Investment hike for pub sector in 2017

The UK pub sector is likely to see a hike in transactional volumes in 2017, driven both by exiting owners and new entrants. According to Colliers International, Brexit is unlikely to have any immediate impact on trading in the pub sector, and the post-referendum fall in the value of sterling has made the sector even more attractive to overseas investors. The impending sale of Punch Taverns, valued at around £400m, will boost 2017 transaction numbers significantly after volumes have slowed in recent years. Volumes hit a peak with 8,500 transactions in 2004, and sales last year were quiet. However, increased investor appetite in recent years is likely to continue. Colliers International anticipates that recent market entrants will remain the most active buyers, and assets will most likely be sold in mid-scale packages. The anticipated sale and partial break up of Punch Taverns to Heineken and Patron Capital may also be seen to be a key moment in the re-emergence of the vertically integrated brewer and retailing model. Whereas historically most pubs were owned by national and regional brewers, recently the pub estate has moved towards “pubco’s” – large property companies whose revenues were derived from property rents as well as effectively being the wholesaler of beer. Heineken started to adopt this model in 2011 with its acquisition of 1,300 pubs. The proposed purchase of 1,900 pubs from Punch Taverns will make it one of the most influential players in the sector. It also expects that the sector will see more interest from mainstream investment funds. These funds have become increasingly attracted to alternative markets over recent years due to the high yields it offers. Private equity will also continue to look for opportunities, and as the debt providers continue to show interest in the sector Colliers International also forecasts increased levels of liquidity. • To send feedback, e-mail amber.rolt@estatesgazette.com or tweet @amberrolt or @estatesgazette