Ei Group, the largest owner and operator of pubs in the UK, has announced it has agreed to sell 370 properties to Tavern Propco for the cash consideration of £348m.
The group closed 2018 with 412 properties and the disposal of the sites will be comprised of public houses and other commercial properties in its portfolio.
Tavern Propco is a newly incorporated private company, which is owned, through intermediate holding companies, by investment funds managed and/or advised by Davidson Kempner Capital Management LP.
Ei Group’s strategy in recent years to grow the income and quality of the commercial properties portfolio has resulted in what the board believes to be an attractive valuation for the portfolio.
Tavern Propco has paid Ei Group a deposit of £33.66m, which is non-refundable unless shareholders do not approve of the disposal. The sale value represents a 13 times multiple of earnings and is in line with the net book value of the assets.
A significant amount of the proceeds will be used to reduce the level of the group’s outstanding debt, as well as give it the opportunity to consider more immediate returns to shareholders.
Simon Townsend, CEO of Ei Group said: “We are very pleased to have agreed the sale of the portfolio, which is in line with our strategy of delivering attractive and sustainable returns to shareholders by unlocking the embedded value and optimising the returns from every asset within the business. The portfolio is comprised of high quality assets which we believe are best suited to a free-of-tie, rent-only business model.
“Throughout the sale process, we have been impressed with the commitment and speed of execution demonstrated by Davidson Kempner, a global institutional investment management firm with over $31bn in assets under management and a long track record of investing in real estate.”