M&B estate valued at £5.5bn

Rising property prices have pushed the value of Mitchells & Butlers (M&B) estate to more than £5.5bn.

The UK's biggest managed pub group, which operates around 2,000 pubs, announced the results of a revaluation alongside plans for a bond issue which will be used to refinance securitised debt and enable the company to return more cash to shareholders.

M&B's securitised estate, which makes up the majority of its pubs, has been independently valued at £4.8bn. Pubs outside the securitisation, including the pub restaurants recently acquired from Whitbread, increase the value by at least another £0.7bn, said the company.

The £1.1bn bond issue will increase M&B's securitised debt by £655m to £2.46bn. Cash will be returned to shareholders through a proposed special dividend of £1 per share, worth around £486m. The company has also spent £33m buying back shares.

Tim Clarke, chief executive, said: "The substantial appreciation of our asset base over the past three years demonstrates the value that has been added to our high quality estate through the successful implementation of our operational strategy. We continue to build on our leadership position in the fast growing pub food market.'

"After the special dividend announced today, Mitchells & Butlers will have returned over £1.1bn to shareholders since listing in April 2003 over and above ordinary dividends."

The company also said it "continues to see alternative use and investment demand for some individual pubs at substantially higher values than has previously been the case". Twenty-one smaller London freeholds have been sold for £53m, and plans for the sale of a package of around 100 smaller drink-led pubs are on-going.

M&B saw off a bid from the R20 consortium led by Robert Techenguiz in May. With the billionaire owner of Laurel Pub Company free to renew his interest in the business in November, M&B is looking to keep shareholders on side in case a new bid emerges.