Punch Taverns sells 158 pubs in major disposal plans

Punch Taverns has reached agreement to sell 158 pubs for £53.5m to NewRiver Retail, a Real Estate Investment Trust focused on the UK retail sector.

This agreement is consistent with the pub operator’s plans to dispose of its ‘non-core estate’ at a rate of approximately 200 pubs per year. The disposal at an average of c.£340,000 per pub, is ‘above book value’.

The agreement is unconditional and is expected to complete on 11 September 2015. The consideration will be used to reduce net debt.

The disposal comprises 150 pubs from the non-core estate and 8 pubs from the core estate that no longer meet Punch Taverns’ criteria as a core pub. Following the disposal, the core estate will comprise c.2,900 pubs and the non-core estate will have c.550 pubs.

The pubs being disposed generated earnings before interest and tax of £7.3m over the last twelve months and have a current book value of £52.5m.

Duncan Garrood, Chief Executive Officer of Punch Taverns plc, commented: “This transaction is in line with our stated strategy of disposing pubs within the non-core estate, reducing the overall level of our debt, whilst focusing on our higher quality core pub estate.”

Allan Lockhart, Property Director at NewRiver Retail, 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.”

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