Trading valuation facilitates tenant acquisition of public house freehold

The Challenge

A family who acquired the tenancy of a public house from a regional brewery chain just prior to national lockdowns in 2020, successfully pivoted their offering to survive business restrictions while simultaneously building strong trade. Despite their success as tenants, they aspired to own the freehold. This would allow them to unlock investment opportunities including upgrading guest accommodation and extending the licensed premises' facilities which could only be achieved under independent operation.

Our Approach

Securing lending to fund the purchase of the freehold hinged on a robust trading valuation which would demonstrate sustainable profitability amidst sector-wide pressures. The lender needed confidence that fair maintainable operating profit assumptions were realistic.

We conducted comprehensive trading valuation analysis for the lender, assessing fair maintainable operating profit under reasonably efficient operator assumptions whilst recognising the family-run business model's staffing cost advantages. Our team evaluated current and post-purchase brewery supply arrangements, quantified in-situ fixtures, fittings, and equipment values with appropriate depreciation, and assessed investments already made improving the establishment. We analysed the tenant's detailed business plans for accommodation upgrades which included stress-testing revenue projections against local market demand and competitive positioning.

Our valuation report provided both going-concern freehold value and property-only valuation, enabling the lender to make informed lending decisions.

The Outcome

Our trading valuation enabled the tenant family to secure lending and successfully purchase the freehold, allowing them to officially launch as an independent free house and move forward with their plans of upgrading their accommodation offerings.