2,300 Punch freehold for sale to tenants
A total of 2,300 Punch licensees will be told by Punch Taverns this month that the company is open to offers from them for their freehold.
The pubs are all in Punch's turnaround division, where the company does not believe the sites can generate enough income for themselves and licensees over the long term. Punch has already told City analysts it wants to sell the 2,300 pubs at the rate of 500 a year. But the rate of sale could increase if licensees take up the offer to acquire their freeholds in large numbers.
Punch will also look at other routes to selling the pubs, such as in blocks to investors and appointing property agents. But it looks as if licensees are likely to have a window of three or four months during which they will be able to table offers before other sales routes are explored.
Punch will not be providing licensees with an asking price, meaning licensees will have to use their knowledge of their own businesses, including bar-relage, to work out a sensible offer for their freehold.
In other Punch-leased disposals, licensees have bought around 10% of available pubs. The percentage of licensees buying their pubs in this tranche is expected to be higher, not least because the pubs are higher quality and therefore not expected to be acquired for alternative use to the same extent.
Sustainable profit
Boss of Punch leaseholds Roger Whiteside, below, said: "These 2,300 pubs in our turnaround division won't sustain enough profit for us and our partners over the long term.
"We've already received letters from licensees saying 'We're interested (in buying)'."
Punch and its managed division Spirit are to de-merge at the end of the summer to become two separate listed companies. But Punch and Spirit will start to operate as such in day-to-day terms from 4 July — dubbed 'Independence Day' internally.
Punch leased will focus on just under 3,000 of the highest quality leased pubs, where there are only 169 vacancies at the moment.
Whiteside added: "This is the final part of our turnaround plan. We've taken a more prudent look at the outlook for wet-led pubs (and placed 2,300 pubs in the 'for sale' turnaround division).
"Those pubs in our core division undoubtedly have a future, with 2% to 3% EBITDA growth per year.
"The core estate is the best quality estate in the UK and we will focus investment on these properties and drive their performance."
Punch leased is completing an internal re-organisation — the pubs-to-business relationship manager (BRM) ratio in the core division is 45, while it is 65 pubs per BRM in the turnaround.
