Wet-led community pub finance

How we fund wet-led community pubs

We fund wet-led pubs on their going-concern trade. For an acquisition or term refinance we model the fair maintainable trade, read it through barrelage and the wet-dry split, and place the request with leisure-experienced lenders on a commercial mortgage or term loan to around 60 to 65% of value, typically over 15 to 25 years at an indicative 7.5 to 11% per annum. Because drink margins are thinner than food and the wet-led segment has thinned out, lenders weigh the maintainable volume and the catchment carefully, and a free-of-tie freehold local with steady barrelage tends to earn the keener end. Where a pub is bought at auction or needs quick completion we use bridging at an indicative 0.8 to 1.5% per month, with a term exit once the trade settles. Where the works are improvement rather than rebuild we arrange refurbishment and fit-out finance. We frame every figure as indicative and never as an offer; the terms a given pub attracts depend on its accounts, tenure, tie position and pitch.

Lender appetite for wet-led community pubs

Wet-led community pubs draw selective but genuine appetite from lenders comfortable with drink-led trade. Clearing banks lend on stabilised freehold locals with a sound trade record, challenger and specialist lenders such as OakNorth, Shawbrook, Allica Bank and Cynergy Bank fund acquisitions and refinance on fair maintainable trade, and bridging lenders provide short-dated money for auction and quick-completion purchases. Lenders favour freehold over leasehold here, because the bricks give security alongside the trade, and they read the free-of-tie position closely, since a free house keeps the wet margin that a tie would otherwise share. A listing as an Asset of Community Value, or ACV, can affect a sale or a change of use and lenders factor that in. We are an arranger and introducer with no exclusive tie to any lender, so we match the pub and the operator to the funder most likely to price it keenly rather than steering every case to one bank.

The wet-led community pub market

The wet-led market is the most exposed corner of the pub sector. Pub numbers have fallen over the long term and drink-led locals have borne much of that decline, which is why lenders read maintainable barrelage and the strength of the catchment rather than a single good year. The flip side is that a well-located freehold local with a loyal trade is a resilient cash business with a low cost base, and the freehold carries an underlying bricks-and-mortar value that can support alternative use where the trade no longer works. That underpin matters to a lender: where a pub is listed as an Asset of Community Value or sits in a use class that restricts change of use, the alternative-use exit narrows, so we present the tenure, the listing position and the going-concern trade together so the case is funded on a realistic view of both the trade and the underlying asset.