Saturday, May 18, 2013

Kings Arms Bath

Well found Nick Cooper.

This is a great example of the Great British Pubco Scam at work. How about making a guess- there's no F&F. What does that mean?

The ingoings are £20K. What for I wonder?

Regional Manager's Review:
"The Kings Arms is a quality business but it has not been fully utilised over recent years. The pub offers plenty of potential to reposition itself with good food, cask ales and letting rooms. Currently, there are no F&F in the pub and therefore the new Publican would need to have funding available to replenish the property."
... Carol , Regional Manager

"Introductory rent: £18K / £346/week"

With a lot of "Key features" such as: Private Accommodation / Town / City Centre / Trade Kitchen / Letting Rooms / Beer Garden / Cask Ale Pub / Games / Live Music

The only substantive 'KEY features' relevant to this pub's future are that the building hasn't crumbled into the ground it stands on in a town centre. Everything else are dependent on the new lessees investing heavily in their future business and in Enterprise Inns' building.

Why are there are no F&F? Because the previous tenant went bust due to unsustainable rent for such a run down pub and wholesale beer prices that are DOUBLE what they are on the open market. They couldn't put a margin on their base costs and have retail prices customers would wear for drinking in a chronically run down dilapidated pub. Every closed pub tells a story. It's not too far removed a notion to assume the tenant either removed and sold all the F&F on the way out, after a long distressed and antagonistic relationship with the freeholder or destroyed everything so the pub couldn't be easily re-let by Enterprise.

That is why: There is no 'business' here whatsoever - let alone ''quality business' which is why: 'therefore the new Publican would have to have funding available to replenish the property'.

Without seeing this pub I'd also guarantee it needs all services to be renewed from the cellar up; minimum refurb cost £250K.

Low cost entry into running your own business. On behalf of Ted Tuppen and Simon Townsend's pay package and bondholders' ever diminishing but still very attractive yields:

To be brief: Enterprise hope to let the property to people with enough cash to make inroads into the appalling dilapidation; to get it trading again - on an initially low 'introductory' rent (though in reality spending a penny on this building is an investment in a financially terminal liability) - which Enterprise will aggressively press to increase exponentially to their own benefit ("Our vision for this pub is a business capable of sustaining a rent of £29,000 per annum." - no guarantees of future rent expectations warranted etc) - by rentalising the tenants' capital investment - and any work left not done to the premises Enterprise will press for the tenant to make good and repair after a dilapidations survey under their fully repairing and insuring lease.

Another bunch of lessees fleeced and robbed by the 'tied lease business model' - the tenants "do not understand" as Ted Tuppen might say- job done. Spot on.- job done. Spot on.

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