Cameron McKenna is advising Enterprise Inns, the UK’s second-largest pub owner, in its bid to allow landlords’ beer money to be used to form a real estate investment trust (Reit).
The pub business is in talks with HM Revenue & Customs about whether it can include its share of the money landlords pay for their beer, known as ‘wet rent’, as part of its rental agreement.
This is essential for it to become a Reit, which requires companies to generate at least 75 per cent of turnover from rental income.
If the talks fail the company will be forced to split its property assets and operations into two separate businesses.
The Camerons team is being led by partner and head of tax Richard Croker.
Until recently it was believed that the only way for a pub group to convert to Reit status would be to split into a property company and an operating company – a process known as ‘opco propco’ – which could involve selling off valuable property assets.
However, the Enterprise Inns negotiations could set a precedent for other landowning businesses keen to make the most of the Reit tax status introduced by the Government in January this year.