NewRiver REIT plc
("NewRiver" or the "Company")
Statement on Coronavirus (COVID-19)
NewRiver is today providing an update on the impact of the Coronavirus (COVID-19) pandemic on its business and the measures it is taking to manage the risks presented by the virus.
Key Points
· The Company's focus is on managing cash resources very carefully and maintaining liquidity in the business. The Company has £72 million of unrestricted cash reserves and £45 million of undrawn revolving credit facilities, giving available liquidity of £117 million.
· NewRiver benefits from a wholly unsecured balance sheet. No bank refinancing events are due prior to August 2023, with the Company's £300 million corporate bond not due for repayment until 2028.
· Consistent with NewRiver's focus on cash preservation and liquidity, the Board has decided not to pay a fourth quarter dividend. This preserves £17 million of cash. The Company will update shareholders on dividends at the time of its Full Year Results announcement.
· The Company is also taking a prudent approach to preserving cashflow and reducing operational costs. These measures include the suspension of all non-essential capital expenditure projects, which will improve cashflow over the next 12 months by £24 million, and the suspension of business rates and marketing in our shopping centres and our pubs which will improve cashflow by a further £4 million.
· NewRiver remains a financially sound business with significant covenant headroom and a capital structure that is well placed to absorb a prolonged period of uncertainty.
· NewRiver's retail portfolio of shopping centres and retail parks represents more than 70% of our total portfolio valuation and net property income. These assets are typically anchored by major food and grocery brands and serve the everyday shopping needs of their local communities. We continue to have no department store exposure and very limited fashion and casual dining exposure. Our 723 wet led pubs are typically community based, local pubs providing an important social purpose with little or no dependency on food.
Q4 Dividend
It is too early to quantify the impact of COVID-19 on the Company's operations. A significant part of the Board's financial focus for the foreseeable future must therefore be on liquidity and trading through to more normalised conditions. To that end, the Board has decided not to pay the fourth quarter dividend for the financial year ending 31 March 2020. The total dividend paid for the year ending 31 March 2020 will therefore be 16.2 pence per share. The impact of this decision is to preserve an additional £17 million of cash. The Company will update shareholders on dividends at the time of the announcement of the Full Year Results. The Board wishes to return to a consistent programme of dividend payments as quickly as possible, but this can only be done on the return to normalised trading conditions. The Board considers this to be the most prudent course of action until the impact of COVID-19 becomes clearer.
Operational update
Safety and Wellbeing
In this rapidly evolving situation, the safety and wellbeing of NewRiver's staff, occupiers, tenants and pub partners, and the customers who visit our assets, are a major priority. Currently, all our retail assets and almost all our community pubs are operational, and we stand ready to act on the latest advice from the UK Government.
Retail portfolio
NewRiver's retail portfolio, mainly comprising community shopping centres and retail parks, represented 77% of our total portfolio by valuation and 70% of our net property income, as at 30 September 2019. This portfolio is focused on occupiers in the food & grocery, health & beauty, discounter and essential services sub-sectors, and almost two-thirds of our retail assets are anchored by a major food and grocery brand. This underscores the vital role that our assets play in meeting the everyday needs of consumers. The resilience of our portfolio positioning is reflected in a 660 bps outperformance of the UK footfall benchmark over the week ended 15 March, with a year-on-year footfall decline of -0.7% across our shopping centres. In addition, the Company has in the last few days exchanged contracts on two new lettings, with a major discounter at Sprucefield Retail Park and a food & grocery retailer at Wakes Retail Park. NewRiver continues to benefit from no exposure to department stores, and limited exposure to mid-market fashion and casual dining operators, which are some of the sub-sectors most impacted by COVID-19.
Community pub portfolio
Our community pub portfolio, which includes a number of Co-op convenience stores, represented 23% of our portfolio by valuation and 30% of our net property income, as at 30 September 2019. Most of our community pubs operate under the 'Leased & Tenanted' model, whereby individual occupiers have control over whether sites remain open, although we are engaging closely with our occupiers to provide support and ensure adherence to the latest UK Government advice. The majority of our 'Operator Managed' pubs remain open and trading, although we are currently assessing UK Government advice and will take all necessary steps to ensure occupier and customer safety.
In addition, the occupiers across our retail and community pub portfolios also stand to benefit from the measures announced by the UK Government on 17 March, giving all retail, hospitality and leisure businesses in England a 100% business rates holiday for the next 12 months, and providing £25,000 grants to businesses in the same sectors with rateable values between £15,000 and £51,000. For our retail portfolio alone, these measures are expected to save our occupiers over £40 million. Almost all our community pubs have a rateable value below £51,000, so this will provide further indirect benefit to our portfolio, and NewRiver's own business rates bill across its community pubs portfolio will be reduced by £1 million.
NewRiver remains a financially sound business with a capital structure that is well placed to absorb a prolonged period of uncertainty, and we welcome the measures outlined by the UK Government on 17 March to provide financial support for the retail and hospitality sectors.
For further information
NewRiver REIT plc |
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+44 (0)20 3328 5800 |
Allan Lockhart (Chief Executive) Mark Davies (Chief Financial Officer) |
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Tom Loughran (Head of Investor Relations) |
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Finsbury |
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+44 (0)20 7251 3801 |
Gordon Simpson James Thompson |
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This announcement contains inside information as defined in Article 7 of the EU Market Abuse Regulation No 596/2014 and has been announced in accordance with the Company's obligations under Article 17 of that Regulation. This announcement has been authorised for release by the Board of Directors.
About NewRiver
NewRiver REIT plc ('NewRiver') is a leading Real Estate Investment Trust specialising in buying, managing, developing and recycling convenience-led, community-focused retail and leisure assets throughout the UK.
Our £1.3 billion portfolio covers 9 million sq ft and comprises 33 community shopping centres, 25 conveniently located retail parks and over 700 community pubs. Having hand-picked our assets since NewRiver was founded in 2009, we have deliberately focused on the fastest growing and most sustainable sub-sectors of the UK retail market, with grocery, convenience stores, value clothing, health & beauty and discounters forming the core of our retail portfolio. This focus, combined with our affordable rents and desirable locations, delivers sustainable and growing returns for our shareholders over the longer term, while our active approach to asset management and in-built 2.3 million sq ft development pipeline provide further opportunities to extract value from our portfolio.
NewRiver has a Premium Listing on the Main Market of the London Stock Exchange (ticker: NRR). Visit www.nrr.co.uk for further information.
LEI Number: 2138004GX1VAUMH66L31
