Ritblat hops into Allied pubs

Investment Column

It never does to underestimate John Ritblat, the mercurial chairman of both property giant British Land and one of the sector's tiddlers, Conrad Ritblat Sinclair Goldsmith. He has survived a string of slumps and thrived in booms by catching the market on the hop.

Even by his standards, the latest move by CRSG, the acquisition of 109 pubs from Allied Domecq, is an interesting step by a surveyor into the nitty-gritty of owning a portfolio rather than simply advising others on how to buy, sell or manage it.

There's nothing wrong with the numbers involved, which show the company receiving annual income of pounds 1.33m, a 12.5 per cent return on the pounds 10.6m consideration. That is a good return by any measure and reflects Allied's desire to wash its hands of, by group standards, an insignificant portfolio it simply didn't have the time or inclination to manage.

Allied was also ready to take such a low price because the terms of the deal will see it share in any uplift in value Conrad can squeeze out of getting change of use consents, from pubs to residential for example. The drinks group is essentially saying to its property adviser: "Have this lot on the cheap, make a turn and we'll share the proceeds."

A bit of entrepreneurial flair is a rare enough thing in the property sector at the moment, characterised as it is by inactivity and an almost total lack of creativity. It is even more so in the world of surveying, an industry that has singularly failed to cut its cloth to match stagnant trading conditions or come up with any innovative ideas to generate business.

This is a clever deal which makes sense for both parties and it is little wonder it came from a company that also managed to raise profits during the year to May from pounds 1.22m to pounds 1.35m despite dire market conditions.

It is also a welcome respite for investors, who have seen the value of their shares in Conrad Ritblat tumble from 52.5p to 24p over the past 18 months. It will come as little comfort, but that is actually a pretty good performance by sector standards - rival Herring Baker Harris, in which Conrad has a 10 per cent stake, has fallen from 78p to 15.5p over the same period.

Backing John Ritblat normally pays off in the long run, but this could be a long wait. Avoid the whole sector.