Morning Advertiser - July 15, 2010
Mitchells & Butlers, Britain's biggest managed pub group, has announced the sale of 52 budget hotels for £91m.
The deal, to Prupim includes the sale-and-leaseback of eight pubs that are inseparable from the adjacent accomodation properties, which are all branded as Innkeeper's Lodges.
Travelodge is expected to sign 25-year leases on the lodges from PRUPIM, a property investor, adding to 2,000 rooms to its business.
M&B has exchanged contracts with Prupim on 44 properties so far, with heads of terms in place for the remaining eight sites.
The 52 lodges generated earnings before interest and tax (EBIT) of £9.5m, equating to an EBIT multiple of 7.9 times. The value attached to the pubs that M&B is leasing back is £16m.
The sale of the lodges at £75m comes against a book value of £93m.
The eight pubs have been sold at an initial yield of 6.0%, meaning that M&B will pay annual rents totalling £960,000 — or £120,000 per pub.
The transactions with Travelodge and PRUPIM are expected to complete on 10 August 2010.
Adam Fowle, M&B's chief executive, said: "This transaction is in line with our strategy of disposing of the non-core assets and focusing the business on expanding the number of sites of our market leading restaurant and pub brands, which have significant growth potential."
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