Trading Update - Return to Capital Growth in H2
NewRiver REIT plc
("NewRiver" or the "Company")
Trading Update - Return to Capital Growth in H2
NewRiver is today providing a trading update ahead of the announcement of our Full Year Results on 7 June 2022.
· Portfolio returned to capital growth in H2
· Continued progress on disposals in-line with last reported valuation
· Significant Loan to Value ('LTV') reduction creating surplus capital position
· Robust Q4 operational metrics
· FY22 Underlying Funds From Operations ('UFFO') expected to be at upper end of analysts' estimates1
Portfolio valuation
The independent valuers have concluded their work on NewRiver's property portfolio as at 31 March 2022. Overall this shows c.2.5% capital growth in the second half of FY22. This growth has been led by retail parks which have continued the positive momentum seen over the last 18 months, but pleasingly we have also seen our Core and Regeneration Shopping Centres return to capital growth in the second half. We have seen further decline in our Work Out Shopping Centre assets, but the rate of decline has slowed markedly when compared to the first half of FY22 and we have made good progress with our disposal and repositioning schedule.
Disposal progress
Since 1 April 2021, we have completed £305 million of disposals. Excluding the sale of Hawthorn2 we completed £77 million of retail disposals, £69 million of which were completed in the second half of the financial year on terms in-line with last reported book value. The largest capital transaction completed in the second half was the disposal of the Regeneration Shopping Centre in Cowley, Oxford, for gross proceeds of £38.8 million.
Balance sheet position
The progress we have made on disposals and the capital growth our portfolio has generated in the second half of FY22 mean that we expect LTV at 31 March 2022 to have reduced further to less than 35%, significantly below our LTV guidance of 40%. As a result, we have surplus capital to deploy in-line with our return focused approach to capital allocation on which we will provide a further update in our Full Year Results. This LTV position compares to 50.6% at 31 March 2021 and 39.4% at 30 September 2021.
Furthermore our disposal activity has reduced net debt to c.£222 million at 31 March 2022, from £493 million at 31 March 2021, the coupon on our drawn debt is fixed and we have no maturity on drawn debt until March 2028.
Operational performance
Rent collection for Q1-Q4 FY22 currently stands at 95% of rent demanded and rent collection in respect of Q1 FY23, due on 25 March 2022, is currently tracking ahead of collection at the same point last year.
Leasing volumes have improved throughout FY22, with 367,300 sq ft of new lettings and renewals secured in Q4 which compares to 383,800 sq ft for the whole of H1. Long-term deals, which represented 95% of the £2.3 million of annualised rent secured in Q4, were signed on average 4.5% ahead of September 2021 ERVs. For FY22 as a whole, long-term deals were signed on terms on average 7.4% ahead of latest ERVs.
Occupancy remained high at 95.6% (March 2021: 95.8%), with average rent remaining affordable at £11.74 per sq ft (March 2021 £11.51 per sq ft).
The strength of our underlying operations, together with the benefit of the finance cost savings unlocked earlier in the year, mean that we expect that FY22 UFFO will be at the upper end of analysts' estimates1.
1. Current analyst consensus for 31 March 2022 UFFO is £24.4 million / 8.0 pence per share, comprising six analyst forecasts ranging from £21.5 million to £27.1 million / 7.0 pence per share to 8.8 pence per share
2. Hawthorn pub business, disposal completed on 20 August 2021
For further information
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NewRiver REIT plc |
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+44 (0)20 3328 5800 |
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Allan Lockhart (Chief Executive) Will Hobman (Chief Financial Officer) |
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Lucy Mitchell (Communications & Investor Relations) |
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Finsbury Glover Hering |
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+44 (0)20 7251 3801 |
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Gordon Simpson James Thompson |
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The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of the law of England and Wales by virtue of the European Union (Withdrawal) Act 2018. 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 and developing resilient retail assets throughout the UK.
Our £0.7 billion portfolio covers 8 million sq ft and comprises 28 community shopping centres and 15 conveniently located retail parks. We have hand-picked our portfolio to focus on occupiers providing essential goods and services and to support the development of thriving communities across the UK, while deliberately avoiding structurally challenged sub-sectors such as department stores and mid-market fashion. Our objective is to own and manage the most resilient retail portfolio in the UK, focused on retail parks, core shopping centres, and regeneration opportunities in order to deliver stable income and capital growth to our investors.
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
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