A portfolio of tenanted pubs across England, Scotland and Wales
Voyager Pub Group consisted of a UK portfolio of 982 unbranded, largely managed pubs, and 6 leased pubs across England, Scotland and Wales, the vast majority of which were freehold properties. Managed pub companies act as retailers, directly operating the pubs they own, employing the staff and bearing the expense of maintenance and development.
Due to a decline in beer volumes and increasing costs, pubs that had once been viable as managed pubs had become more suited to a motivated and entrepreneurial tenant. It was believed that changing to a tenanted business model would significantly enhance value by increasing the cash generated from the portfolio, reducing the cost base and improving the quality of the cashflow available for future securitisations. Substantial operational and procurement synergies with Terra Firma’s other pub companies were also identified.
By converting the portfolio from a managed to a tenanted estate, significant value was unlocked. A programme to reduce head-office and operational expenses and to transfer of responsibility for capital expenditure and maintenance of the pubs to individual tenants significantly reduced costs while also creating lessees who were appropriately incentivised to run efficient, profitable pubs.
The conversion from a managed to a tenanted estate increased the cash generated from the portfolio, allowed for the elimination of large portions of the cost base and improved the stability of the cash flow available for a future securitisation.
The Voyager Pub Group investment has been fully realised. At the time of sale in 2002, Terra Firma was in the process of refinancing the acquisition debt. Given the attractive terms offered by a consortium of trade and financial buyers, Terra Firma decided to sell Voyager, together with Unique Pub Company, to the consortium.