The directors intend to raise up to 6m through this offer. They believe Scotland is the right place for pub investments because the market is less congested than in England and consolidation within the industry is throwing up opportunities to buy premises.
The directors will focus on established pubs which may be renovated or developed if necessary. Pubs which rely on seasonal business and discounted drinks, or that are fashion dependent will not be considered for the scheme as they will not have the best chance of producing a high yield for investors.
Maclay Inns, part of the Maclay Group which was established in 1830, will manage the pubs in the portfolio. It currently runs 20 pubs in Scotland which are designed to appeal to each community rather than forming part of a branded or themed chain. Maclay feels there is demand for smaller pubs offering a community feel in city suburbs, university and market towns in Scotland.
Maclay Inns has had a similar role in four previous EISs and the directors of this one feel it has improved the trading performance and capital values of the pubs it manages. Maclays role will initially be to draw on its contacts to identify pubs and notify the board of directors. Once acquisitions are made, Maclay will apply for licenses, recruit staff and take overall responsibility for the pubs.
With many pub EISs focusing on English pubs, this EIS offers a fresh opportunity and many EIS investors will like the asset-backing aspect of bricks and mortar behind it. However, investments in this scheme are unlikely to be realised until at least 2010.
In addition the possibility of smoking restrictions in licensed premises and possible changes to licensing laws in Scotland could represent problems. But the directors point to recent trade association research as evidence that smoking restrictions will have little impact on community pubs and they also argue license law changes will not have an adverse effect.