NewRiver Retail Limited, the UK REIT specializing in value-creating retail property investment and active asset management, announces that it has exchanged contracts to acquire a major portfolio of public houses from Marston's Plc for a total consideration of £90 million (approx. €108 million).
NewRiver has exchanged contracts to acquire an off-market portfolio of 202 public houses from Marston's, the UK's leading brewing and pub retailing business, predominantly located in high population residential areas with good roadside visibility and extensive car parking.
It is NewRiver's intention to convert the majority of the assets to meet the high demand for new convenience store premises from the UK's major food store operators. The Company has already received strong initial interest from the UK's major convenience store operators and supermarket groups.
The Portfolio, with an average gross internal area of 3,150 ft², site area of 29,000 ft² and on-site car parking of 24 spaces, is particularly suitable for convenience store use. The average unit value is £445,000 and the total site area equates 6.5 million ft² with a total 4,500 car parking spaces.
The units were selected by the company following detailed due diligence to identify assets with significant potential for asset management and value enhancement initiatives. The portfolio includes adjacent car parking of 4,500 spaces. Additional uses such as branded restaurants, drive-through food outlets, residential, and medical centers have also been identified. NewRiver believes it will be able to pre-let significant tranches of the Portfolio to the major supermarket groups before conversion.
As part of the agreed terms of the acquisition, Marston's has entered into a minimum four-year term leaseback agreement (extendable to five years) during which time it will continue to manage and operate the Portfolio as public houses. Marston's will pay annual rent of £12,235,000, reflecting a net initial yield of 12.8% on the purchase price.
Importantly, the acquisition represents the deployment of a significant element of the proceeds of NewRiver's oversubscribed £67 million equity fundraise five months since its completion in July.
David Lockhart, Chief Executive of NewRiver Retail Limited, commented: "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.
"The acquisition marks a major achievement for NewRiver through the effective deployment of proceeds from the summer capital fundraising and further strengthens our joint venture partnership with BRAVO II."
Source: NewRiver Retail