NewRiver Retail plans to make more pub acquisitions and is looking to recruit an experienced pub operator to manage its portfolio, M&C understands.
The UK REIT yesterday confirmed the acquisition of 158 pubs from Punch Taverns to add to the 202 Marston’s sites bought in 2013.
NewRiver’s property director Allan Lockhart told M&C that the company was committed to the tied model and was willing to look at longer leases for existing tenants.
He said the company would work with tenants to grow sales while looking for additional opportunities to redevelop surplus land. He said the Punch portfolio offered fewer opportunities for convenience stores but a greater potential for residential development.
He said: “We think the pub sector is an interesting one and somewhere we plan to make further in-roads. We see a lot of potential for growth in the sector.
“Even after this acquisition around 75% of our portfolio will be shopping centres with the rest split between pubs and retail warehousing. We don’t necessarily see that ratio changing but as the business grows it will give us the capacity to add more pubs to our portfolio in due course.”
The portfolio will be managed by LT Management Services but Lockhart said NewRiver would have a hands-on approach.
He said: “LT Management Services have a great track record and we have now become one of their biggest clients but that doesn’t mean to say that we won’t be actively involved in the running of the pubs and the relationships with the tenants. What we are also planning to do is recruit a specialist pub asset manager, someone with years of experience of working with tenants.
“We have always worked hard at the relationship with our tenants in our shopping centre portfolio because ultimately it is in everyone’s interest for them to succeed.
“What is great about the pub portfolio is that we get monthly access to the underlying sales performance in each of the pubs. That allows us to understand why some pubs are doing really well and how we can improve others.
“We are long-term investors. We are prepared to invest into our pubs to improve profitability.”
On the tied model, Lockhart said: “We like the tied arrangement because it allows us to get instant access to all the underlying sales performance. We have no plans to change that arrangement.”
On development he said: “Like our Marston’s estate, the Punch pubs give us the opportunity to exploit opportunities to redevelop on surplus land for convenience stores and for small-scale residential developments.
“Within the Punch portfolio there are further opportunities for convenience stores – perhaps more limited than with the Marston’s portfolio but there are opportunities here for small-scale residential development.”
