Enterprise Inns Plc (LSE: ETI), a UK leased and tenanted pub company, advanced the most in 17 years in London trading after becoming a real estate investment trust.
Since 1995 when the company sold its stock to the public, the company gained 29 percent increase.
Enterprise Inns is headquartered in Solihull , West Midlands in the United Kingdom. It is a constituent of the FTSE 100 Index. Its pubs are operated by tenants, which means that the company collects rent from individuals who live in and operate the pubs.
Enterprise Inns was formed in 1991, initially with 368 pubs. Following a series of transformational acquisitions, including large estate acquisitions of former Whitbread pubs from Laurel Pub Company and the acquisition of the Unique Pub Company, by 2004, they had an estate of nearly 9,000 pubs spread throughout England, Scotland and Wales, including a number of locally famous pubs like The Lock Stock & barrel in Halifax, the Poet's Corner in Cardiff and The Compass Rose in Portsmouth.
Enterprise may soon get a REIT status if it reorganizes operations. REIT is a Real Estate Investment Trust, a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90% of their income, which may be taxable in the hands of the investors. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks.
The legislation laying out the rules for REITs in the United Kingdom was enacted in the Finance Act 2006 and came into effect in January 2007 when nine UK property companies converted to REIT status, including the five that were FTSE 100 members at that time.
British REITS have to distribute 90% of their income. They must be a close-ended investment trust and be UK resident and publicly listed on a stock exchange recognised by the Financial Services Authority.