Punch Taverns decides to sell 158 of its pubs to NewRiver for an agreed sum of £53.5 million. The decision to sell off its non-core businesses is in line with their goal to take care of its accumulated debts.
Chief executive Duncan Garrod of Punch said that the transaction with NewRiver is consistent with their plans of disposing their non-core estate properties, which can reduce their total debts while allowing them to focus on their core pub assets.
The companies expects the deal to be finished by September 11, which will leave Punch with 2,900 core estate pubs and 550 non-core estate pubs.
The transaction is also similar to a 2013 deal with NewRiver and Martson's where the former acquired 202 pubs, which were used to start several co-operative grocery stores and post offices.
Punch is proud to say that the deal resulted to a sale value that was higher than the pubs' book value as well as giving them better average profits compared to other non-core disposals done previously.
Property director of NewRiver, Allan Lockhart, said that they expect to bring in striking capital growth as well as incomparable cash on cash returns through developing and managing their assets properly.
He added that they are confident that their latest transaction with Punch will add to the positive long-term value for their shareholders.
NewRiver owns 29 shopping centers and other properties in its portfolio of which 15 percent are pubs. The firm plans to use the latest addition to their properties from Punch for residential and commercial developments.
Punch was able to complete a deal last year in October to reduce their £2.3 billion debts to only £1.5 billion. The debts incurred resulted from initiating huge expansion programs prior to the 2008 financial crisis.
Numis analysts predicted that Punch Taverns will announce a positive full year during its trading update come September 1.
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