Bottom Line: Brent feels the draught
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Your support makes all the difference.BRENT WALKER'S decision to write off pounds 240m against its public house estate this week is a blow for anybody who believes there might be any real open market value left in pubs.
The battered leisure group asked independent valuers to put a price on its 2,000- strong pub chain, which was acquired for about pounds 400m in the giddy 1980s. The valuers decided that, as so many pubs had been, and still were being, put on the market by the big brewers, and as the collapse in property values had hit pubs as hard as any sector, values had dropped significantly.
Of the 2,000 pubs that Brent Walker's Pubmaster subsidiary controls, 734 are leased from Allied Breweries, 174 are leased from Whitbread and 142 are owned by a joint venture with Labatt, where Labatt has the financial risk. This leaves fewer than 1,000 pubs actually owned by Pubmaster. Brent Walker's accounts reveal the value of an average pub owned by the group was reduced by pounds 250,000 to about pounds 140,000.
There are dark mutterings at Brent Walker's Rupert Street headquarters that this value may still turn out to be too high. And there are concerns that this problem did not come to light during the pounds 1.3bn debt restructuring, completed last year. Some banks have even suggested that if the fall in pub values had come to light then, Brent Walker might not have been able to push through the restructuring.
The new valuation also raises questions about the pounds 214m bid made by Greenalls for the public house group Devenish. The offer price is pitched at a 53 per cent premium to Devenish's published net assets, which included its 260 managed pubs at pounds 542,000 each. In other words the pubs are being valued by Greenalls at pounds 830,000 each.
It can be argued that Pubmaster does have a lower quality estate than Devenish, having bought pubs offloaded by Grand Metropolitan. But it is difficult to see how Devenish's pubs, two-thirds of which are exposed to the whims of the weather-conscious tourist, are worth nearly six times as much.
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