The challenge for Enterprise Inns is to ensure 90% of the estate is let on substantive leases, which is the historical level, finance director David George has told a Numis Securities, writes Paul Charity.
The current figure is 82% of pubs let on substantive leases — 6,128 pubs — with the remainder, 1,271 pubs, let on non-substantive leases.
George said between 400 and 500 pubs would be sold this year — he said that market conditions had meant eight or nine years of disposals were happening in three or four years.
He stressed the quality of the Enterprise estate — “overall the best quality tenanted and leased estate” — with 1,200 pubs worth more than £1m and 60% of the estate worth between £500,000 and £1m.
“In five, ten, 15 years’ time, the vast majority of our pubs will still be trading as pubs,” he said.
The average Enterprise pub still produces “profit cake” in excess of £100,000 with Enterprise earning £65,000 and licensees earning the remainder. George stressed that the Enterprise business model was still evolving with a new lease agreement planned offering wholesale terms and greater control over the assignment process to ensure incoming licensees have proper business plans.
