Christie + Co completes on over 650 ex-Spirit Group Punch leases
Property agent Christie + Co has completed the Spirit lettings campaign, transferring around 650 former managed houses into Punch Taverns' leased estate in the last 15 months.
At the time of the acquisition of the Spirit Group in December 2005, Punch Taverns announced its intention to offer the managed houses to the lease market. Christie + Co was appointed to assist with the lettings campaign, which commenced in March last year and was undertaken in three phases.
"The pubs in the Spirit estate had operated as managed houses for a number of years and were generally of exceptionally good quality, with average turnovers of between £450,000 and £500,000", said Colin Wellstead of Christie + Co. "Many publicans never imagined that pubs of this quality would be available on the lease market, so the letting campaign generated incredible demand."
Christie + Co claim that the campaign has significantly changed the nature of the lease market. Although lessees are accustomed to paying premiums for lease assignments, the industry had rarely sought premiums when granting new leases, prior to the Punch Taverns project.
"We recognised that many of the pub businesses would be highly sought-after and advised Punch Taverns to seek premiums for the new leases", explains Wellstead. "Despite considerable scepticism within the industry, we succeeded in identifying suitable lessees for almost 650 pub businesses within an 18-month period, which is an incredible achievement."
"The lease market has evolved considerably over the past 20 years", Wellstead adds, "and the Punch Taverns project has contributed to this evolution. The shortage of freehold pubs available in the market means that demand now considerably exceeds supply. Experienced licensees and pub operators who would previously only be interested in chasing freehold acquisitions are now keen to pursue lease opportunities. Where leases were previously granted to whomever was willing to pay the highest rent, the increasing demand now enables pub companies to be more discerning and consider the lessee's experience and suitability."
According to Wellstead, two major factors contributed to the overall success of the campaign: Firstly, Punch set up a dedicated team of people, whose sole responsibility was the letting of the Spirit pubs. Secondly, the strength of the Christie + Co office network enabled the process. "Our 16 offices around the UK were all made available to the Punch Taverns project team and most of the retailer interviews were conducted within our meeting rooms", he said.
"The successful letting of almost 650 pubs in just 15 months perfectly illustrates the strength of the market", said Wellstead, "and the sale of the Grange provides encouraging news for the many licensees to whom the new Punch Taverns leases have been granted."
