The UK's largest pub company, Enterprise Inns, has made "good progress" in the first half of 2016 and is primed to sell 22 of its commercial sites in a £20m deal by mid-June.
Enterprise Inn's revenues nudged up by £3m in the first half of 2016, from £302m this time last year to £305m.
Profit before tax and exceptional items remained flat at £57m, while earnings per share edged up marginally to 9.2p, from 9.0p in the same period of last year.
The company is set to sell a portfolio of 22 sites, including 17 pubs and five convenience stores, in a £20m deal that will go through in mid-June, as it seeks to "crystallise and capture value" from its huge estate.
The company is looking to operate around 300 commercial properties by September this year and add a further third again to "in excess of 450" pubs by September 2017.
Net like-for-like income at the firm's leased and tenanted business was up 1.8 per cent, while net like-for-like income in the commercial property branch was up 5.2 per cent. Enterprise now have 75 managed pubs, with 21 under its Bermondsey operation, 50 in the Craft Union segment and four within Enterprise Managed Investments.
Why it's interesting
Enterprise, which currently has investments in around 5,000 pubs in the UK, has a three-pronged strategy involving its leased and tenanted, managed and commercial property arms.
Over the next five years, the business aims to have sold around 1,000 - or 20 per cent - of its pubs and upped its managed portfolio (in which it directly runs and manages pubs) to 800 properties.
The company recently announced it would launch new pubs around London as part of a new venture called Frontier Pubs, in a "managed expert agreement" with Food & Fuel, a London-based operator of gastropubs and cafe bars.
It did not say how many pubs it plans to open as part of the venture.
What Enterprise Inns said
Chief Executive Simon Townsend said:
We are continuing to make good progress. Our leased and tenanted business is maintaining its growth momentum while the rapid expansion of our managed operations and commercial property portfolio is on track and delivering results in line with our expectations.
We are confident that the execution of our strategy is demonstrating a clear path to maximising long-term shareholder value and our returns driven approach to allocating excess cash will deliver near-term benefits to all our stakeholders.
What others said
"The new commercial property division, with 264 properties (2020 target 1,000), is expanding fast and, professionally run, is one of the most promising areas - with 5.2 per cent net income growth and a gross yield of 8.6 per cent, it has the clear opportunity to realise significant cash and gains," Paul Hickman, analyst at Edison Investment Research, said.
"Uncertainty remains over the upcoming MRO (market rent only) legislation expected later this year giving tenants the opportunity to potentially exit the beer tie at a rate of some 600 pa. Enterprise, through its active asset development programme, is in a good position to manage this."