NewRiver Retail has exchanged contracts to buy a portfolio of 158 pubs in England and Wales from Punch Taverns for £53.5m – a net initial yield of 13.6%.
Projected profit before tax on the portfolio is £6m pa, generating a cash on cash equity return upwards of 20%.
It follows the REIT’s purchase in November 2013 of 202 pubs from Marston’s, bringing NewRiver’s pub portfolio to 15% of assets under management.
Some 34% of the sites are in the South East and South West, covering 339,866 sq ft of internal area and 1.8m sq ft of site area. The portfolio is 99.4% let.
The assets, which include asset management and development opportunities, have an estimated reinstatement value of £146m.
A specialist pub management company has been appointed to run the outlets.
The purchase was funded through existing financial resources, with a new debt facility available in future.
NewRiver Retail property director Allan Lockhart said: “We are delighted to announce the acquisition of the pub portfolio from Punch Taverns, which represents a strategic progression for NewRiver, following our acquisition of a similar portfolio from Marston’s in late 2013, the successful result of which has led us to identify similar opportunities.
“In many ways this portfolio is similar to our Marston’s transaction, in that we expect to deliver exceptional cash on cash returns and attractive capital growth through asset management and development. We are confident that this acquisition will add significant long-term value for our shareholders.”
Colliers International advised NewRiver Retail.
