NewRiver REIT (LON: NRR) has this morning announced the acquisition of community pub company Bravo Inns Limited for £17.9 million, representing an EBITDA multiple of 6.8x. The transaction is expected to generate annualised outlet EBITDA of £2.6 million, equating to a yield on cost of 14%, which excludes £0.3 million of synergies expected to be realised through the transfer of Bravo Inns to the Hawthorn Leisure platform. The transaction will be accretive to Underlying Funds From Operations and will further increase dividend cover, which is the Company’s key priority.
Bravo Inns owns 44 wet-led community pubs, predominantly located in North West England. The Bravo Inns management have established a high-quality, well-managed and well-invested operator managed portfolio which complements Hawthorn Leisure’s existing 660 community pub portfolio.
The acquisition will increase NewRiver’s exposure to the highly profitable operator managed pub model. This will provide the Company with opportunities to drive higher returns through accretive capital expenditure and other asset management initiatives, whilst providing the Company with a higher degree of management control and oversight.
Mark Davies, Chief Financial Officer of NewRiver REIT and CEO of Hawthorn Leisure commented:
“The UK pub sector has experienced a recent revival in transaction activity and, as an early investor into community pubs, we have been tracking the success of Bravo Inns for some time. The transaction will increase our portfolio weighting in community pubs and demonstrates the value of our Hawthorn Leisure platform in identifying acquisitions that can deliver higher yielding sustainable cashflows with scale driven synergies. A further attraction of this acquisition is the quality of the pub estate and the pub partners. We look forward to welcoming Bravo Inns and its pub partners to Hawthorn Leisure.”