NewRiver Retail Limited
("NewRiver" or "the Company")
Swallowtail - Major shopping centre portfolio acquisition for £140 million, NIY of 8%
NewRiver Retail Limited (AIM: NRR), the UK REIT specialising in value-creating retail property investment and active asset management, announces it has exchanged contracts for the acquisition of a significant portfolio of three shopping centre assets (the "Portfolio"), part of the Swallowtail portfolio, for a total consideration of £140,132,155 equating to a net initial yield of just under 8%.
The acquisition was funded through the Company's joint venture with the Bravo II partnership (a fund advised or managed by Pacific Investment Management Company LLC) with both parties taking a 50 per cent equity stake. The Portfolio was acquired using existing cash resources ahead of a new debt-facility which is at an advanced stage.
This high quality shopping centre portfolio comprises 758,000 sq ft of retail space located in Hastings, Newton Mearns, an affluent town south west of Glasgow and Newtonabbey, an affluent district north of Belfast.
With an annual footfall in excess of 15 million this high performing portfolio is let to 185 tenants including major brand retailers such as Marks & Spencer, Asda, Primark, Next, Top Shop, H&M and Poundland. The low average vacancy rate at 3.5% reflects the strong underlying retail sales performance of the portfolio.
Current rental levels across the three shopping centres range from £50 Zone A to £65 Zone A providing an affordable base for the retailers and this is reflected in an average turnover to rent ratio of 9%.
The Portfolio includes the following assets:
Priory Meadow, Hastings, East Sussex, with limited retailing competition from other towns/ cities, Priory Meadow provides the dominant retailing offer in Hastings. Priory Meadow opened in 1997 and comprises 292,000 sq ft of retail space, the town's best car park with 1,086 spaces and a range of food, fashion and value retailers thereby proving a balanced mix for the 5.2 million customers that visit the centre annually. Key high quality retailers include: Marks & Spencer, New Look, Poundland and a new H&M store. The centre benefits from a stable income stream with a WALE of 8.7 years. NewRiver has identified a range of asset management initiatives which the Company believes will deliver long term benefits.
The Avenue, Newton Mearns, is located in one of the most affluent districts of Glasgow. The town has experienced higher population growth than the UK average which is set to continue with an additional 1,000 homes planned over the next 5 years. The Avenue is the dominant retail offer within Newton Mearns and comprises 202,000 sq ft of retail space, 1,084 free car parking spaces and is a classic convenience led shopping centre anchored by Asda and Marks and Spencer supported by other major brand retailers such as Boots, Superdrug, O2, and Costa Coffee. This popular shopping centre generates over 4 million customer visits per annum and is underpinned by an income stream that has a WALE of 7.2 years. A range of asset management initiatives has been identified including a significant development opportunity to undertake a mixed use development on surplus land within the ownership.
Abbey Centre, Newtonabbey, Northern Ireland, is ranked the third most dominant centre in Northern Ireland. This dominance reflects that the catchment area is one of the most affluent and has the second highest spend per head of population in Northern Ireland. The Abbey Centre provides the main retailing provision within the Newtonabbey catchment and comprises 264,000 sq ft, over 1,104 free car parking spaces and a range of high quality fashion retailers such as Primark, River Island, Next, JD Sports and Top Shop. In addition the centre benefits from a popular food court. The combination of a balanced retail mix including fashion, health and beauty, food and value supports an annual footfall in excess of 6 million. The centre is underpinned by a WALE of 5.1 years. This centre offers NewRiver a range of asset and development opportunities to pursue and already terms have been agreed to significantly upsize Next Plc to provide them with a new 43,000 sq ft through a partial redevelopment of the centre. This significant endorsement by Next, one of the UK's leading retailers, of the Abbey Centre will greatly enhance the fashion and homeware offer within the centre.
Allan Lockhart, Property Director at NewRiver Retail, said:
"We are delighted to be acquiring these three high quality shopping centres at what we believe is an attractive price reflecting a net initial yield of 8% and significantly below replacement cost. In addition to benefiting from an attractive double digit cash on cash return underpinned by strong underlying retailer sales, there are opportunities to enhance returns through our proven asset management and development skills.
Following our successful equity fund raising earlier this year, this transaction demonstrates NewRiver Retail's ability to deploy shareholder funds efficiently and wisely and strengthens our position as one of the UK's leading value-creating real estate specialists
This major acquisition increases the growth asset base of NewRiver Retail to £730m and represents a significant milestone in the company's plan to reach £1bn of assets under management in the near future."
For further information
NewRiver Retail Limited David Lockhart, Chief Executive Mark Davies, Finance Director |
Tel: 020 3328 5800 |
Bell Pottinger David Rydell/Guy Scarborough/James Newman |
Tel: 020 7861 3232 |
Liberum Tim Graham/Simon Atkinson/Jamie Richards |
Tel: 020 3100 2000 |
About NewRiver
NewRiver Retail Limited is an AIM listed REIT. The Company is a specialist real estate investor and asset manager focusing solely on UK retail with a particular focus on food and value retailing.
The management team, with over 100 years combined experience in the UK commercial property market, actively engages with retailers, stakeholders and consumers. NewRiver Retail is the UK's third largest shopping centre owner by number with assets under management of approximately £730 million principally comprising 26 UK wide shopping centres, 17 high street assets, 1 supermarket, four retail warehouses and a portfolio of 202 public houses principally suitable for conversion to alternative uses. The portfolio has 1,280 occupiers, a total of over 5 million sq ft, total annual footfall of over 110 million and a retail occupancy rate of 96 per cent.
The Company's activities include active and entrepreneurial asset management and risk-controlled development, utilising both its own balance sheet and co-investment joint venture structures.
Founded in 2009, NewRiver has become the UK's leading retail-focused property investment business. The Company's shares were admitted to London's AIM in September of the same year. For more information on NewRiver, please visit www.nrr.co.uk.
