NewRiver REIT to sell Hawthorn Leisure REIT to AT Brady Bidco for £222.3 million

The purchaser is a member of the Admiral Taverns group, a wet-led community pub operator, with approximately 1,000 pubs across England, Wales and Scotland.

LONDON, UK: NewRiver REIT plc has entered into an agreement for the sale of the entire issued share capital of Hawthorn Leisure REIT Limited to AT Brady Bidco Limited for a gross aggregate cash consideration of approximately £222.3 million.

Allan Lockhart, Chief Executive of NewRiver, commented: “Over recent years, we have grown Hawthorn to become the UK’s leading community and wet-led pub business. As a consequence of this, we received significant interest from a range of potential buyers for Hawthorn, following the divestment plan we announced in April 2021.

We have now agreed the sale of Hawthorn which, once completed, will deliver on our key priority to reset Loan to Value, strengthening our balance sheet and enabling us to focus on executing our resilient retail strategy.

I would like to thank the entire Hawthorn team and, in particular, Mark Davies, who the Board had previously mandated to lead the divestment of Hawthorn, for their professionalism and dedication throughout the process, which has delivered a great result for NewRiver shareholders.

Alongside the new dividend policy which we announced recently in our full year results, and increased transactional evidence in the parts of the retail investment market that we are focused on, we look forward with genuine confidence.”

Admiral Taverns is a wet-led community pub operator, with approximately 1,000 pubs across England, Wales and Scotland.

The disposal of Hawthorn, which as at 30 June 2021 comprised 674 leased & tenanted and operator managed community pubs, represents the successful delivery of the Company’s previously announced strategic priority to divest itself of its community pub business in order to reset its LTV and provide the firepower to reshape its portfolio.

Net aggregate proceeds are expected to be used to reduce net debt, significantly strengthening NewRiver’s balance sheet by resetting LTV to below 40 per cent on a 31 March 2021 pro-forma basis, which is in line with company guidance.

The disposal of the pub business, once completed, will enable the majority of future proceeds from non-core retail disposals, of which we currently have £73 million exchanged or under offer, to be recycled into resilient retail assets and NewRiver’s regeneration portfolio which offer superior income and capital growth opportunities.

In the second half of the financial year ended 31 March 2021, the Company undertook a thorough portfolio-wide strategic review, which involved analysing every asset in its portfolio in terms of current and projected resilience and value-creation opportunities.

The review examined current and emerging trends across the retail landscape, including shoppers’ changing behaviours and priorities, to determine how the Company can ensure that its portfolio remains as resilient in the future as it has proved to be during the COVID-19 pandemic.

The strategic review and its findings culminated in the Board’s strategic aim that by 2025 assets in the Company’s portfolio will display only the characteristics of resilient retail. It is the Board’s belief that this will transform the business into a more agile and resilient proposition and will provide the appropriate balance of income and capital returns.

In pursuing this strategic aim, one of the Company’s key priorities included the divestment of the Pub Portfolio. The Board believes that the Pub Portfolio is currently sub-scale in a sector which could see significant consolidation opportunities which cannot be unlocked under NewRiver’s ownership due to its status as a real estate investment trust. Furthermore, the divestment of the Pub Portfolio will reduce the Company’s LTV and provide the capital to reshape the Company’s portfolio.

In the Board’s view, the Disposal delivers the best outcome for the Shareholders and is a key step to achieving the Board’s strategic aim that by 2025, assets in the Company’s portfolio will display only the characteristics of resilient retail.

The Disposal proceeds will be used to reduce the level of the Group’s net debt, accelerating the delivery of the Group’s target to reduce Group LTV below 40 per cent. On a pro forma basis, adjusting for the net aggregate proceeds of the Disposal and based on the property valuation as at 31 March 2021, excluding the Hawthorn portfolio, the Group’s LTV ratio would be 39.8 per cent. The Disposal will also allow the Group to invest in its core Retail Portfolio and, together with other sales of non-core retail assets, to recycle the resultant capital into resilient retail.

Newriver Reit PLC

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23 Jul, 4:35 pm GMT+1 ·Disclaimer

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