Punch's valuation gap
A number of Punch Taverns tenants attempting to buy their pubs are finding out their offers are failing to match up with the pub company's expectations.
The news comes as finance brokers report strong interest since Punch's invitation mid-February to all 7,560 licensees to make an offer on the pubs they currently run (see box below).
Antony Snow, licensee at the Mist Bar in Scarborough, had his pub valued unofficially by two estate agents for £350,000 to £450,000, exclusive of fixtures & fittings and goodwill. Based on this, Snow made what he felt was a "very fair" offer of £500,000, which was rejected. Next he offered £650,000, but was informed by Punch that it would only consider an offer of £1m.
The frustrated tenant said: "It's a load of nonsense. They are not taking serious offers." Snow pays an annual rent of £68,000 to Punch Taverns, which would mean that it is worth at least £1m to the firm given he is tied for beer.
The tenant said he had heard from four other tenants — all had their offers refused and were told to bid £1m.
Michael Rounthwaite, lessee at the Royal Oak in Leverton, near Retford in Nottinghamshire, said: "I had my pub valued at £350,000, but when I contacted the estate development manager John Heald, he told me that anything under £650,000 would not even be considered." He added: "I do want to buy the pub, but not for that price."
Another Punch licensee, Anthony Sinnott, posted on the MA forum: "A valuer recommended an offer of £200k plus to start the ball rolling, which was made. A Punch valuer called to say they were looking for £1m. My valuer believes it is worth £500,000 at the maximum, and given the economy and well-publicised drop in commercial property, especially pubs, this is outrageous."
Nigel Turpin, corporate affairs director for Punch Taverns, said: "We have agreed terms with a significant number of our licensees and are proceeding towards exchange of contracts. The Oddfellows Arms in Kendal is an example of a recent sale to an existing licensee, as written in last week's MA.
"There will be occasions where price expectations will differ, but we cannot comment publicly on individual cases.
"However, some sites may have higher alternative use value that will not be reflected by bank valuations."
