Kong property company CKA’s
purchase of brewer and pub operator Greene King is purely a move to take
ownership of its cheap property portfolio, an investigation in The Guardian
CKA is part of the business empire of Li Ka-shing, said to be the world’s 30th richest individual, and has purchased Greene King for £2.7bn. The newspaper suggests that the acquisition is another example – if a more covert one – of overseas investors taking advantage of Brexit-induced weakness in the UK property market to buy up assets at a discount.
Larry Elliott of The
Guardian explains: “It’s not hard to see why Greene King looked attractive. CKA
is a property company and Greene King has an estate which has a current market
value of £4.6bn against a book value of £3.6bn.
“Many of these properties
are in desirable parts of the country and would be worth more if converted into
homes than they would be if they stayed as pubs. It is in CKA’s interests at
present to say that it is impressed by Greene King’s ability to generate strong
cashflow but any Greene King regular who thinks this deal will not lead to pub
closures has probably had one too many.”
The pub business has a reputation for being unprofitable. However, this deal suggests that the property side isn’t necessarily so. It might remind would-be property moguls everywhere that the best way to make money in property is not always to buy property as such.