Pubco refuses rent cuts
The firm that manages Wellington Pub Company's free-of-tie estate says it doesn't expect to offer any rent reductions to licensees.
In a letter to host Ian Collins, Criterion Asset Management operations director Peter Gullis said: "My client [Wellington] has not given any authority to implement rent reductions and my understanding is that they will not be giving any authority to do so."
Collins, of the Nag's Head in Thornfalcon, Somerset, asked for a rent reduction after surveyor David Morgan, boss of Cookseys DMP, calculated that it should reduce from £41,000 to £27,000. Annual turnover is around £210,000.
"They just flatly refused to discuss it," said Collins. "It's their policy across the board not to reduce rents. They won't even do it on a short-term basis.
"Wellington's view is that they're not like Punch and Enterprise, which get revenue from the beer. Wellington's only income is through rent."
Collins said he was unable to assign his lease because the people interested wanted a rent reduction.
He added: "It's very frustrating. We would think in this climate they would help out — we are all in the same boat." Gullis declined to comment.
The news comes as pubcos with tied estates are granting rent concessions and increasing discounts during the downturn. For example, this week Punch said it continues to spend £1.6m a month — double last year — on tenant support in the form of rent concessions and extra discounts.
Trade consultant Phil Dixon said: "Wellington should act as a reality check for some licensees about what life would be like under a free-of-tie property company."
David Morgan accused Wellington, which has around 850 free-of-tie leased pubs, of "not facing reality". But he stressed: "That isn't to do with the tie. It's to do with poor estate management. It's to do with over-renting in a number of pubs."
Ian Collins also accused Wellington of continuing to operate controversial upward-only rent reviews.
Six tenanted operators — Punch, Enterprise, Admiral, Marston's, Greene King and Shepherd Neame — said they removed upward-only rent clauses in evidence to the Business and Enterprise Committee probe into pubcos. The 2004 Trade and Industry Select Committee report into pubcos called for the clauses to be removed from leases.
