Profitable Beds in Pubs Adding Value to your business Noel Moffitt 14 March 2017 christie.com
Introduction to Noel Moffitt - Over 20 years experience within the licensed sector - A member of the Royal Institute of Chartered Surveyors (RICS) - Assisting pub companies and investors in brokering sales of individual pubs and packages both on the open market and confidential off market sales Noel Moffitt National Director - Hospitality - Clients include Greene King, Whitbread, Marston s, Enterprise Inns, Punch, Red Oak Taverns, JW Lees, BCTI, RBS and Hudson 2
An Introduction to Christie & Co Christie & Co was founded over 80 years ago, and has been publicly listed on the Alternative Investment Market (AIM) for more than 10 years Christie & Co Today We are the leading valuers, consultants and brokers across Europe in our specialist sectors We have more than 250 professionals across 31 offices We act on behalf of: Major, regional and multiple operators International developers and investors UK and European lending banks International lending and investment banks Property agents, valuers and advisers of over 6,000 pubs each year, over 12% of the UK pub market In July 2016 Christie & Co was named as a Business Superbrand by The Centre for Brand Analysis (TCBA) in a survey commissioned by Estates Gazette UK OFFICES BIRMINGHAM BRISTOL CARDIFF EDINBURGH EXETER GLASGOW IPSWICH LONDON LEEDS MAIDSTONE MANCHESTER NEWCASTLE NOTTINGHAM READING WINCHESTER EUROPEAN OFFICES AIX EN PROVEN CE BARCELONA BERLIN BORDEAUX DUBLIN FRANKFURT HELSINKI LYON MADRID MUNICH PARIS RENNES STOCKHOLM VIENNA WARSAW 3
Christie & Co Sectors and Services Creating value, retaining value, recovering value Pubs Freehouses High street bars Late night venues Managed houses Nightclubs HAUV assets Tenanted pubs Other sectors Restaurants Leisure Hotels Retail Care Childcare Medical Agency & Brokerage Valuation & Advisory Services Pub & Restaurant Consultancy Acquisition and disposal advice Strategic advice and maximising route to value Price maximisation Asset marketing, sales and PR strategy Deliverability management Disposal process control Fully RICS and IVSC compliant valuations Capital gains and compulsory purchase advice Development advice Expert witness and litigation support Landlord and tenant advice Business rates advice Industry and market research Feasibility studies Buy-side and commercial due diligence Strategic and operational business reviews KPI development and benchmarking Sell-side support including Investment Memorandums 4
Pubs With Letting Rooms Example 1 - The Elizabethan - Typical (Attractive) 1970 s housing estate pub - 4 en-suite letting rooms (added in 2015) (clean, perfectly serviceable accommodation ) - Owner bought in 2009, trade declining year on year - Self marketing proved difficult small increase in turnover - Early 2016 joined booking.com dramatic increase in revenue which has now bridged the income gap, now adding another 6 rooms in an old Function Suite 5
Pubs With Letting Rooms Example 2 - The Stag - Alcester Road, Redhill, Alcester, Warwickshire - 9 en-suite letting rooms and manager flat (combination of double and twin) - Financial Performance: ASKIN G PRICE 1.1m Revenue FY16 000 Wet 171 Food 310 Machine income 3 Other (incl. rooms) 104 Total revenue 588 SOLD in excess of asking price 6
Pubs With Letting Rooms Example 3 - The Albany - Tied tenanted pub in Sydenham Road, Guildford - Four en-suite letting rooms (rates of 65-85 pn) - One bed accommodation for manager Leaseh old 135,00 0 - Financial Performance: Revenue FY 15 000 36 weeks to Sep 16 000 Gross Profit Margin Wet 399 246 63% Food 126 78 64% Other (incl. rooms) 49 49 65% Total revenue 575 373 63% 7
An Attractive Market - Diversification into another revenue stream and reducing the reliance on wet sales - Taking over as the new casual dining now that growth in casual dining has stalled - Impact of the EU referendum on confidence and Pound Sterling heralding a rise in inbound tourism and domestic staycations - High incremental margin as most costs are fixed property costs - Established companies like JD Wetherspoon are now developing upper floors and outbuildings for boutique rooms: The Red Lion, Doncaster (JD Wetherspoon) The Red Lion, Doncaster, was closed at the end of 2014 to allow for the development of 14 high quality bedrooms 8
Encouraging Results - ALMR Christie & Co Benchmarking Survey 2016 showed: - 60% freehold / 40% leasehold - Like-for-like growth of 5.9% Pubs with Letting Rooms Cost Profile (leasehold): - Reasonable wet margins of 67% - The following cost profile for leasehold units: 9
Case Study Adding Letting Rooms - The High Field - Gastropub at 22 Highfield Road, Birmingham B15 3DP - Opened in 2014 by Midlands-based Peach Pub Company 10
Case Study Adding Letting Rooms (continued) - The High Field - In 2016, purchased the building next door to create The High Field Town House: The High Field Town House was once a Victorian villa, but was converted into a boutique hotel with 12 uniquely furnished en-suite rooms 11
Value Considerations 1. Key drivers of value when selling a pub: - Maximising Gross Profit and EBITDA margins - Asset quality - Seasonality 2. Cost of Conversion 3. Additional Revenue Wet/Dry 4. Local Attractions 5. Target market 12
Questions and Answers 13
Contact Us Noel Moffitt Director - Pubs & Restaurants T: +44 (0) 20 72270700 M: +44 (0) 7713 061 594 E: noel.moffitt@christie.com Christie & Co Whitefriars House, 6 Carmelite Street, London, EC4Y 0BS T: +44 (0) 20 7227 0700 F: +44 (0) 20 7227 0701 christie.com