Terra Firma

Phoenix Inns

Description

Phoenix Inns owned approximately 1,800 tenanted, untied pubs previously owned by Grand Metropolitan plc and Fosters.

Strategy

Terra Firma's acquisition of Phoenix Inns marked the first major entry by a financial buyer into the UK pub sector and transformed market perceptions of the asset class.

The yield on tenanted pubs exceeded the cost of bond finance as pub prices had been depressed by the enforced sale of pubs by brewers and the common misapprehension that the UK pub sector was in terminal decline. Terra Firma identified that a strategy of focusing on individual assets and allocating each to its highest value use would yield significant returns. This approach was totally contrary to received wisdom at the time - that nationally managed pub brands were the optimum means of maximising value in the sector.

Outcome

The Phoenix Inns investment has been fully realised. The pubs were sold either individually, often to tenants, or in groups to realise the maximum value for each asset.

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