Millions of pounds lost in unpaid rent

By Nikkie Thatcher

- Last updated on GMT

Financial impact: a number of pub companies have outlined how much they have lost in unpaid rents amid the crisis
Financial impact: a number of pub companies have outlined how much they have lost in unpaid rents amid the crisis

Related tags: Tenanted + leased, Pubco + head office, Finance, Rent, Star pubs & bars, Jw lees, Robinsons, Greene king

At least £90m worth of rent has gone unpaid to pub companies due to the coronavirus pandemic over the past year.

In June last year, brewer and operator Robinsons estimated its rent support had tipped over £3m – an average of £12,500 per pub since the pandemic started.

This included cancelling pub rents on 16 March before recommencing payments from the first reopening date after the first lockdown on 4 July.

The tapered rent discounts were up to 90% for July, up to 60% in August, and 30% for September and October. This also meant pubs that did not receive a Government grant in this time paid less than those who did.

The group estimated over the period from July to October, this amounted to a further discount of at least 60%, rising marginally to 63% for the pubs that did not receive funding.

At present, this has meant Robinsons has lost out on £4.1m in unpaid rent – equalling £17,372 per pub.

The Morning Advertiser (MA) ​understands Suffolk-based pubco and brewer Greene King has lost £25m worth of rent amid the pandemic, which was mainly through the 90% rent concessions it had put in place at various times over the past 12 months.

These times included when tied tenants were under the strictest measures as part of the Government’s tier system.

The pub company first announced a 90% rent reduction before tapered support in the spring of last year (May).

Viable operation plan

Prior to the tier system, Stonegate Pub Company stated it had provided licensees in its leased and tenanted arm Ei Publican Partnerships financial support in excess of £42.5m.

Meanwhile, Star Pubs & Bars stated it has given its leased and tenanted estate more than £40m in rent concessions since last spring.

A spokesperson for Heineken’s pub arm said: “This year we have offered all of our core leased and tenanted pubs a 90% rent reduction for the weeks in which hospitality businesses are required to close across England, Scotland and Wales.

“This takes our total investment in rent reductions to more than £44m since last March. We are continuing to keep all our commercial support under constant review.

“Where necessary, we are working with each of our pubs on an individual basis to develop realistic, long-term repayment plans for any outstanding rent.

“Clearly we want as many of our pubs as possible to thrive and operate as viable businesses once Government restrictions are lifted.”

Brewer and operator JW Lees has charged its licensees zero rent for each day their pubs are forced to shut.

Managing director William Lees-Jones told The MA​: “All of the people shouting for we want to be free-of-tie and the tie is terrible have suddenly gone very quiet.

“It’s win win, you pay less rent but more for beer so we took the view that in the same way with commercial landlords if there’s no revenue there’s no ability to pay the rent apart from with grants and there’s other bills."

Rent breakdown

Lees-Jones added: “So when we look at our rent charge it’s probably 15% of our gross profits but actually the 85% which is running the pubs and wholesaling is far bigger so simplest thing to do is to cancel rent and help to navigate through the nightmare of all different local authorities grants

“I really feel for all those people with commercial landlords who defer the rent and even those people that are only charging 10% rent, residential element, lots of ours don’t live above the pub or run more than one so we thought the fairest thing to do was cancel the rent.

“It's hard to say [an exact figure] but if I look at Greater Manchester, we have been closed now for 183 days, that's more than six months in the year.

“On an annualised basis, we would collect more than 15% of our gross profits from rents. On a Greater Manchester equivalent, and Wales again is different, we are nudging between £700,000 and £800,000 so far.”

Lees-Jones went on to outline how any funds borrowed at the beginning of the pandemic will soon have to start being repaid.

“A lot of the early loans that were taken out in March are coming up for the time they have to start being repaid and how do you repay a loan when you haven't got any revenue and you've got everything going out?" he added. 

“On the one hand, it's encouraging to see Rooney Anand getting back into pubs and NewRiver saying there will be activity in the sector and JW Lees has got a strong balance sheet but there are lots of people, particularly small pub companies, entrepreneurs, people who have got a mixture of different arrangements with different head landlords.

“Landlords have in the main, been pretty unreasonable about this. [Rent] is the big untold story so as to speak and for me, the fact we have tied rents means we are in a position we can be more generous because there's a much more shared upside when we are trading.

“I do have a certain amount of sympathy if you've got someone who has borrowed a load of money to buy a load of pubs that are rented out, the only income stream they have got from rent, they can't afford to be quite so generous but you've got others who are multi-millionaires who don't quite take that point of view.”

Related topics: Property law

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