Trading Update

RNS Number : 8752D

NewRiver Retail Limited

12 July 2016

 

NewRiver Retail Limited

("NewRiver" or the "Group" or the "Company")

12 July 2016

First Quarter Company Update

Strong start to the financial year with a highly active first quarter

Improved retail occupancy of 97%

Robust business model well positioned to capitalise on market opportunities

NewRiver Retail Limited (AIM: NRR), the UK REIT specialising in value-creating retail property investment and active asset management, announces the following Company update for the first quarter, beginning 1 April 2016 and ending 30 June 2016.

David Lockhart, Chief Executive at NewRiver Retail, said:

"It has been another successful period for the Company and we are delighted to be delivering a first quarter dividend of 5 pence, an 11% increase year on year. Operationally the business continues to perform well, with 90 leasing events completed during the quarter and occupancy, lease length and footfall all improving in the period. We have made good progress on our Co-operative convenience store development programme, having delivered the first three stores with the next five under construction. Across the portfolio we have made further progress on our developments, securing planning consent to re-position the Montague Centre in Worthing into a vibrant restaurant quarter.

We founded the Company in 2009, during a severe recession, and since then we have consistently created value for our shareholders through our proven business model, focusing on the non-discretionary convenience-led retail sector where the UK household budget is spent day in, day out. We believe that consumers are ultimately price-driven and with our convenience-led specialism, strong operational metrics, rigorous cost-control and conservative balance sheet we feel well-positioned to withstand market uncertainties following the EU referendum result.

Importantly, since the referendum the business has remained active, progressing a number of leasing deals with major national retailers who are continuing to take space as planned. Finally, and significantly, yesterday we signed a new improved debt and refinancing facility for £85.3 million with a US based institutional lender, further endorsing our business model and reducing our interest costs."

HIGHLIGHTS

▪   Acquisitions totalling £140 million including Broadway Shopping Centre and Broadway Square Retail Park in Bexleyheath for £120.25 million, equivalent yield of 7%; and Cuckoo Bridge Retail Park, Dumfries for £20.2 million, equivalent yield of 7.9%. The Bexleyheath acquisition was part funded by a new £49 million debt facility from DekaBank at an all in cost of 2.1%.

▪    Disposals totalling £1.2 million through the sale of two pubs, delivered 39% above purchase price and 10% above March 2016 valuation, at IRR's of 54% and 98%.

▪     Assets under management now total £1.2 billion (31 March 2016: £1.1 billion) across a total area of 8 million sq ft.

▪     Rent roll under management totals £107.5 million pa (31 March 2016: £95.5 million).

▪   Improved Weighted Average Lease Expiry ("WALE") for the retail portfolio of 7.4 years (31 March 2016: 7.2 years).

▪     Increased retail occupancy rate to 97% (31 March 2016: 96%). 

▪     Like-for-like Q1 footfall marginally improved compared with Q1 2016 (national benchmark down 1.5%).

▪     Affordable average retail rent of £12.66 per sq ft (31 March 2016: £12.14 per sq ft).

▪   Occupier demand remains strong for the Company's convenience-led portfolio with Q1 delivering 90 leasing events, of which 43 were long-term new lettings and lease renewals securing annual rent of £1.65 million, 3.2% ahead of valuer's ERV with an average lease length of 9.9 years.  

▪   The portfolio's top 15 retailers (by rental income) continue to be underpinned by successful national retailers including ASDA, B&M, Boots, New Look, Poundland, Primark, Sainsbury's, Superdrug and Wilkos.

▪    Following the acquisition of Cuckoo Bridge Retail Park, Dumfries the portfolio includes 22 retail warehouses and the Company continues to drive performance through its active asset management and risk-controlled development, creating value through rental uplift and valuation growth.

▪     Good progress across the Company's 1.5 million sq ft mixed-use development pipeline including:

§ A planning application was submitted in Canvey Island to create a 65,000 sq ft retail park and a pre-application was submitted in Cardiff ahead of a major 150,000 sq ft retail and leisure re-development at the Capitol Shopping Centre. Four consents were secured in the retail portfolio in Coalville, Erdington, Fareham and most notably at the Montague Centre in Worthing where A3 consent was granted to re-position 20,000 sq ft of existing space at the shopping centre into a restaurant quarter with leading national operators.

§ First three Co-operative convenience stores now handed over and trading, securing an annual rent of £195,000 across 11,600 sq ft; on-site for a further five stores. Further progress continues with 49 convenience store planning applications submitted and 30 convenience store planning consents secured to date.

§ Value-creating residential development continues to progress well within the pub portfolio to create 150 residential units. To date we have submitted 32 planning applications and secured 11 consents to provide 26 residential units.

§ Site and car park works are underway in Wallsend, forming the first phase of the new Forum Retail Park, part of phase two of the ongoing development. Works are due to complete in August 2016 when the site will be handed over to Aldi to build a new 18,500 sq ft unit having paid a premium of £1.65 million for a 999 year lease and to Burger King, to construct a 1,450 sq ft drive-thru pod on a 10 year lease at £60,800 pa with turnover top up.

§ Excellent progress at the Abbey Centre Newtownabbey, with construction of the new 43,000 sq ft Next anchor store due to hand over in August 2016 and works for the Dunnes extension to create a 31,600 sq ft unit due to commence late summer. Revitalisation works including a brand re-launch, improved car-parking, signage and wayfinding together with three further new lettings continues to create value at the centre.

▪     Dividend increased by 11% in the first quarter to 5 pence per share (Q1 FY16: 4.5p), payable on the 19 August 2016 to shareholders on the register on 22 July 2016. The ex-dividend date will be 21 July 2016. The increase in quarterly dividend demonstrates the Company's commitment to shareholders and confidence in the business model.

▪   Secured an £85.3 million debt facility with a major US insurance company, replacing an existing £63 million facility. The facility improves the financing provided when the Company acquired 202 pubs from Marston's Plc in November 2013. Under the revised terms, the facility amount has increased to £85.3 million of which £70 million is available to draw immediately, the bank margin is reduced by 30% and the loan maturity is extended to 2021.

     The Company is making good progress in its move up to the Main Market and obtaining a Premium Listing and is on track to complete this by September 2016. 

ENDS

For further information

NewRiver Retail Limited  David Lockhart, Chief Executive Mark Davies, Finance Director Will Hobman, Head of Investor Relations	Tel: [phone]
Bell Pottinger David Rydell / James Newman / David Bass / Eve Kirmatzis	Tel: [phone]
Liberum Richard Crawley / Jamie Richards	Tel: [phone]
Peel Hunt LLP Capel Irwin / Edward Fox	Tel: [phone]

About NewRiver

NewRiver Retail Limited is an AIM listed REIT. The Company is a specialist real estate investor, asset manager and developer focused solely on the UK retail sector. NewRiver Retail was named Property Company of the Year at the 2016 Property Week Awards.

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 £1.2 billion principally comprising 33 UK wide shopping centres, further nationwide retail assets and a portfolio of 356 pubs with retail and mixed-use extension opportunities. The portfolio totals over 8 million sq. ft. with almost 2,000 occupiers, an annual footfall of 150 million and a retail occupancy rate of 97 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 

 

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