21 March 2004 – Scotland On Sunday
The billionaire Reuben brothers, two of the UK’s wealthiest private investors, have taken an equity stake in the pubs portfolio recently acquired from Spirit Group by property tycoons Nick Leslau and Tom Hunter.
It is thought the brothers have invested about £10m to take a stake slightly above 10%.
Leslau and Hunter, together with the Bank of Scotland, paid £500m in a debt and equity deal for the portfolio of 220 pubs which will be leased back to Spirit over 30 years.
The pubs were part of the Scottish and Newcastle retail business that Spirit acquired for £2.51bn last October. This is the second time the Reuben brothers have struck a deal with Leslau and Hunter following the acquisition of REIT Asset Management’s property portfolio for £310m, one of the biggest property transactions of last year.
Hunter said the tie-up with the Reubens underscored the relationship established at the time of the tussle for high street department store group Selfridges. Both parties have interests in retail investments and consult each other about getting involved, particularly with the bigger deals.
“We continue to explore further opportunities to partner with them in the retail and property sectors,” Hunter said yesterday. “By linking up together we can add significant firepower in targeting the larger deals. This is about synergy and comfort. We see similar opportunities in the marketplace and work well together.”
The acquisition takes Hunter’s West Coast’s investments to £2.5bn since its launch.
This transaction is the fifth joint venture in the last two and a half years between West Coast Capital and Leslau’s Prestbury, involving £1.25bn of commercial property. The pubs portfolio is a departure to the normal range of property investments by the partners, but it complements its long-term ‘hold and develop’ strategy.
Karen Jones, chief executive of Spirit, said the transaction allows the company to retain operational control of the pubs while using the cash to reduce debt.
Pubs are becoming one of the most sought-after asset classes for property investors. According to recent Christie figures, £4bn of pubs changed hands in 2003.
A spate of mergers and acquisitions since the start of last year means that by the start of last year means that by the end of this year, more than 10,000 will be under new management in just a handful of deals.