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Property management specialist London Town Group plc has bought, through its Bankside Developments subsidiary, a portfolio of 167 pubs from Save Investments, a subsidiary of Petchey Holdings plc.

The portfolio, which comprises 162 freehold and five long-leasehold pubs, was bought for £94.57 million in cash.

The deal was part-financed by a £72.82 million debt package from Anglo Irish Bank and through a £14.3 million placing of some 13.7 million shares at 104p each managed by nominated adviser and broker Strand Partners. The company also issued deep discount bonds raising more than £14 million.

The portfolio has an estimated annual income of some £6.5 million based on the eight months trading to August 31, 2006.

London Town, a property developer managing site acquisitions, planning, architectural design and the project management of the building works, together with onward sales, paid an average price for each pub in the portfolio of some £566,000.

The group will hold 105 pubs in the portfolio as trading units to be managed for income yield with the remaining 62 properties held as development units which will continue to be managed for income yield.

London Town’s non-executive chairman, Andrew Wilson, said he is pleased to have completed the deal and welcomes the new shareholder to the company. “We will seek to improve the operating performance of the business and maximise the value of the portfolio in order to generate significant shareholder value.”

Anglo Irish Bank’s investment was co-ordinated by senior property finance manager Mark Cotter.

Cotter said London Town is an existing client of the bank following the acquisition of 14 pubs in May from Pubfolio. “The bank worked closely with Ian Robinson of Strand Associates who were acting as advisers to London Town on the acquisition. The bank is keen to support London Town on any future acquisitions as and when the opportunities arise.”

London Town received legal advice from Mishcon de Reya’s cross-departmental team led by real estate partner Daniel Lipman, while Strand Partners was assisted by Fladgate Fielder.

Mishcon de Reya’s team included corporate partner Ross Bryson and banking partner Matthew Lindsay.

“The acquisition has been financed from a mixture of bank borrowing, shareholder loans, the issue of deep discount bonds and the issue of new ordinary shares,” Bryson said. “Mishcon received the instruction on the back of the strong reputation of its commercial property department, and also the fact that its corporate department had previously worked with Strand Partners.”

Fladgate Fielder has worked on many transactions for companies advised by Strand Partners. Its team was led by partner David Robinson, who said he is delighted to act for Strand on this significant transaction for London Town.

“In order to satisfy the cash consideration for the acquisition the group has entered into a new debt facility of £72.02 million with Anglo Irish Bank and is funding the balance of the consideration with short term loans,” he added.
 
Anglo Irish Bank supported by Addleshaw Goddard in relation to the property and corporate due diligence and Coffer Corporate Leisure in respect of the valuation requirements.

Coffer Corporate Leisure’s specialist pub valuation team was led by director Trevor Watson.

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