UK REIT NewRiver has acquired pub operator Hawthorn Leisure Holdings for £106.8 mln (€122 mln) from an affiliate of Avenue Capital Group.
As well as a portfolio of 298 pubs, the acquisition includes a brand and pub management platform which could potentially be applied across NewRiver's existing pub portfolio, generating significant synergies of scale, the company said.
'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,' said CEO Allan Lockhart.
'The portfolio is highly complementary to our existing pub portfolio and the combined portfolio remains below 20% 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,' Lockhart added.
Led by co-founder Gerry Carroll, Hawthorn was placed on the market by Avenue earlier this year.
NewRiver acquired its first portfolio of 202 pubs from Marston's in November 2013, followed by a deal for 158 pubs from Punch Taverns in 2015. The Hawthorn Leisure portfolio increases the size of its estate to 629 pubs.
'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,' commented Mark Davies, chief financial officer. '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% and inheriting a strong brand and management platform.'
The company said that the combined estate should enable it to realise scale-based synergies in purchasing and logistics worth at least £3 mln per annum.