Finance house offers funding to buy pub freeholds
A corporate finance specialist is offering to provide finance to multiple lessees who want to buy their freeholds.
Downing Corporate Finance has provided £6.6m of finance to three multiple lessees to buy Punch freeholds in the past three weeks.
The money has been made available through Downing-operated Venture Capital Trusts and Enterprise Investment Schemes. Downing provided £4.2m to allow Antic, the operator of 12 pubs in South London led by Anthony Thomas, to buy three Punch freeholds it leased.
The £4.2m investment was provided by a collection of VCTs operated by Downing. The deal went from initial meeting to completion in two weeks. The finance house also provided £1.5m to allow Pub People Company, led by Kevin Sammons, to buy two Punch pubs it leased — the company had been unable to find suitable bank lending.
The deal went from initial meeting to completion within six weeks. Downing also provided £900,000 to allow Hoi Polloi Pub Company, which is owned by Peter Dalton, to buy The Horse and Jockey in Chorlton Green, Manchester from Punch Taverns, which it began leasing in December 2008. The pub was formerly a Spirit pub and underwent an extensive refurbishment in May 2009.
The pub was transformed from a low grade boozer to a quality community local pub/restaurant where food and wine sales now account for over 40% of the sales. The £900,000 was provided by a collection of Enterprise Investment Scheme funds operated by Downing.
The deal timetable from initial meeting to completion was five weeks. In addition, Downing VCTs have also provided The Close Imperial Pub Company a funding facility of £500,000 whilst it seeks to dispose of poorly-performing pubs.
A Downing spokesman said: "The general economic climate and more specifically conditions within the public house sector means that there are and will continue to be opportunities for tenants to acquire their freeholds and the funds that Downing operates are ideally positioned, given the continued shortage of available bank debt to small companies, to take advantage of these opportunities."
Downing Corporate Finance was established in 1986 and specialises in the structuring, promotion and management of tax efficient investment products. It has raised over £750 million, of which approximately £50 million is in respect of EIS schemes and more than £130 million is in respect of the Downing Protected VCTs.
Kevin Sammons, boss of Pub People, said: "We found Downing very considerate, flexible and decisive - they take a very practical and pragmatic approach to decisions."
