Fuller's positively negative on REITs
London brewer Fuller, Smith & Turner last week poured cold water - and a degree of scorn - on those pub operators looking to become real estate investment trusts (REITs).
Fuller's new finance director James Douglas, who replaced the retiring Paul Clarke at the beginning of the year, said the London brewer could "only be bemused by talk of separation or divestment" of other operators' assets.
Fuller's chairman Michael Turner went further. "We believe in owning a strong portfolio of freehold pubs," he said. "We don't see a move such as becoming a REIT as being a long--term strategy." Asked about Mitchells & Butlers' plan to become a REIT, Turner said that in his view it was "a short-term one".
Going down the opco/propco or REIT route for any operator was "very unfortunate" he said, a strategy that had little or no prospect of benefiting either the industry or the consumer.
"As an operator you could be tied into a series of high street leases, many of which haven't performed well," he added.
Some 85 per cent of Fuller's 360 pubs and hotels were freehold, the group said, including its flagship pub in the City, the Counting House.
Turner said that like many operators Fuller's was in the market to buy pubs, but he warned that vendors hadn't taken into account declining property values.
"There are not too many opportunities when it comes to the sort of pubs we want and where there are, people aren't being realistic on the issue of price. Some sellers are looking at revising their demands," he said. "But they still haven't reached what we would regard as suitable levels.
"We don't want to outspend our competitors. We want to outsmart them."
Turner added that a new distribution depot, located near the former Gales brewery site at Horndean, which Fuller's agreed to sell earlier this year, should be operational before the end of the current financial year.
He was speaking as the brewer announced its annual results for 2007/08, which showed overall turnover up two per cent.
