Pub group Enterprise Inns said today that it would undertake a restructure of its operating and property business ahead of a possible REIT conversion.

The company said it would look to adopt an ‘op-co/prop-co’ structure and was waiting to hear from Revenue and Customs about whether it would be allowed to convert to a REIT.

US model

When REIT legislation was introduced in January 2007 it was widely predicted that, following the pattern of the US, asset rich operating companies such as pub and hotel groups would convert to REITs.

But uncertainty over the legislation and financial market turmoil mean that self-storage company Big Yellow is the only company whose core business is not property to convert.

Enterprise Inns said the restructure would allow it to refinance an existing securitisation and also raise new debt.

Swift response

On the REIT conversion it said: ‘Since October we have provided additional information to HMRC as requested and answered questions which they have raised.

‘In particular, we understand that there is one area upon which HMRC are obtaining legal advice which is the effect of the grant of the intermediate lease. Once they have received this advice, we hope that HMRC will be able to provide a swift response to the Code of Practice 10 submission.’

Shares in Enterprise rose 10% today after it reported that despite challenging trading conditions, earnings before interest, tax, depreciation and amortization had not deteriorated since January.