Saturday, April 28, 2012


in repsonse to Steve Wilson:
"Asked various BDMs across the last 4 & 1/2 years of the possibility of my pub freehold coming up for sale. All said zero percent chance. Recently got a letter saying S&NPC had purchased the freehold from RBS! Go figure..."

(forgive me if the dates here are a bit out - it's all a bit hazy to me now)

RBS wouldn't have sold your pub to you Steve Wilson - it was owned by West Register 3 - a holding arm of RBS - and was bought from S&N in 1998/2000 along with hundreds of other freeholds in an essentially pointless deal to anyone other than asset stripping bean-pushers that was supposed to make money for everyone by simply milking the tenants of the estate without investing anything back in - by abusing the terms of all those tied leases the tenants were hoisted by.

S&N continued to 'manage' the estate, as you so very well know, under the tie agreement set out in the leases - 'on behalf of the freeholder' while the freeholder's asset value would increase over time. Effectively the liabilities and assets were taken over by RBS (protected, on paper, notionally by the fact that the tenants all have fully repairing and insuring responsibilities over every single pub in the estate) while S&NPC became a 'Service Company' which ensured the tenants met all their lease obligations, paid ever increasing upward only rents and beer supply prices so the suits could get their annual bonuses for doing absolutely ZILCH other than pretending to be bullies in an unsupervised playground...

Well, we all know what happened to the asset value of buildings, and pubs especially, in the next ten years don't we?

And RBS, when it became the biggest embarrassment to the UK and passed into public ownership with unbelievable toxic debts that outstripped the liabilities of entire nation states on its books, decided that it would get rid of its pubs, along with £billions of other 'distressed assets', to begin to get its balance sheet back to some form of rational stability.

RBS announced it wanted to sell the whole S&N 'managed' pub estate back in 2009/10 - and it went on the market through Sapient Corporate Finance - a bunch of those useless public school educated besuited skivvies who make ridiculous amounts of money out of nothing by bigging up the advantages to pension companies and large institutional investors investing in changing markets, weird financial transactions and massive property deals. It was trumpeted as the largest sale of pub assets since the glory days when Punch and Enterprise were running around in a shopping spree expanding their estates by paying over the odds for thousands of ever more dilapidated pubs using bondholders' money saying 'things can only get better' while, actually, setting up the scene for the massive, entirely predictable, collapse of the pub sector we've seen in the last five years.

RBS paid S&N something like £650K per freehold back then and Sapient said they were looking for something like the same per pub - ten years later - touting around the 'robust nature of the estate' and saying there's still a lot of profit to be squeezed (out of the tenants) and such BARF when the sale was first announced. It all went quiet then - this was around the time that Punch said they wanted to sell 2000 freeholds too - and the market was hemmoraging pub freeholds being dropped by all the other failing tied estates - and no one made offers to buy the S&N portfolio.

You can imagine Heineken having heebie jeebies about all this - Heineken bought a big UK brewer that had a silly rump of a property arm that was buying its own beer from it at knockdown prices while selling it on to its own tenants at three times the price it should be - which created the situation where the estate sold Heineken's own beers at prices which made punters abandon S&N pubs for better value places - anywhere else where the beer was cheaper and where, ironically, Heineken was making more money by selling their beer to other estates at free of tie prices.


Eventually, when the DORKS at RBS and S&NPC and Sapient Copulate Finance eventually noticed that the pub property market was saturated and that no one is buying 1000 pubs at a time any more, Heineken stepped in to keep egg off everyone's face by buying the estate back from RBS at half the price it paid for the pubs a decade before.

Heineken kind of got a deal where it got to own a load of pubs it was already supplying beer to, RBS shifted a massive, shitty liability off its balance sheet, S&NPC managed to continue employing its staff - the ones who have proved remarkably consistently over a twenty year period that they cannot organise a pissup in a brewery - and the tenants of the estate continue in the same lappy dappy way as they always have done - to pay for the every last bit of the whole machinery and bonus scales and dividends to shareholders and scams they unknowingly signed up to with their tied lease agreements - you know Steve Wilson, the bits that aren't in the small print or written anywhere else.

The only way you could have got your freehold would have been to make an offer they could not refuse - and that would be a figure roughly 130% of their 'book value' which, in itself is a figure roughly double the true 'open market value' of your pub.

Done deal - it's a stitch up. And you're just one of the stitches keeping their profits on the go.

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