Stephen Taylor, Managing Director comments upon the licensed/hospitality property and pub leasehold and freehold market at Guy Simmonds, in the new unprecedented, deadly Covid19 pandemic era, with continuing/increasing Autumn and Winter 2020 prevalence.
"So, since my last property update back in June, what is the current state of the licensed property/hospitality and pub market, and my realistic assessment, now that we are in the final quarter of 2020 of this highly challenging period?
At Guy Simmonds, we are still managing to sell a surprising number of freehold premises, create new free-of-tie leases (at our recommended sensible and sustainable rents) for our valued freeholder/retiring publican clients, and even having some success in assigning Pubco leases (albeit at very realistic premiums).
We continue to fully market all businesses using our innovative and unique combination of websites, portals and generic domain names.
We are making a relatively good number of appointments for prospective purchasers (always following/adhering and sending via email the evolving Government viewing guidelines etc). Our valued prospective purchasers, cooperate and demonstrate their genuine intentions to acquire a suitable business by completing via email, a number of our relevant questions, including finance status, how soon they wish/are able to acquire a business, relevant experience, etc, prior to us arranging a formal appointment with our vendor clients for them to formally view the premises.
We are finding that people from diverse backgrounds and professions are still looking to enter the licensed trade.
Some are seeking a change of career, others have unfortunately been made redundant from their long-standing professions and others are shrewd, realising that there are some extremely realistically priced propositions available.
Certainly, a freehold licensed business can often now be perceived as a relative bargain, especially when compared with the differently valued residential/domestic property market. The complete contrast between licensed businesses is highlighted and compounded by the now almost complete reluctance of banks/institutions to finance hospitality businesses, compared to the residential/domestic house sector - whereby Banks/Building Societies/Lending Institutions continue to be prevalent in their desire to lend residentially and at very high 'LTV' (Loan to Value) levels. Fortunately, some 'cash rich' positive potential purchasers take a longer-term view. They are of the opinion that whilst the on-going Covid19 pandemic is dreadful and clearly adversely affecting the hospitality trade with a potential nightmare winter scenario looming - at some future point (probably if/when a successful vaccine is available and 'rolled out') the situation will undoubtedly improve and hopefully/eventually be overcome - maybe in 2021/2022.
Obviously, the volume of sales in 2020 has decreased compared with the pre-Covid19 pandemic era, with sale prices usually also detrimentally effected.
This is unfortunately a result of the awful year the hospitality industry is enduring, together with evolving, strict and further damaging Government guidelines, together with the complete prevailing and future uncertainty.
Of course, the glorious summer weather and the opportunity to maximise often large outside lawns and trading areas has now largely disappeared, hence trading restrictions now impact even more severely on turnover levels.
Certainly, I completely empathise and understand the almost impossible evolving and completely uncertain trading situation, which our beleaguered hospitality/pub operators are encountering. We are also of course completely conscious that the industry faces a potential nightmare winter scenario, in respect of both further damaging Government restrictions, together with the impending situation of mass redundancies.
Since businesses are valued relating to turnover and profits, then all shrewd business owners and purchasers usually understand and accept that the related valuations and rents will usually also be effected. Providing vendors are very realistic and pragmatic with their expectations, then we are often managing to successfully conclude transactions.
Indeed, we have a healthy pipeline of freehold and leasehold businesses under offer, and with deposits taken with Solicitors instructed, ready to complete in the last quarter of 2020 and into next year 2021.
We have successfully sold in the past few months to date a pleasing number of freehold and leasehold businesses (see photos and names for examples). These range from low/medium cost of entry leases, up to a freehold licensed business we have just sold for in EXCESS OF £1 MILLION POUNDS.
We also have our loyal retained buying clients who continue to selectively seek freehold licensed property/pubs/hotel to purchase, with the aim of Guy Simmonds advising upon creating a new free-of-tie lease and finding them a suitable lessee for sensible rental income (this is our Guy Simmonds speciality, with enduring success for over 30 years). We can advise upon these speciality leases from personal, long-term experience, since I have owned several freehold licensed premises over the past 30 years, whereby I have created sustainable and still current free-of-tie leases. We can also recommend specialist commercial solicitors if necessary, to help our valued freeholder clients in creating these leases, following our rental guidelines and 'Heads of Terms' etc.
If you are looking to sell a freehold licensed property, or looking to engage our expertise in creating a new correctly valued, free-of-tie lease and us finding you a suitable tenant for sustainable rental income etc then please contact me by email firstname.lastname@example.org
We also have purchasers seeking freehold premises (whether still trading or having ceased trading) with the potential or already having 'change of use' to residential/development etc...
Again, due to recent sales, we also welcome additional vendors wanting to try to sell/assign their existing leases at very realistic premiums/asking prices. We will of course formulate and professionally advise upon current market valuations on request, subject to us being provided with annual verified historic trading accounts, together with up to present date monthly turnover figures for 2020.
We look forward to hearing from all prospective freehold and leasehold vendors and continuing to being of assistance in these immensely difficult unprecedented times, which affect all of us in the severely afflicted but ever resilient hospitality sector.
Unfortunately, one aspect we can all be sure of, is that the only thing that is certain is continued uncertainty..."
Best wishes. Stephen Taylor. Managing Director Guy Simmonds.
Please visit www.guysimmonds.co.uk to see all of our licensed businesses for sale including hotels for sale, pubs for sale, restaurants for sale etc.