middle of an economic downturn, a situation which has hit house prices with some considerable force, and presumably the commercial property world too.
With this in mind it was therefore interesting to hear some of the views I encountered when I met a number of the country's leading pub valuers at a function in London last week.
A number of individuals expressed bemusement bordering on incredulity concerning the sort of rents being demanded of tenants and lessees in the current environment. The word 'sustainable' cropped up a lot in conversations during the course of the evening.
Is the existing system of rents and discounted - or not-so-discounted - barrelage set to seize up under the weight of pubcos' leveraged debt? More and more people are thinking it might.
More people are also calling for a more paternalistic - read 'economically realistic' - approach on the part of pubcos towards their tenants and lessees, replicating what the old brewing groups used to do in the 'old days'.
A tall order, me'thinks. But not completely beyond the realms of possibility assuming that the banks, in whose debt many such companies are, find themselves in a…'understanding' frame of mind.
