The UK’s largest pub owner, Enterprise Inns, has announced it has agreed to sell a bundle of 22 sites, as it confirms plans to evolve the business away from being 'a predominantly leased and tenanted operation' are on-track.
Announcing its interim results for the six months ended 31 March 2016, the company said its strategic plan to dispose of a number of sites, increase the number of managed pubs in its estate, and set up a commercial property rental arm, was delivering in line with expectations.
However, in an apparent nod to the impact of the impending new pubs code, it announced a number of new measures.
A new tied deal for licensees, the Partnership Tenancy Plus (PTP), intends to reduce property-related obligations for publicans, with Enterprise agreeing to match any capital investment made 'where appropriate'. The new model may be seen as a sweetener for licensees considering moving to a free-of-tie agreement under the new pub code rules, set to be introduced shortly.
The PTP is initially being offered to 50 new lets during the second half of the financial year. Enterprise will then determine its 'attractiveness' to licensees before extending its availability across the business.
As of 31 March 2016, the company had 4,669 leased and tenanted pubs, with like-for-like income up 1.8% for the six-month period.
Simon Townsend, chief executive officer said: 'We are continuing to make good progress. Our leased and tenanted business is maintaining its growth momentum while the rapid expansion of our managed operations and commercial property portfolio is on track and delivering results in line with our expectations.
'We are confident that the execution of our strategy is demonstrating a clear path to maximising long term shareholder value and our returns-driven approach to allocating excess cash will deliver near term benefits to all our stakeholders.'
Enterprise said its target of building a managed house business of between 750 and 850 pubs by 2020 remains deliverable. The total number of managed pubs trading as of 17 May 2016 stands at 75 with 21 trading under its Bermondsey pubs operation, 50 under its Craft Union brand and four within Enterprise Managed Investments.
It said it expects its 'rapidly expanding' commercial property arm – mostly made up of free-of-tie pubs – to increase from 264 properties to 300 by the end of September, and to over 450 by 30 September 2017. The division is currently achieving an average annualised rental income of £59,000 per site.
However, further sell-offs are likely as it confirmed growing its commercial portfolio is 'not [its] primary objective', saying it would 'constantly assess opportunities to crystallise and capture value from this estate'. The latest deal – made up of 17 pubs and 5 convenience stores from its commercial division – is due to complete on 7 June.
The company has also appointed Julia Poulson, currently property and business development director for Domino’s Pizza Group, as group property director, starting in August.