NewRiver REIT has bought the Hawthorn Leisure pub portfolio from an affiliate of Avenue Capital Group for £106.8m.
The portfolio of 298 pubs also includes the brand and pub management platform, which NewRiver says will create “scale-based synergies” when applied to its existing pub portfolio of £3m a year.
The deal represents a 13.6% yield.
NewRiver said the pub sector is an attractive opportunity for its business strategy with low-risk, diversified cash returns and in-built asset management opportunities, including potential convenience stores or residential units on surplus land.
NewRiver reports 8.2% total return
It bought its first portfolio of 202 pubs from Marston’s PLC in November 2013 and a second comprising 158 pubs from Punch Taverns in 2015. Including the Hawthorn portfolio, it will have 629 pubs.
Mark Davies, chief financial officer, commented: “Having taken over executive responsibility for our pub portfolio, I look forward to working with our experienced management teams to establish a market leading business, which will deliver synergies and drive highly accretive cash returns.”
In 2017, Hawthorn Leisure generated pre-tax earnings of £9.9m, while total assets stood at £153m.
Hawthorn Leisure’s senior management team of Gerry Carroll, Mark McGinty and Matthew Ward will stay with the company and work with the NewRiver pub management team led by David Shipton.
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