Britain's largest pub group, Stonegate, is exploring a monumental sale of more than a thousand of its establishments in a strategic move to manage its substantial debt pile.
A Platinum Portfolio on the Market
Stonegate Group, the powerhouse behind popular chains like Slug & Lettuce and Be At One, is reportedly in discussions with advisers about offloading a 'platinum' collection of 1,034 pubs. This represents a significant portion of its total estate of 4,300 sites. According to The Times, this potential £1billion fire sale is a direct response to the company's staggering £3billion debt, a legacy largely stemming from its 2019 merger with rival Ei Group that cemented its position as the UK's top pub operator.
From Refinancing to a Potential Sale
This is not the first time Stonegate has looked to its property portfolio for financial relief. In 2023, the group attempted to sell 1,000 pubs but ultimately refinanced them with a £638million loan from the debt firm Apollo. A key condition of this loan was a 'non-call period', which has prevented Stonegate from selling or refinancing these specific pubs until January. With this deadline approaching, company executives are now actively weighing their options.
One strategy under consideration, as reported, involves selling the pubs in smaller batches of hundreds, rather than as one single block. This could make the portfolio more attractive and manageable for a wider range of potential buyers.
Resilience Amidst Economic Headwinds
Despite the financial pressure, Stonegate has demonstrated a degree of commercial resilience. The group reported a revenue of £1.7billion in 2024, up from £1.6billion the previous year. However, Chief Executive David McDowall highlighted several challenges that have squeezed profits, including persistent inflation, cost-of-living pressures, high energy costs, unseasonably wet weather, and recurring industrial action which collectively dampened customer footfall.
McDowall, who was appointed CEO in February 2023 after a tenure at BrewDog, has also overseen operational changes such as the introduction of dynamic pricing in 800 venues from September 2023, allowing for promotions during busier times.
The potential sale comes at a precarious time for the wider UK pub industry. Landlords across the country are feeling the strain from increases in National Insurance and the minimum wage, with many fearing being overlooked in the upcoming Budget on November 26.
