Lynton and Barnstaple - Operations and Development

What did the alternative L&B station embedded in a pub go for?

 

Don't forget the house is included, as well as some key land.

 

Which one was that then ????

 

There’s no dispute that Blackmoor Gate has value. The going rate for a pub in the area is about £0.5M and the house is worth around the same. The land and other assets add a few hundred thousand, so all in all a figure of £1.2 ish is not disputed.

It has been commented that paying over the odds a bit to secure something of particular value to a
Trust is also fine.

It isn’t what the money was spent upon, but the way it was spent and the way it was raised that create a significant issue if the business fails, and the Trust has huge vested interest in ensuring it doesn’t, whilst being legally unable to help. There were other ways of structuring all this that could have achieved the same outcome one with fewer of the risks

 

That's interesting, myself and others were led to believe the key land was a separate deal to the pub! Done by the trust.
The truth of the matter is there's only a handful of people who know exactly how this deal was put together and they ain't gunna say anything, the only time the members will know is if it all goes t!ts up

 

The Blackmoor Company has announced that the Trust will rent the House from it from April 2025 to provide a mix of accommodation and Museum space, which will affect the value. As already mentioned the Blackmoor accounts (unless modified as a result of audit or valuation) values its assets at the cost of £1.9m and with depreciation of £21,400 pa will stay that way.

 

As you say, few people know exactly.

But my point was to mitigate the regular criticism of 'buying a pub'. Blackmoor Gate is key to the railway. It's a station, quite a big site, with a house built on it that is part of the deal. Like Bratton Fleming the station building has been altered and added to over time, and today the original building is a pub. So whatever price was paid, it's for the whole package.

So now you own a business that's on the site. What do you do? Tear down the extra bits, or try and make a go of it? It seemed quite busy, when I went there last Sunday. I had lunch with the wife and a nice pint, and sat outside and looked out over the lovely scenery. I became a shareholder, even sent a top up, and don't regret it. I'm glad they got it.

 

Yea, but the Trust doesn’t own the pub or the site.

 

I know. My point was there is a value, and it is undisputed that LBBC overpaid, which may not be an issue for the Trust as they would value the core building differently to any other buyer. However, the Trust doesn’t own the freehold, the LBBC does. That may have seemed like a good idea at the time, but I am far from convinced it is.

 

Indeed. As Breva less cryptically puts it, it's an asset that will need to be dealt with if the L&B is to go anywhere.

The location of the freehold is potentially concerning, but if it allows the asset to be charged for example, it may be a good idea. Also if everything does go south, owning the freehold of the pub may not be in the L&B's interest. Then there's charity status/tax/rates etc that could mean it is a good idea for the L&B not to own the freehold of a pub (or even prohibited). It is very opaque, but I can see reasons.

 

On what basis do you "know" they overpaid? What metric are you measuring it on?

 

'Overpayment' is not really measurable. My surveyor said that I 'overpaid' for my house when I bought it. But there are no others like it to compare in my area. Indeed, new houses in my general area are now offered at 20 - 40% more.

What other stations converted to a pub, with land and an extra house, are there within 50 miles?

 

The overpayment is measurable based on business metrics and expected land prices. That overpayment may or may not be justified given the wider purposes of the Trust - but that then brings in the whole set of difficult questions around the structure of the purchase, the cash tied up in a pub business, and the burdens the the price of the OSI places on a not especially remunerative business.

It's really hard to assess whether the OSI is an asset or a liability to the wider L&B project.

 

The Trust have control of the LBB Co., which does own the site, via their majority shareholdings. However that control could be put at risk if the LBBC failed.

 

Property prices in the area are easily available as are pub business sale prices. The price paid by LBBC is a matter of record. There is an element of judgement of course in the valuation of this particular property, but all the indicators are that more was paid than might be expected. That a value be placed on the heritage angle is potentially acceptable, but the Trust didn’t secure the heritage in the way in which it went about buying the property through a separate entity.

 

That’s my point

 

How much did LBBC actually pay for the site, pub and house? IRC it was going to be £1.500.000, and when they managed to assemble the funds, the vendors wanted more. Typical! Perhaps in the intervening time the vendors realised (or someone whispered in their ear) that the L&B wanted that site, and none other. Ransom strip springs to mind

 

Had that not been patently obvious all along ?

 

It is in the books at £1.9m

 

And your comparator for a pub with an L&B station incorporated into it is?

Overpayment only works where there are other choices that are substitutable for that item.