NewRiver Retail Limited
("NewRiver" or "the Company")
Third Quarter Portfolio Update
NewRiver Retail Limited (AIM: NRR), the UK REIT specilaising in value-creating retail property investment and active asset management, announces the following portfolio update for the third quarter ending 31 December 2014.
The third quarter, inclusive of the key Christmas trading period, has been another highly active period for NewRiver. The Company completed a number of key acquisitions, growing the portfolio by 8.8% to £800 million at the end of December (Sept 2014: £735 million) and continued to deliver a significant number of value-enhancing asset management and development initiatives.
Highlights
§ Assets under management increased by 8.8% to £800 million (Sept 2014: £735 million)
§ Total of £30.3 million of acquisitions comprising two shopping centres, five high street units and two retail warehouses
§ Total rent roll under management increased by 4.9% to £70.7 million pa (Sept 2014: £67.4 million)
§ Completed 54 new leasing events of which new long-term leasing events achieved a rental income of 7.8% above valuation ERV with an average lease length of 7.6 years. Occupier incentives continue to decrease, now at an average of 5 months equivalent rent for the period
§ Weighted Average Lease Expiry ("WALE") for the retail portfolio was 7.6 years (Sept 2014: 7.9 years)
§ Maintained a stable retail portfolio occupancy rate of 96%
§ Sustained an affordable average retail rent of £12.72 per sq ft (Sept 2014: £11.87)
§ Top ten retailers within the portfolio defined by rental income remain strong national covenants and include Poundland, New Look, Superdrug, Primark, Wilkinson, Dixons Carphone, BHS, Boots and Argos
§ In the period 24 planning applications were submitted, which if granted will enable the Company to deliver over 78,000 sq ft of new development space for retail-led and mixed-use, including C-Store, hotels, leisure and residential
§ Footfall continues to grow across the portfolio delivering a 3.47% uplift in like for like figures for the period. This was boosted by the Christmas trade and Black Friday with various shopping centres reporting uplifts of between 6% and 20%; annual footfall for the portfolio totals over 122 million
§ Post period end, successful equity fundraise of £75 million at 275 pence per share, enabling the Company to acquire a major shopping centre portfolio with assets across the UK
§ Quarterly dividend policy commenced with a second interim dividend of 4.25 pence per share announced in November 2014 and a third interim dividend of 4.25 pence per share announced in December 2014.
Successful Equity Fundraise and Acquisition:
Post period end, NewRiver announced the successful completion of an equity fundraise of £75 million. The fundraise was voted on by shareholders at an EGM on Thursday 8 January 2015. Accordingly, the Company has issued 27,272,727 of new ordinary shares. The new shares were issued at 275p per share which was a 9.1% Premium to the reported EPRA NAV Per Share. Funds raised enabled NewRiver to acquire the remaining 90% of a major shopping centre portfolio for £71 million from LVS with assets across the UK, the completion of which was announced on 15 January 2015.
Quarterly Dividends:
In November the Board declared that a second quarterly dividend of 4.25 pence per share would be paid on 30 January 2015 to shareholders. On 03 December 2014 the Company announced a third quarterly dividend of 4.25 pence per share to be paid on 30 January 2015 to shareholders on the register on 5 January 2015. The Company expects to pay its fourth quarterly dividend for the year ended 31 March 2015 in April 2015.
David Lockhart, Chief Executive at NewRiver Retail, said:
"We are delighted to have concluded 2014 with such a highly active third quarter. During the period we executed our growth strategy by completing £30.3 million of acquisitions and submitted major planning applications, which if granted will enable us to deliver over 78,000 sq ft of new development space. We look forward to the opportunities that 2015 presents, particularly following our most recent acquisition of a major UK shopping centre portfolio which promises exciting value-enhancing asset management and risk controlled development opportunities."
Acquisitions:
Montague Shopping Centre, Worthing (1)
Successfully completed the acquisition of the Montague Shopping Centre in Worthing, West Sussex for a total consideration of £5.82 million, reflecting a net initial yield of 7.7%. The shopping centre was acquired using existing cash resources. Forming the principle part of this south-east coastal town's retail offer, the Montague centre, a food, value and convenience-led shopping centre in the heart of Worthing, is a strategic acquisition in line with NewRiver's core portfolio. The 67,000 sq ft centre has a WALE of 3.1 years, an occupancy rate of 92% and a strong covenant of national retailers including Laura Ashley, Game, HMV, Boots, TK Maxx and McDonalds.
NewRiver had knowledge of the centre through its existing ownership of the long leasehold interest in the TK Maxx within the centre. The acquisition included the freehold acquisition of the TK Maxx store resulting in the immediate benefit of marriage value.
The Company has identified a number of significant asset management and development opportunities to drive and enhance the value of the centre. This includes engaging with Worthing Town Council to discuss the refurbishment of common parts, a centre re-brand and the introduction of a new restaurant quarter.
Eastham Point Retail Warehouse, The Wirral (1)
Acquisition of Eastham Point Retail Warehouse, The Wirral, eight miles south-east of Liverpool, for £2.4 million reflecting a net initial yield of 8.6%. The 10,202 sq ft retail warehouse completed in 2005 to a high specification and striking design, is 100% let to Snow & Rock and Bathstore with a combined average WALE of 4.03 years. The asset benefits from free parking and is ideally located in a prominent roadside location.
The site has a number of development opportunities including gaining unrestricted planning consent and the creation of a third unit.
Orritor Road Retail Park, Cookstown (1)
Acquisition of the Orritor Road Retail Park, Cookstown, Northern Ireland for a total consideration of £3.21 million, reflecting a net initial yield of 7.8%. The 25,045 sq ft site is in a prominent location within the town and provides a core retail offer for the area. The retail warehouse has free parking and is 100% let to three strong covenants, Halfords, Iceland and B&M, with an average WALE of 8.45 years excluding breaks.
The acquisition represents the Company's growing presence in Northern Ireland following the acquisition of the Abbey Centre, Newtownabbey, Belfast as part of the £140 million Swallowtail portfolio in August 2014.
Acquisition of Sands Portfolio (1)
As announced on 18 December, NewRiver completed the acquisition of the Sands Portfolio, which includes the Arndale Shopping Centre in Morecambe and five UK High Street assets (the "Portfolio"), for a total consideration of £19 million, equating to a net initial yield of just under 9.75%. The Company completed the acquisition of the portfolio using existing cash resources. In total, the portfolio comprises 141,000 sq ft and benefits from a high occupancy of 95%. Key retailers include Poundland, Boots, Argos, Topshop, McDonalds and Greggs.
Active Asset Management & Development:
Marston's pub portfolio (2)
Strong progress continues across the Company's pub portfolio following the Agreement for Lease with The Co-operative Group Limited in September to lease new convenience stores from the portfolio acquired from Marston's PLC. Following detailed planning and local consultations with respective stakeholders during the latter part of 2014, the majority of intended planning applications will have been submitted by the end of January 2015. The current portfolio EBITDA is performing above the guaranteed income received from Marston's Plc by 2.75%.
The Abbey Centre, Newtownabbey, Belfast (2)
Following the Company's announcement of a 15 year Agreement for Lease with Next for a new 43,000 sq ft store at a rent of £475,000 pa the Company has completed two further lettings. The first, the 10 year lease renewal with a break at 5 years to Uberfone, a local mobile phone accessories operator, for a rent of £28,000 pa; the second, the straight assignation of the former Phones 4U unit in the centre to Vodafone at the passing rent of £56,000 pa.
Newkirkgate, Leith, Edinburgh (2)
First phase of the refurbishment works have been completed at Newkirkgate which includes the installation of new branding and signage throughout the mall.
The Avenue, Newton Mearns (2)
Secured new letting to Niche, a local specialist whiskey gift shop, at £30,000 pa on a 5 year lease.
The Forum, Wallsend (1)
Forming phase two of the development works for The Forum, a planning application was submitted for the development of the adjoining site to create a new 18,500 sq ft food store, drive-thru, new car park and common parts with planning consent successfully granted on 19 January 2015. Phase two also includes an extensive programme of refurbishment works throughout the entire Centre and indoor market with work due to start in early 2015.
Vodafone has taken an assignation of the Phones 4U lease, at a passing rent £16,300 pa simultaneously agreeing a 15 year extension of the existing communications mast at £12,250 pa.
The Beacon, North Shields (2)
Planning consent has been granted for the internal and external programme of refurbishment works including a centre rebrand. Work is due to begin in Spring 2015.
NewRiver has secured a five year lease extension with Card Factory for its existing store at £27,800 pa and the conversion of a short term let to Poundland for a straight 10 year lease at £70,000 pa.
Gloucester Green, Oxford (2)
Completed the letting of Unit 104 at Gloucester Green in the heart of Oxford, with Purcell Miller Tritton LLP signing a new 10 year lease at £45,117 pa. Three further units are under offer to retailers.
Templars Square, Cowley, Oxford
Vodafone has taken an assignation of the Phones 4U lease, at a passing rent £36,000 pa.
Prospect Centre and Ferensway, Hull (2)
Following the September 2014 acquisition of the Ferensway Building, located adjacent to the Prospect Centre, the Company has submitted a detailed planning application for a mixed-use refurbishment. The plans include renovation of the outer façade, creation of a gym and introduction of additional catering. The plans will re-activate this landmark building and formerly disused space in the heart of Hull. As a result of the Company's active asset management programme and creation of new food court StrEAT, footfall for the Prospect Centre has increased year on year by 14%.
The Promenades, Bridlington (2)
Completed the letting of unit 8 to mobile phone retailer EE for a new 10 year lease at a rent of £28,000 per annum. The Company also exchanged contracts with the bookmaker Betfred on an external facing unit for a new 10 year lease at a rent of £25,000 per annum conditional on change of use planning consent which has now been granted. This letting to Betfred reflects a 28% increase in rent compared to the previous occupier and a 25% uplift on the projected business plan. Footfall grew significantly for the period, increasing by 15.9% compared to the same period in 2013.
The Packhorse, Huddersfield (3)
Contracts have been exchanged with Huddersfield's reputed department store, Peter's, to relocate from their existing King Street store into Units 27 - 29 inside the centre. Peter's department store have agreed a new 20 year lease at a rent of £75,000 per annum. The relocation forms part of the significant redevelopment of the Packhorse Centre, secures an important anchor inside the centre and is part of the strategy to improve the King Street elevation through creating and letting reconfigured units to both retail and leisure operators. Contracts have also been exchanged with Rivers Chinese restaurant for 22 Kirkgate and 1/3 Cross Church Street at a rent of £25,000 per annum for a new 20 year term. The letting forms part of the phased redevelopment of The Packhorse Centre.
Horsefair, Wisbech
Vodafone has taken an assignation of the Phones 4U lease, at a passing rent £33,360 pa.
Albert Square, Widnes (3)
Completed the letting of unit 14 to Speedloan Finance at a new rent of £25,000 per annum, reflecting a new rent that is 28% ahead of ERV.
St Elli, Llanelli
Vodafone has taken an assignation of the Phones 4U lease, at a passing rent £65,000 pa.
The Martlets, Burgess Hill (1)
Following a detailed planning review and two day public consultation in October 2014, the Company is in discussions with Mid Sussex District Council with a view to submitting a planning application for the comprehensive redevelopment of The Martlets Shopping Centre in Burgess Hill. This major planning application comprises the total redevelopment of the Martlets Shopping Centre to create substantial new retail space, as well as a cinema, hotel, restaurants and residential. The proposed development will include the relocation of Lidl to a new purpose built foodstore, together with dedicated car parking. The development will be phased with phase one expected to commence in 2015. NewRiver is working closely with the council to deliver a transformational retail and leisure town-centre destination.
Locks Heath, Fareham (1)
Following the successful introduction of Waitrose to Locks Heath Shopping Village, NewRiver are now in advanced discussions with a number of additional national operators and progressing a comprehensive reconfiguration of the car park. With the final vacant unit within the precinct currently under offer, the completion will bring the retail occupation for the centre up to 100% for the first time in a number of years, demonstrating NewRiver's active asset management and value-enhancing approach.
Newlands, Witham (1)
Units 1-2 is under offer to Roman, the value fashion retailer, and is expected to open in the first quarter of 2015. Furthermore, 46 Newland Street is under offer to a new coffee operator. The Company has extensive refurbishment development plans for the shopping centre and is currently working with Braintree District Council to bring these forward together.
Sovereign Centre, Boscombe (1)
Entered into pre-application dialogue with Bournemouth City Council to bring forward a comprehensive redevelopment of the former TJ Hughes department store which the Company acquired in May 2014 to provide a new mixed use retail and leisure development together with a car park upgrade.
TJ Hughes, Romford (1)
Successfully relet the former TJ Hughes in Romford to B&M for a new 10 year lease, at a rent of £125,000 pa for the ground floor.
Commercialisation
Commercialisation income for Q3 has performed well achieving £511,042 for the period (Sept 2014: £430,575). Notable top performers include Fareham, Bridlington, Skegness and Llanelli following NewRiver's initiative to introduce new retailer RMUs in March 2014. Terms have been agreed with UK Massage Chairs to introduce massage chairs across 13 shopping centres within the portfolio.
Contracts have been exchanged with BSKYB's The Cloud to introduce free wi-fi into five more NewRiver Centres in Bridlington, Leamington Spa, Middlesbrough, Kilmarnock and Cowley from January 2015. Wifi usage, in terms of number of users and duration of use, across NewRiver's existing Cloud portfolio is steadily increasing, confirming consumer demand for a digitally-connected retail experience and NewRiver's ability to provide this.
As part of NewRiver's initiative to embrace click and collect, terms have been agreed with Inpost to introduce a new Inpost locker to The Hildreds in Skegness and Horsefair Shopping Centre in Wisbech. The Company is in the final stages of agreeing terms with an international digital advertising operator to provide new digital pods and wall mounted screens throughout the portfolio which is expected to enhance the customer offer and significantly increase commercialisation revenue.
Key
(1) Refers to NewRiver Retail 100% owned assets
(2) Refers to joint venture with Bravo I and II (funds advised or managed by Pacific Investment Management Company LLC)
(3) Refers to Barley Joint Venture
This Third Quarter Portfolio update relates to the period 01 October 2014 - 30 December 2014. Following the completion of NewRiver's acquisition of the remaining 90% of the shopping centre portfolio from LVS, a subsidiary of Bravo (a fund advised or managed by Pacific Investment Management LLC), as announced on 15 January 2015, NewRiver now own 100% of the following assets: Templars Square, Cowley; The Promenades, Bridlington; Burns Mall, Kilmarnock; Regent Court, Leamington Spa and The Prospect Centre in Hull.
ENDS
For further information
NewRiver Retail Limited David Lockhart, Chief Executive Mark Davies, Finance Director |
Tel: 020 3328 5800 |
Bell Pottinger David Rydell/David Bass/James Newman |
Tel: 020 3772 2500 |
Liberum Chris Bowman/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 focused solely on UK retail with a particular focus on food and value retailing. NewRiver Retail was named Property Company of the Year - Retail & Leisure at the Estates Gazette Awards at the close of 2014.
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 one of the UK's largest shopping centre owner/managers with assets under management of approximately £800 million principally comprising 29 UK wide shopping centres, further nationwide retail assets and a portfolio of 202 public houses principally suitable for conversion to alternative uses. The portfolio has 1,380 occupiers, a total of over 5.2 million sq ft, total annual footfall of over 122 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.
