Less than a month - and a new national lockdown - into the new calendar year the internet has already been awash with parallels between 2021 and the events of 2020.
While the pub property market won’t have been front of mind for the vast majority, early signs are that the start of 2021 somewhat mirrors January 2020 when it comes to on-trade wheeling and dealing.
January 2020 yielded its fair share of pub property deals – headlined by Punch purchasing a seven-pub package from Heartstone Inns and Hawthorn acquiring 29 sites from Marston’s.
Now, 12 months on, 2021 has kicked off in similarly rapid fashion with Sky News reporting that former Greene King boss Rooney Anand has raised £200m to invest in Britain’s pub sector through Redcat Pub Company.
Anand – who led Greene King for 15 years – is expected to embark on a series of small-scale acquisitions in the coming months with the backing of an unnamed US-based private equity firm.
“The news former Greene King chief Rooney Anand is looking to acquire specifically in the smaller scale pub acquisitions segment is significant evidence to support our strongly held view that the pub property market will see a strong resurgence as we pull through Covid restrictions into a post and quasi-post pandemic economy as this year unfolds,” Davey Co managing director Paul Davey said of the news.
‘Not an easy market’
Anand, who left Greene King in 2019 before joining Casual Dining Group as chairman, is said to be working on the assumption that the eventual end of social distancing will trigger a rebound for the pub sector, which has been badly impacted by Covid measures.
In keeping with this, leisure property specialist Fleurets’ director Simon Hall went as far as to say that he believes now is the “perfect time” for investors to eye up opportunities within the pub sector.
“I think by the time they sign deals and get them over the line we're going to have a lot more clarity over releasing restrictions and trading is likely to bounce back,” he explained.
What’s more, Hall attempted to put Anand’s £200m Redcat Pub Company investment into context alongside similar moves in the pub sector – including the re-entry of Gerry Carroll and Mark McGinty, co-founders of Hawthorn and James Croft, former group strategy and retail director at Ei Group into the pub sector under the Valiant Pub Company.
"It does seem to be pointing towards a managed house operation, whereas the likes of Valiant and Inglenook are looking for either tenancy or franchise style operations,” he explained. “It'll be interesting to see the type of thing he'll be looking to buy.
“It's not an easy market, and I know a number of operators that have been looking to acquire packages for years and have struggled to do so because they're either outbid or they're not quite right in terms of the style, the size, the quality, the price – it's difficult to get the perfect combination.
“It's not going to be an easy challenge, particularly if he's ruling out some of the large corporate deals - as it suggests from his commentary - and that he's looking for more individual and smaller groups,” Hall continued.
"I think once we're through the next few months it's going to bounce back strongly as we go through the year so it's a good time to be buying – the problem is not many people are selling."
‘Independent, smaller scale’ appetite
Fleurets’ Survey of Pub Prices 2020 also found that the average price of a trading freehold pub fell by a third (34.7%) to £567,500 during the Covid-19 pandemic while the average leasehold pub price plummeted by 46% to £30,769.
These figures came after the average trading freehold price and leasehold prices respectively rose by 8.3% and 10.2% during the six months to March 2020, with reports in The Guardian suggesting that Anand and JD Wetherspoon head a queue of investors looking to acquire struggling sites on the cheap.
What’s more, looking at the wider pub property landscape, Davey added that both Redcat and Valliant’s latest moves come at a time when the “independent operator suburban, community, market town, village and destination” markets look to be the most appealing.
“The news also of the launch of Valliant by co-founders of Hawthorn, Gerry Carroll and Mark McGinty joined by James Croft former strategy and retail director of EI – who are specifically targeting suburban and community sites in their intended acquisition roll out – provides further significant evidence of confidence and appetite amongst seasoned operators keen to invest in the independent, smaller scale site acquisition market too,” he said.
“The sharp recovery in customer demand these venues witnessed last July on re-opening from the first lock down and remarkable convergent uplift in acquisition enquiries we received from operators looking specifically at this market segment firmly re-enforces this view for the year ahead.
“We are already experiencing the early signs of high demand for multi-faceted independent single and multiple-site operator venues offering depth in their business offer to include bar, food, letting accommodation, functions and events facilities and good outside trading areas in popular suburban, town, village and destination locations,” Davey added.
Show of confidence
Furthermore, both Colliers International’s head of alternative markets, James Shorthouse, and Savills’ head of licensed leisure, Kevin Marsh, believe the news is a vote of confidence in the pub sector’s recovery from Covid symptoms.
“The rapid recovery which many pubs saw in the summer of 2020 underlines how they are an important a part of the UK leisure experience, and the appetite that the British public have for good quality food and beverage experiences,” Shorthouse said.
“We fully expect 2021 to present a number of opportunities for new entrants and existing operators to acquire assets, individually or in packages, as the market rebounds from the series of lockdowns and the vaccines take effect.”
What’s more Marsh also believes Anand’s investment demonstrates confidence that the pub market will bounce back from lockdown.
“The pub market has already shown its resilience in the way trade bounced back after the July lockdown for those pubs that were able to reopen,” he said.
“There is always opportunity in the market to acquire sites, the key is finding those that help to deliver a strategy.
“There will inevitably be some stresses in the hospitality market this year caused by Covid-19,” he continued. “It is the most experienced and skilled teams that rebuild confidence, trade and profitability quickest and I would say that Rooney is very well qualified in this respect.”