Private equity investors will continue to seek pub portfolios in 2020

By Stuart Stone contact

- Last updated on GMT

Sector strength: Christie & Co’s Stephen Owens believes purchasing activities will continue in 2020
Sector strength: Christie & Co’s Stephen Owens believes purchasing activities will continue in 2020

Related tags: Property, Public house

Specialist business property adviser Christie & Co has predicted private investors will continue to seek tenanted, managed and franchised pub portfolios alongside consolidation opportunities in the next 12 months.

According to Christie & Co’s Business Outlook 2020: Focus on Business ​report, the UK pub sector finds itself in an “incredibly strong position” off the back of more than £8bn worth of portfolio transactions in 2019 – surpassing the level of activity seen over the past decade.

However, Stephen Owens, managing director of pubs and restaurants at Christie & Co, doesn’t expect to see a drop off in sector wheeling and dealing this year.

“We witnessed a considerable amount of M&A activity in the pub sector throughout 2019, which we fully expect to continue going into 2020,” he explained.

“We now have a leaner, healthier and better-invested sector that appeals to a broad range of investors who are attracted by the prospect of significant returns and additional security that the underlying pub assets represent.”

Sector churn

According to Business Outlook 2020​, the continued churn of large tenanted estates – with the likes of Marston’s and Star Pubs & Bars offloading what they see as tail-end pubs – has created a healthy supply of pubs on the market, while private equity-backed operators and investors have driven demand.  

As reported by The Morning Advertiser (MA)​, there have been more than 180 mergers and acquisitions​​ in the UK pub sector since the start of 2018.

In November, MA​ revealed that Admiral Taverns had purchased 137 pubs from Marston’s in an “exciting acquisition”​ worth £44.9m after picking up a 150-pub package​ from Star Pubs & Bars a month earlier.

Check out MA​’s recap of the biggest pub sector deals in 2019 here.

Family pubco growth

Alongside forecasts that M&A activity within the sector will continue, Christie & Co also predicts that traditional, family-owned, pub companies and brewers will expand at a steady pace while disposing of tail-end pubs.

What’s more, the property expert’s report suggests that demand for properties with letting rooms will continue to attract the most demand as a more diverse source of income and a more mature entry point for investors, according to Christie & Co.

Related topics: Property law

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