Enterprise Inns, the tenanted pub operator, cheered investors yesterday by confirming that it was exploring ways of becoming a real estate investment trust (Reit) without having to split itself in two.

The company, which until now had appeared to be lukewarm on Reits, said that it had asked its lawyers and tax advisers to investigate whether it could qualify for Reit status without the need to divide into separate operating and property companies. Under HM Revenue & Customs (HMRC) rules, companies that derive at least 75 per cent of their income from rent can become Reits without having to split in two.

In Enterprise’s case, rent accounts for just over 50 per cent of revenue, but the company believes that much of the money it makes from selling beer to its tenants is effectively “wet rent”, while much of its fruit machine income is also tantamount to rent.

Analysts said that if Enterprise could persuade HMRC to accept its arguments, there could be significant benefits to shareholders. However, Ted Tuppen, the chief executive, said that the issue would require “extensive analysis” before any conclusions could be drawn.

The company reported a 4.1 per cent increase in underlying half-year earnings to £256 million and adjusted earnings per share up 15.7 per cent to 18.4p. The interim dividend is 15.6 per cent higher at 5.2p.

The figures exclude the impact of the disposal of 769 pubs to Admiral Taverns in September and the sale of its entire Scottish estate of 137 pubs in December. These resulted in a 2.6 per cent fall in pretax profits before exceptionals to £149 million. Mr Tuppen expected to sell no more than 100 pubs next year. The company has about 7,700 pubs. The shares closed up 42½p at 769½p yesterday.

— Hilton Hotels Corporation (HHC), the American hotel operator, has signed a deal to develop the first hotel in Britain under its mid-market Hilton Garden Inn brand. The £16 million hotel in Luton, which will have 155 rooms, is due to open next year.

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