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Morning Briefing for pub, restaurant and food wervice operators

Thu 12th Nov 2015 - Downing and Redcomb Pubs launch innovative joint venture
Downing and Redcomb Pubs launch innovative joint venture: Investment firm Downing has launched Apollo Pubs, a joint venture between Downing IHT Fund and Redcomb Group – it has completed the purchase of its first freehold site, the Village Inn, Ealing. Apollo Pubs was set up with the intention of building a freehold pub estate. The pubs will be identified, refurbished and operated by the Redcomb Group whilst the Downing IHT Funds will provide the majority of the capital. Redcomb was formed after the merger of BFI and Redcomb Pubs in August 2014. Redcomb currently operates 13 pubs, pubs with bedrooms and hotels including the Carnarvon Arms next door to Highclere Castle (aka Downton Abbey) and big turnover sites in and around London. Redcomb is looking to increase the size of the group significantly over the next three to five years, a strategy that will be helped by the partnership with Downing, a fund manager with over £600m under management. Apollo’s first site, the Village Inn is a solid, mature site in an affluent part of London. The site has been operated by Redcomb (and BFI before that) for over 20 years. Apollo purchased the site under Downing’s innovative sale and manage back investment structure. This structure allows operators to release capital from existing freehold sites well in excess of that which would be possible with traditional bank debt whilst retaining the majority of operating profits and any capital appreciation. The initial purchase is expected to act as a bedrock for future, third party freehold pub acquisitions. Steven Kenee, head of the licenced leisure team at Downing, said: “I am delighted to announce that yet another high quality business has joined our already impressive list of operating partners. Redcomb has excellent retailing standards and is led by a team with an attractive mix of youth and experience. The transaction allows Redcomb to release capital from a mature freehold asset that would otherwise be locked in whilst retaining the majority of any upside or capital appreciation, something that would be lost by the (once again) increasingly popular sale and leaseback model. We see this as a win win transaction for both parties and are actively seeking similar investments of this type with other operators.” Dan Shotton of Redcomb added: “We are delighted to be working with Steve Kenee and Downing, who have a real understanding of and passion for the sector. This deal will further enhance our growth strategy as we continue to build a portfolio of high quality outlets.”

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