Thursday, April 15, 2010

S&NPC invests £10m in estate

On the face of it this is a radical departure from S&N's previous vision of how cap ex is planned. And considering the pubco model rule of thumb: 'Never Spend Unless the Lessee Pays Back Through the Nose. Twice' there is not enough detail in the article to be able to comment decisively enough but, as with everything to do with all pubco 'initiatives' for their estates scepticism has to rule the day:

1) WHERE is the money coming from and how is it being recouped? Tenants previously have had any cap ex slapped on their rent at around 15%+ return on investment.

2) WHO is controlling costs? Pubco project managers have an awful reputation for presiding over grossly over priced development projects (because the client who always pays) and pubco cap ex projects cost 30% over open market because the tender process is designed to make everyone money and the tenant will pay.

3) Is this investment in S&NPC's OWN estate or on behalf of the considerable number outfits it 'manages' pubs for, like RBS for example?

4) £60K cap ex per pub is barely going to get the basic services up to scratch in less than 10% of a badly dilapidated estate.

Otherwise. Great news. I look forward to them getting in touch over a cap ex project on pub. It certainly needs it. A new gas main for a start.

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