Globe Pub Company, the tenanted operator of 429 pubs owned by Robert Tchenguiz, has reported a sharp rise in closed pubs as a result of the “tough operating environment”, writes Paul Charity. The company, which has defaulted on a key covenant attached to its securitisation, saw closed pub numbers rise to 32 in its latest quarter to the end of February 2009, up from 19 previously. Globe also granted a further 29 rental concessions during the period, bringing the total number to 50. The company was also impacted by the administration of Glasshouse, which prompted a £900,000 bad debt expense – Glasshouse ran nine Globe pubs. A statement by Globe said: “The estate profile declined markedly during the quarter with the number of pubs on substantive leases decreasing from 283 to 264. “In contrast, the number of one-year agreements continue to rise, up by nine on the last quarter, reflective of undercapitalised operators.” Of the number of closed pubs, the company added: “Whilst a number can be explained by gaining vacant possession to assist disposal there is a growing element of operators returning keys. “We are clearly witness to the effects of the tough economic environment with potential operators finding it increasingly difficult to access capital through traditional routes of bank funding and/or equity release.” Year-on-year drinks revenue was down 9% in the quarter and 8% in the year-to-date, a “reflection of the further decline in consumer confidence in recent months”. Globe’s rent roll decreased to £12.3m in the quarter, a decrease of £300,000 of the quarter before. The company made three disposals during the quarter with gross proceeds of £1.7m and net proceeds of £1.1m after allowing for allocated debt. Globe has solicitors instructed on eight pubs aiming to generate £3.2m of gross proceeds. The ratio of ebitda to debt service for the two financial quarters ended 28 February 2009 is 1.08 versus a covenant level of 1.25.