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Thu 28th Nov 2013 - Breaking News - Marston’s sells 202 pubs for £90m to REIT
Marston’s sells 202 pubs for £90m to REIT: Midlands brewers and retailer Marston’s has sold 202 pubs for £90m, at a sale price of 7.6x EBITDA, to NewRiver Retail Limited, a leading specialist REIT focused on the UK food and value retail sector. This disposal is consistent with Marston’s strategy to target growth through investment in higher turnover pub restaurants, improve the quality of its estate and reduce its exposure to smaller wet-led pubs. The disposal comprises 158 community pubs from Marston’s Taverns estate and 44 Leased pubs. Under the terms of the transaction Marston’s will manage the pubs for five years in return for a management fee. For the first four years Marston’s has provided a minimum income guarantee. Based on EBITDA of £11.8m (net of the management fee) and operating profit of £10.4m for the year to 5 October 2013 the transaction represents an exit multiple of around 7.6x EBITDA. The pubs have a book value of £119.5m of which £37.4m is represented by previous revaluation surpluses. Chief executive Ralph Findlay said: “This disposal will enable us to reduce the cost of servicing our securitised debt, is consistent with our strategy and improves the quality of our estate. It will also assist with financing the accelerating rollout of our new-build pub-restaurants which are achieving good returns.” The company has reported group revenue up 9% to £782.9 million (2012: £719.7 million) in the year ended 5 October. Underlying operating profit rose 7% to £168.3 million (2012: £157.9 million) and underlying profit before tax was up 1% to £88.4 million, despite higher interest costs. The company has extended its bank facility to November 2018, extending the maturity of group debt. The company reported destination and premium pubs saw “strong sales and profit growth” driven by new-build investment, including 22 openings in the year, performing ahead of target. Its taverns division saw Second Half profit growth in managed pubs and 600 pubs converted to franchise. Revenue and profit up was up in its brewing division with increased market share. The company will accelerate new-builds to 25-30 sites per annum. 130 pubs and other assets were sold or exchanged during the year for circa £50 million. The company will target £60-70 million disposals per annum in 2014 and 2015 from Taverns estate. In the seven weeks to 23 November, Destination and Premium saw like-for-like sales up 3.1%, with like-for-like food sales up 4.6% and like-for-like wet sales up 1.0%. In Taverns managed and franchised like-for-like sales were up 2.1% and tenanted profits in line with expectations. The Leased division saw like-for-like profits in line with last year and Brewing was in line with expectations. Chief executive Ralph Findlay said: “In 2013 we achieved good growth in turnover and operating profit despite significant challenges. This reflects our unstinting focus on what our customers want: excellent service and value for money in high quality pubs and bars. In 2013 we served 30 million meals, with food now the principal reason for around 80% of customer visits in our Destination pubs. Looking forward we will accelerate our high-return new-build programme whilst increasing the level of disposals from our lower turnover wet-led pubs. We have made an encouraging start to the new financial year and remain confident that our proven strategy is aligned to the underlying trends in the sector.”
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