UK pubs group Enterprise Inns sees REIT go-ahead

UK-based Enterprise Inns, the operator of 7,700 tenanted pubs, on Friday unveiled corporate restructuring proposals it said should facilitate its plans to convert to tax-efficient real estate investment trust (REIT) status. Should Enterprise Inns convert into a REIT, it would be the first pub group to do so and would be expected to pave the way for the creation of other REITs involved with the sector.

As part of refinancing plans to raise an additional £750 mln (EUR 948 mln) in debt, Enterprise Pubs said a new operating company would be created to take an intermediate lease on arm’s lengths terms over the freehold pub estate from Unique Pub Properties. Unique Pub Properties represents about 40% of its pub portfolio. ‘We believe the revised corporate structure contemplated as part of the proposed refinancing exercise would enhance the group’s ability to convert,’ Enterprise Inns said in a pre-close statement. As Enterprise Pubs lets all of its pubs to third parties, it said it believed it could convert to REITstatus without demerging.

Enterprise Inns has been in talks with tax authorities to convince them of its eligibility for REIT status. The pub group said its advisers were confident the proposed restructuring should allow it to convert to a REIT.