On behalf of Aprirose, the real estate investment company, leisure investment specialists Coffer Corporate Leisure has completed the off-market sale of a public house investment portfolio – Project Red Apple – for £23 million. The purchaser was BlackRock, advised by Fleurets. The portfolio comprises 13 pub assets let to one of the UK’s leading pub companies, Stonegate.

The properties provide long, unbroken leases with 22.5 years unexpired terms and a total passing rent of c£1.35 million per annum, reflecting a Net Initial Yield of 5.5%.

The 13 managed public houses in the portfolio are: Slug and Lettuce, Southend on Sea; The Surrey Arms, Camberley; The Station, Eastleigh; Slug and Lettuce, Derby; Yates’s, Leicester; Prince of Wales, Chatham; Prince of Wales, Chorley; The Burlington, Chesterfield; The Merchant, Glasgow; The Mailbox, Lincoln; The Crafty Scholar, Lancaster; Yates’s, Blackpool; and The Castle, Blackpool.

Mark Sheehan, Managing Director, Coffer Corporate Leisure, said: “Stonegate is a well-regarded operator with a very strong estate. The properties are long established and highly profitable, let on long leases and benefitting from index-linked growth.

“This was an off market transaction which worked well for both parties.  The public house market in particular is in huge demand with appetite significantly outstripping supply. Institutional investors are attracted by the long leases, index-linked uplifts, strong underlying property value and liquidity of pub assets. Lack of stock remains our biggest issue.”

Geoffrey Shaw, Portfolio Manager at BlackRock, said: “Pubs provide a great diversifier for our clients as the demand drivers have a low correlation to other sectors such as hotels, offices or car parks.  The assets are run by a very experienced management team and the individual lot sizes make the properties very liquid. We believe in collaboration with our investment partners and this was another example where all parties involved collaborated seamlessly to complete this transaction.”

Coffer Corporate Leisure advised Aprirose Real Estate Investors. BlackRock was advised by Fleurets.