H&W hands tenanted division an £8m kitty

by The PMA Team

Dorset brewer and retailer Hall & Woodhouse is to expand its tenanted division with £8m set aside to buy pubs this year.

The move follows the company's decision in January to sell the Panda drink brand and Popzone range to Vimto for £5.5m. H&W, which currently has 192 tenanted pubs compared to 177 a year ago, has already bought five pubs in the past eight months, with a further four in the pipeline.

Tenanted director Andrew Younger said: "This year we are determined to invest wisely in our pub business. There's no reason why we shouldn't have a further £8m to spend on buying pubs next year. The business is going to be lighter on its feet and is going to produce better cash flow."

H&W has bought a new pub west of Torquay as part of a fresh willingness to look at the south-west for acquisitions. Younger also revealed that the company had invested £1m in buying one particular pub for conversion to tenancy.

"If a pub is not going to make a good living for a tenant we don't want to buy it," he said.

"The important thing is that we are buying a good, sustainable business. In addition, we tend to earmark some funds to develop a pub once we've bought it. Every pub we buy or bring across from managed has to have the capability of taking £5,000 a week."

Younger added that the company was finding it possible to buy freehold pubs despite claims that the market is over-priced.

"All the pubs we've bought we've acquired for below their market price, partly because we're pretty agile and quick off the mark."

The new pro-active acquisition policy is in contrast to the period when Younger, a former director of Punch, first joined the company ­ it bought just four pubs in 2002 and three in 2003. In the past year, H&W has also transferred 10 pubs from managed to tenanted.

"All of those are taking at least £8,000 a week," said Younger. The past 12 months has also seen £2m invested in pub refurbishments. For the coming year, Younger believes around £3.7m will be spent on 18 major development schemes.