Potential buyers signal interest in £400m deal for Ei Group properties

The UK’s largest owner and operator of pubs is preparing for a potential sale of its commercial property portfolio, in a deal which could be worth more than £400 million.

Ei Group – formerly known as Enterprise Inns – said it had received indications of “considerable interest” from potential buyers for the estate of more than 400 pubs.

The company is considering a disposal of all or part of the portfolio, which brings in annual rents of £29 million.

Analysts at Peel Hunt said a sale could attract real estate investment buyers and fetch around £400 million.

It comes as Ei Group’s managed division shows strong like-for-like sales growth of 7.1% in the year to the end of September.

The company has been focusing on expanding the number of pubs it manages by converting leased and tenanted sites.

It now has 308 after adding 80 over the past year.

In 2014, when it had just 16 managed pubs, the group outlined plans to increase its managed operations in response to government restrictions on “tied” beer licences, which oblige pub tenants to buy at least some beer from a particular brewery.

“EIG’s plan appears solid,” said industry analyst Mark Brumby at Langton Capital.

“Execution remains a challenge and there are some external concerns – Brexit, the pubs code etc. but trading is in line with expectations.

“This would appear, though these are early days, to be working.”

Meanwhile in pub partnerships, like-for-like net income was 1.2% higher.

“We are very pleased to have maintained positive momentum in our leased and tenanted business whilst at the same time transitioning selected assets into the alternative formats and operating models of our other business units,” said chief executive Simon Townsend.

The company also announced a share buyback of up to £20 million on Tuesday.

Shares were trading 3% lower in mid-morning.