JD Wetherspoon’s efforts to sell pubs hampered by tough property market

Dozens of JD Wetherspoon pubs put up for sale in recent months are yet to find a buyer as nervousness over the impact of the cost of living crisis on the hospitality sector and turmoil in the commercial property market has put off potential suitors.

Wetherspoons announced it was selling 32 of its 800-plus venues in September as part of a long-term strategy to overhaul its estate, just days after former prime minister Liz Truss’s mini-budget led to a sharp rise in mortgage rates, sending shockwaves through the property market.

Of the 32 pubs advertised for sale at the time — 10 of which were freeholds and the rest leaseholds — 27 venues are yet to find a buyer. Wetherspoons has since put several more premises on the market, bringing the total up for sale to 35 venues.

Wetherspoons’s chief executive Tim Martin admitted the sale — the biggest in the pub chain’s recent history — had been affected in part by worsening economic conditions.

“Would we have done better in 2018? Yes, probably,” said Martin. “Some [of the sales] are slow but overall they are moving at a reasonable pace. It probably is a bit slower than in the middle of a property boom but we’ve sold a lot of pubs.”

The company has fetched nearly £3mn for the 10 pubs it sold since July, most of which have been offloaded to other rivals.

“It’s not really a time when publicans want to buy, renovate and open loads more pubs with all the costs of running them and the uncertain market conditions,” said a competitor, who looked at some of the Wetherspoons sites in London. The sales process is being overseen by real estate companies Savills and CBRE.

Wetherspoons said in a trading update on Wednesday that like-for-like sales were 17.8 per cent higher in the 12 weeks to January 22 than the same period a year ago, but 2 per cent down on pre-pandemic levels. The London-listed group’s share price fell 5.5 per cent to £4.50 in afternoon trading.

Martin stressed the pub sale was not part of an effort to raise money to ease cash flow or pay down Wetherspoons’s £745mn debt, and instead was part of a “normal churning” of premises. “The ones we’ve sold are mostly within a mile of another pub,” he said.

An agent close to the sale process said offloading the pubs was “tough” because of concerns over a consumer downturn hurting pub sales and banks’ increased cautiousness about lending, but stressed “buyers are still coming through for these properties”.

“I actually think the marketing has gone pretty well so far given what you hear about the market,” they said, adding that freehold sales can typically take up to six months.

“Quite a lot of [the venues advertised] are pubs where the leases are coming to an end and we’ve put them on the market anyway to see if anyone wants them,” added Martin.