Marston’s to sell off 202 pubs for £90m to property investor NewRiver
MIDLANDS brewer and pubco Marston’s has announced it is to sell 202 pubs for £90m to NewRiver Retail, a leading specialist property REIT focused on the UK food and retail sector.
Most of the pubs are likely to be converted into convenience stores.
Wolverhampton-based Marston’s said the disposal is consistent with its strategy to target growth through investment in higher turnover pub-restaurants, improve the quality of its estate and reduce its exposure to smaller ‘wet-led’ pubs.
The disposal comprises 158 community pubs from Marston’s Taverns estate and 44 Leased pubs. Under the terms of the transaction Marston’s will manage the pubs for five years in return for a management fee. For the first four years Marston’s has provided a minimum income guarantee.
Marston’s said the proceeds of the sale will be used to improve its financial position, specifically to redeem the £80m AB1 securitised note, saving £6.7m of interest per annum and, on a pro-forma basis, reduce group leverage by 0.1 times EBITDA.
Ralph Findlay, chief executive officer, said: “This disposal will enable us to reduce the cost of servicing our securitised debt, is consistent with our strategy and improves the quality of our estate. It will also assist with financing the accelerating rollout of our new-build pub-restaurants which are achieving good returns.”
NewRiver, which owns several shopping centres in the West Midlands, says it plans to convert the pubs into food convenience stores and restaurants.
The acquisition was funded through its NewRiver’s BRAVO II joint venture partnership.
David Lockhart, chief executive of NewRiver Retail, said: “This off market transaction is a highly innovative opportunity for NewRiver to further demonstrate its proven risk-controlled retail development and asset management skills.
“With increasing demand from all of the major supermarket groups for convenience stores substantially outstripping supply, the portfolio provides a very attractive opportunity to generate capital profits through the conversion of the public houses into convenience stores underpinned by an attractive cash on equity return from a FTSE 250 company.”
