£107m deal agreed to create 600-strong pub group

Property investor NewRiver has agreed a £106.8m deal to buy Birmingham pub group Hawthorn Leisure, creating a business with more than 600 pubs.

It has taken over Hawthorn’s 298 pubs as part of its strategy to target the sector because of its “low-risk, diversified cash returns”.

NewRiver is also keen to maximise the potential to build convenience stores or residential units on surplus land adjacent to pubs.

Mark Davies, NewRiver’s chief financial officer, said: “Having acquired our first portfolio from Marston’s in 2013, we are well aware of the attractiveness of the high cash returns generated by pubs, as well as their inherent active asset management and risk-controlled development opportunities.

“Importantly, we have also retained cost discipline on this transaction that we have tracked for some time, acquiring the portfolio at an attractive net initial yield of 13.6% and inheriting a strong brand and management platform.”

Hawthorn’s brand and pub management platform is expected to have a key role in creating efficiencies once it is rolled out across NewRiver’s existing pub portfolio.

NewRiver will pay £55.1m in cash, with the balance of the £106.8m of enterprise value principally comprising Hawthorn Leisure’s net debt.

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