S&N to raise £2bn from property deal

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The Independent Online

Scottish & Newcastle is looking to raise up to £2bn from a property deal on its 1,450-strong pub estate. Britain's biggest brewer, which owns the John Smith's and Kronenbourg brands, intends to keep the pubs but believes it may not make economic sense to own the freeholds.

There has been intense City speculation that S&N may dispose of its managed pub estate in order to concentrate on its brewing interests. In an interview with The Independent Brian Stewart, the group's chairman, was asked if he would keep them and said: "Yes, I think so. It depends on values and performance. But I'm not sure we should necessarily own all the property." Asked when a deal might be struck he said: "Possibly this year."

The deal would follow the sale of the freeholds of S&N's 1,100-strong tenanted pub estate to Royal Bank of Scotland last year. All options are being considered for the managed estate including a sale-and- leaseback deal and securitisation of the pubs' cashflow. The group already has a property joint venture with British Land which holds the freeholds of 200 S&N pubs.

S&N's managed estate includes brands such as Chef & Brewer, John Barras, T&J Bernard and Premier Lodge. S&N's interim results in December showed that the group's managed pub estate recorded profits of £106m on sales of £484m. Like-for-like sales were up by 1.9 per cent on the same period in the previous year.

The sale of the freehold property interests may go some way to pacifying the City where many analysts have been pushing S&N to sell its pubs and concentrate on its beer interests. These include Hartwall, the Finnish company S&N bid £1.2bn for in February.

Some analysts believe Mr Stewart holds a sentimental attachment to the pubs which may be sold when he retires. However, Mr Stewart says the whole board is behind the decision to remain in retailing as well as brewing.

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