Solihull leisure company acquired by NewRiver for over £105m

NewRiver has acquired Solihull’s Hawthorn Leisure Holdings Limited from an affiliate of Avenue Capital Group for an enterprise value of £106.8m.

This represents a net initial yield based on the value of the pub portfolio of 13.6 per cent and will be satisfied using the company’s existing resources.

As well as a portfolio of 298 community pubs, the acquisition includes an established brand and pub management platform, which could be applied across the company’s existing pub portfolio, generating significant scale-based synergies.

The transaction will be immediately accretive to NewRiver’s Funds From Operations and net assets.

Allan Lockhart, NewRiver’s chief executive, commented: “The acquisition of Hawthorn Leisure is absolutely aligned with our strategy of investing in retail & leisure assets at the heart of the communities across the UK.

“The portfolio is complementary to our existing pub portfolio and the combined portfolio remains below 20 per cent of our total assets.

“We now look forward to applying our active asset management and risk-controlled development expertise to produce profitable opportunities for our occupiers, and growing and sustainable cash returns for our shareholders.”

NewRiver has identified the pub sector as an attractive investment to deliver on its business strategy.

The sector generates high levels of low-risk, diversified cash returns and contains a number of in-built value creating asset management and development opportunities, including the potential to build convenience stores or residential units on surplus land adjacent to pubs.

Having acquired its first portfolio of 202 pubs from Marston’s PLC in November 2013, NewRiver acquired its second portfolio of 158 pubs from Punch Taverns plc in 2015.

The Hawthorn Leisure portfolio provides attractive scale for NewRiver, increasing the size of its estate to 629 pubs.

The combined NewRiver & Hawthorn Leisure estate will target scale-based synergies and other improvements in purchasing and logistics, and the Company expects to realise synergies of at least £3m per annum.

Mark Davies, NewRiver’s chief financial officer, added: “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 per cent and inheriting a strong brand and management platform.

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.“

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