Analyst: Punch to see some First Quench leases return

Punch Taverns could also be affected by the administration of First Quench with a number of leasehold off-licences bouncing back to it, a City analyst has warned.

The ownership of this business was originally split between Whitbread and Allied Domecq.

The latter sold its stake to Punch Taverns when it exited pubs.

The business was sold on to private equity, but the reversionary risk is split equally between Whitbread  and Punch Taverns.

There were 1,500 properties when First Quench was sold, of which 800 were leases, mostly short term duration.

A City analyst said: "Of these, around 600 have since gone and less than 200 remain.

"A number of these will continue to trade with new owners, so we do not expect a major problem for either Punch or Whitbread. Whitbread made a circa £20m provision on the reversionary leases it got back when Robert Tchenguiz put the old Laurel Pub Group into pre-pack administration 18 months ago.

"We would see this as the worst case, though final details are still being worked out by KPMG.

"For Punch Taverns, the reversionary leases issue is a bit more of a problem, in that 10% of its managed pub estate is currently reversionary leases.

"It is a problem for the managed estate that could increase by circa 50% this year with other sites coming back from Regent Inns and Tattersall Castle group.

"The sites from First Quench will be no strangers to the head of the Punch tenanted and leased estate, Roger Whiteside — he was formerly the Threshers Group chief executive, prior to joining Punch.

"Gregg's the bakers, (where Whiteside is a non executive) is allegedly interested in around 100 sites from First Quench - which is nice!"