Written by: Keith Tully
Published: 24th August 2015
Punch Taverns, which owns and leases several thousand pubs around the UK, has announced its plan to sell 158 of its outlets as it aims to reduce the debt levels across its business.
The pubs being sold generated earnings before interest and tax of close to £7.3 million during the most recently assessed 12-month period, according to Punch Taverns’ own figures.
However, company directors are keen to scale down the number of pubs that Punch owns and to generate sizeable sums through sales from its “non-core estate”.
The investment firm NewRiver Retail is to acquire the 158 pubs from Punch in a deal expected to boost the company’s coffers by around £53.5 million.
“This agreement is consistent with Punch’s strategy to sell the non-core estate at a rate of approximately 200 pubs per year,” the company said.
“The disposal at an average of £340,000 per pub, is above book value and significantly ahead of the average proceeds achieved for previous non-core disposals.”
There are understood to be a further 550 pubs which are owned by Punch Taverns but which are regarded as being “non-core” assets, while the business still has a total of 3,500 different premises being leased and operated independently throughout the country.
In a statement on the planned sale of assets, Punch’s chief executive Duncan Garrod said: “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.”
In March of this year, Punch Taverns’ net debt levels reportedly stood at £1.5 billion, with the company having agreed deals to restructure £2.3 billion worth of debt in October 2014.
For its part, NewRiver Retail has said it expects its new pubs to deliver “exceptional cash on cash returns and attractive capital growth through asset management and development”.
The investment firm acquired just over 200 outlets from the pub group Marston’s in late 2013 but the bulk of its property portfolio is accounted for by shopping centres, of which it currently owns almost 30 in different parts of the UK.
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