Admiral's decision to end its pub-buying spree sounds a warning for tenanted operators
Admiral Taverns owner Gary Landesberg has stated that he does not intend to buy any more pubs for the time being, because of the high level of uncertainty over the general economy.
His company has been the most active buyer of pubs being sold by the major tenanted pub companies, acquiring more than 3,000 since 2004. Landesberg said the company would "definitely not" be buying pubs in the current climate.
"This has got nothing to do with the pub industry, which is a very resilient business - the whole world is in a bit of a crisis," he said.
Landesberg said the distress seen by major banks has yet to feed through properly to areas such as unemployment figures. He said: "The (position of the banks) is out of sync with the economy.
"I reckon it will now be at least 12 months before we see a bit of calm. We are focusing on cash generation and debt reduction." Landesberg said that he had become a lot more bearish since January.
The withdrawal of Admiral from the acquisition of pubs for the time being has implications for the sale of pubs by quoted tenanted operators.
Admiral has been the single largest buyer of these sites. It means that individual companies wishing to sell pubs are likely to have to sell them on a site-by-site basis - or work harder to support their poorly-performing pubs.
A number of major pubcos are considering a raft of initiatives to help tenants suffering reduced sales and rising costs. Admiral's joint managing director Lynn Darcy said the company was "very mindful" of avoiding passing on extra costs to its tenants.
"We're looking at areas like insurance costs, which we might even absorb. We are looking at everything to see where the opportunities lie.
"We are prepared to invest and not according to any set formula. There is some spend that is defensive."
Industry consultant Phil Dixon said: "The pubcos have got to be more flexible - there can't be a rigid rent policy at the moment."
The decision by Admiral Taverns to put a stop to buying pubs comes despite the successful completion of a £760m refinancing last July. Beating the start of the credit crunch by a number of weeks, the refinance provided it with around £1bn to invest in future acquisitions and development.
l Business opinion - p10