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Wed 20th Jan 2021 - Update: JD Wetherspoon eyes London buys, UKHospitality, leasing system
JD Wetherspoon eyes London acquisitions with new funds: JD Wetherspoon’s share placing of 8.37m new shares has raised £93.7m and will allow the company to take advantage of property opportunities thrown up by the pandemic. It stated: “Additional capital will facilitate the acquisition of new properties, which are likely to be available at favourable prices, as a result of the pandemic. The company is considering the acquisition of a number of properties in central London, the freehold reversions of pubs of which it is currently the tenant, and properties adjacent to successful pubs. It may be possible to achieve a higher-than-average return on capital on properties acquired in the next few years, based on the company’s past experience.” Tim Martin, chairman of Wetherspoon, said: “The covid-19 outbreak is having a severe impact on the UK pub sector. After a number of false starts, the hospitality industry generally anticipates a return to more normal trading patterns in the spring and summer, as a result of the introduction of a mass vaccination programme. The equity placing will help the company, along with the other actions it has taken, to emerge from the pandemic in a strong position. Very many thanks to everyone at the company, and also to its shareholders, suppliers, landlords and banks, for their support and commitment.” The new placing was at a price of 1,120p a share, a circa 6.95% discount to the closing share price. Paul Rudy, an analyst at Goodbody, stated: “Overall, we believe this is a sensible course of action for JDW, and the placing should be well supported. It will allow the group to invest in a period which will surely throw up attractive opportunities and liquidity becomes less of a concern. On the presumption that the equity placing is successful, JDW will have issued circa 22% new shares including the April raise (15%). We believe there is little impediment to a normalisation of sales once government restrictions are lifted. A weakened competitor set, JDW’s budget price point, and a good estate should see it outperform the overall sector through the recovery phase.”

UKHospitality has called on the Chancellor for more sector support: UKHospitality has written to the Chancellor outlining the additional action needed to accelerate the revival of the UK’s hospitality sector, slash unemployment and bring the whole nation together. In order to ensure the early, rapid return to growth of as many hospitality businesses as possible, the government must: extend the VAT cut to 5% for a further 12 months, and ensure it applies across the broad hospitality sector, to stimulate economic activity; enact a further business rates holiday for hospitality for 2021/22 to protect communities and repair businesses. If the sector is to drive investment in communities and provide employment around the UK to its full potential, then further support will also be needed. UKHospitality is urging the government to use the forthcoming Budget to announce additional support to safeguard businesses and jobs, including: Implement a reformed Job Retention Bonus to allow continued investment in our workforce: extend the repayment period for all government-backed loans to ten years, with an extra year interest-free; defer tax payments further, to December 2021, to allow full trading before debts to government fall due; Extend CJRS until the end of June, allowing flexible furlough. Assist the hospitality supply chain so it can support the sector’s recovery. UKHospitality chief executive Kate Nicholls said: “The Budget provides the government with a fantastic opportunity to deliver a bold package of support to tee hospitality businesses up for a year of rebuilding. Some businesses have inevitably and sadly gone to the wall, and we have lost around 650,000 jobs. Thankfully, many more businesses have managed to adapt and are still managing to cling on, keeping jobs safe and giving their staff, customers and communities hope that they will be able to reopen once the vaccine roll-out makes it safe to do so. Government financial support has been key – the two principal pillars of support, slashing hospitality VAT to 5% and providing a business rates holiday, have helped give employers the lifeline they needed to survive. We know from recent history that hospitality has the economic clout to be in the vanguard of economic recovery once the crisis has passed, but only if essential support is extended. A wide-ranging package of financial support will give hospitality businesses the best chance of not just surviving the remainder of the crisis, but leading the UK’s economic recovery in the years ahead. If we get what we need, hospitality can spearhead the economic recovery of the country, revive high streets and provide employment and investment in every single region.”

Over 96% of hospitality firms declare the current commercial leasing system not fit for purpose: Over 96% of hospitality firms declare that the current commercial leasing system is not fit for purpose, according to a survey of 400 leading hospitality businesses representing 10,000 sites, carried out by commercial property restructuring specialists Cedar Dean. Just under 90% (88%) said that rent was the biggest cash flow issue they have. The survey also found that 77% of hospitality operators say they are being forced to look at restructuring or insolvency, with current rents remaining unaffordable for the vast majority of firms. This is up from 69% in October 2020. Only 31% said they have agreed new terms with the majority of their landlords. As opposed to 38% in October 2020 – 88% believe their current or new terms will not be enough to see their businesses through this next phase of hospitality restrictions. As opposed to 80% in October – 85% of those questioned were not at all confident that government support will come into place on rent, with only 1% very confident. 73% of operators said they won’t survive the next six months without further landlord or government support. David Abramson, chief executive of Cedar Dean, said: “The evidence is now overwhelmingly clear that the current commercial leasing system is broken and must adapt urgently. Upward only reviews need to be abolished and affordability clauses need inserting. Rent is the biggest issue on the table right now and survival and affordability is key for the hospitality sector. Many of the landlords that we are negotiating with are doing sensible deals, but we still have a long way to go to make sure we don’t have an avalanche of insolvencies in April. It is imperative we get certainty in the coming weeks from the government in the form of a moratorium extension and protection or support on rent arrears once the moratorium is lifted to avoid a major crisis in the industry.”

Van Morrison to challenge the ban on live music in Northern Ireland: Van Morrison will challenge the Northern Irish government in court over its “blanket ban” on live music in licensed venues arising from coronavirus restrictions, his lawyer said. Solicitor Joe Rice said the Northern Irish singer-songwriter, who has released several protest songs against covid-19 rules in recent months, will ask the high court in Belfast to review the policy. “We will be seeking leave for judicial review to challenge the blanket ban on live music in licensed premises in Northern Ireland,” Rice said. “We’re not aware of any credible scientific or medical evidence to justify this particular blanket ban … and we’re going to challenge this in the high court.” All hospitality and entertainment venues are closed as part of a six-week lockdown, but Morrison is eager to challenge the rules for when they reopen. Rice noted that the singer had been able to perform in England several times late last year before the British government tightened rules there. He said he expected the case to be heard at the high court within “weeks”. Morrison was taking the action “on behalf of the thousands of musicians, artists, venues and those involved in the live music industry”, Rice said.

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