Property giant NewRiver eyes float of 700-strong pub group Hawthorn
Property giant NewRiver has said it has plans to float its Hawthorn business of 700 UK pubs and focus further on its retail business.
The real estate investment trust (REIT) saw shares lift higher on Wednesday morning after it said it intends to offload the community pub arm as a standalone business.
NewRiver told investors that it has reviewed its property portfolio and decided it will focus on its “resilient” retail assets as part of a plan to reshape its estate by 2025.
It said that offloading Hawthorn will help to provide “the firepower” to help enable the shake-up of its operations.
More than 60% of Hawthorn’s pubs have started trading again in England following the reopening of outdoor hospitality on Monday.
The group added that the whole pub estate, which is primarily freehold, is expected to be open by its next trading announcement at the start of June.
It comes amid strong recent investment demand for pub groups, following Greene King’s £2.7billion takeover, the acquisition of EI Group by TDR Capital-backed Stonegate and the failed acquisition attempt by US firm Platinum Equity Advisors to snap up Marston’s.
Hospitality IPOs (initial public offerings) over the past year, including Various Eateries and London Cocktail Club owner NightCap, have also been greeted with positive demand.
However, the recent float of takeaway delivery giant Deliveroo could result in some investor caution, with Deliveroo shares more than a third lower than its IPO price after just two weeks.
NewRiver said it will consider where to invest funds from the divestment “in good time” but plans to pump money into its core retail and regeneration assets.
Chief executive Allan Lockhart told the PA news agency that the group expects “strong market demand” for Hawthorn.
“From a capital markets point of view we feel really positive about the pub estate,” he said.
“We believe there is really good demand in the IPO market for a strong, sustainable business with good corporate governance.
“We also expect there will be investment from private investors as well and keep considering options.
“Despite everything, we’ve still seen strong demand from retailers for new sites and have had new openings from the likes of B&M, Iceland, other supermarkets too, so there is a lot of resilience in the retail market still.”
The company said it has collected around 85% of its rent payments for the past year despite pressure on the retail sector due to coronavirus restrictions.
It also reported that its occupancy levels have risen to 95.8% at the end of last month.
Shares in the company were up 3.1% at 106.6p after morning trading on Wednesday.
