October 2010: Published Letter to Editor of Horticulture Week
Having read Plimsoll Publishing’s report on garden centre values, I disagree with a number of its findings.
The last couple of years have generally been good for garden centre trading. However this is not necessarily across the board. Larger centres in particular appear to have traded strongly. However, some smaller centres have, in our experience, struggled and I agree with Plimsoll’s findings that it will be difficult for those centres to recover lost ground.
Where I disagree with Plimsoll is its opinion of the effect this will have on garden centre values. To say they will be a third less than 12 months ago is inaccurate. There have been a couple of instances recently where garden centres have sold for significantly less than they would have achieved previously. For example Gilbert Evans advised the purchasers of both Wincanton and Towneley centres and we were able to acquire both at a significant discount. However, it must be noted that both of these garden centres were controlled by administrators. In such cases cash is king and discounts can be negotiated. However the majority of garden centre businesses have maintained their values, even those that are struggling. Providing the business remains sound and cash flow allows a controlled sale, then there has been no fundamental change in garden centre values.
The current banking situation is having an effect but we have seen no dramatic reductions in value. There is as strong a demand for garden centres as there has ever been, with requirements across the country. Banks are lending to the garden centre sector, particularly since most garden centres are Freehold and are therefore asset-backed. What has happened however is that people are no longer prepared to offer ‘ silly ‘ prices. Quoting prices have to be very sensible otherwise garden centres will remain available for significant periods of time. There are a number of examples of this at present. Over quoting does no good.
If someone wishes to sell and achieve full value for a garden centre, then the market today is as healthy as it has been for two or three years.
Mike Gilbert, Head of Garden Centre Division