The chance to cherry-pick the best assets

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CASH-rich investors have a once in a lifetime chance to pick up high quality assets, according to one of Britain’s biggest property advisory firms.

Christie & Co’s business outlook for 2012 also suggests that it would be foolish to call time on Britain’s pub industry, which has struggled since the introduction of the smoking ban in 2007.

During a period when the big banks are still being squeezed, the company expects the “bank of mum and dad” to play a growing role in property transactions.

David Rugg, the company’s chairman, said he expected to see a good supply of property coming on to the market this year, especially as the banks and their customers will be committed to disposing of assets in order to reduce gearing.

He added: “Increasingly, we will see the sale of some ‘trophy’ assets, where the value is viewed as disproportionate to the commercial return.

“Already in the public house sector, Enterprise Inns has outlined its strategy to offload the best 100 pubs in its estate this year.

“We may also see new investors emerging among the graduates who face the fiercest competition for employment we’ve seen for some time.

“Funded by ‘the bank of mum and dad’, these new investors may use the opportunities, and the filial funding, to both create and purchase businesses and develop them with innovation and flair to appeal to their own generation of connected customers.”

Mr Rugg said family and friends should be able to keep attractive tax reliefs through the recently announced Seed Enterprise Investment Scheme.

Mr Rugg said in his introduction to the report: “Emerging investors, fresh ideas and new businesses should be encouraged more than ever as we continue to face up to the economic uncertainty.”

Christie & Co’s Leeds-based valuation services team carried out 190 valuations in 2011, which was one less than the number carried out the year before.

In 2011, the Leeds team sold 73 properties with a total value of just under £21m. The year before, it had sold 70 properties with a total value around £20m.

The biggest activity was in the pubs sector, where 49 properties were sold by the Yorkshire-based team last year, which was three more than the total sold during 2010.

David Lee, who manages the Leeds office of Christie & Co, detected encouraging signs for the pub industry.

He said: “Sixty four per cent of the pubs Christie & Co sold in 2011 were sold for use as a pub. This may be a surprising statistic to many.

“In the North of England in 2011 Christie & Co sold 81 pubs and restaurants, hopefully demonstrating the pub sector is far from dead.”

Mr Lee said there had been consolidation in the Yorkshire care home sector last year.

Some care home operators were concerned about the varying levels of fees charged by local councils, Mr Lee added.

He added: “The general business market remained fairly robust although lack of funding from banks was an issue, and most buyers either needed a lot of experience to buy a business or needed to be a cash purchaser.”

According to Christie & Co, there will be continued private equity interest in the managed house sector and emerging interest in the tenanted sector.

Deals completed by Christie & Co last year included the sale of Solberge Hall Hotel in Northallerton.

The hotel, which is a popular wedding venue, was sold on behalf of administrators off an asking price of £2m.

Other Yorkshire deals included the sale of the Old Scalby Mills in Scarborough. It was snapped up off an asking price of £365,000.

Nationally, 25 per cent of businesses sold by Christie & Co in 2011 had a distressed background. Simon Hughes, the UK managing director, said he expected banks to continue driving transactional activity over the next few months.

Jeremy Hill, the company’s director and head of hotels, added: “The market dynamic in the hotel sector changed quarter-by-quarter through 2011 – from hope and increased activity early in the year to uncertainty and confusion by the year-end. Significant deals did take place in a transactional market dominated by distress across Europe, while London again led trading performance.

“The year to come could provide a windfall for cash buyers in an increasingly ‘come-and-buy-me’ market place in which the availability of cash in a debt-scarce environment will again be the most crucial influencing fac- tor.”