NewRiver Share News (NRR)

(Sharecast News) - NewRiver REIT said on Thursday that its business model was delivering "sustainable" cash returns, underpinned by its unsecured balance sheet, as its full-year funds from operations fell to £56.4m from £60.3m.The FTSE 250 real estate investment trust said its funds from operations per share for the year ended 31 March stood at 18.5p, down from 21.2p year-on-year, explaining that the decrease was primarily due to the £4.8m profit on disposal it reported in the 2018 financial year.Underlying funds from operations, excluding profits and losses on the disposal of investment properties, was £55.1m, broadly in line with the £55.5m reported the year before, as underlying funds from operations per share slipped to 18.1p from 19.5p.The company's ordinary dividend per share rose 3% to 21.6p, which was 84% covered by underlying funds from operations, improving from the 78% cover it reported in the first half thanks to the phasing of net acquisitions.Its first quarter ordinary dividend was maintained for the 2020 financial year at 5.4p.EPRA net asset value per share was down to 261p at year-end, from 292p 12 months earlier, impacted by a portfolio valuation decline of 6.4%.NewRiver's total property return was a positive figure of 1.3%, which was 410 basis points ahead of the MSCI-IPD benchmark, with its total accounting return a negative figure of 3.3%, swinging from a positive 8.1% in the 2018 financial year.The firm's proportionally consolidated loan-to-value ratio was 37%, rising from 28% at the start of the year due mainly to net investment activity.IFRS net assets stood at £796.1m at year-end, down from £892.4m, while its IFRS loss after tax was £36.9m, swinging from a profit of £45.7m year-on-year due to a non-cash valuation decline of £89.5m.The company's IFRS basic losses per share totalled 12.1p, compared to earnings of 16p in the year ended 31 March 2018.Looking at its operations, NewRiver's retail occupancy stood at 95.2% at year-end, down slightly from 96.5% year-on-year, while its pub occupancy slipped to 97.9% from 99.0%.Its leasing activity totalled 1.2 million square feet, consisting of long term deals on terms 0.5% ahead of previous rent and in-line with its estimated recovery value.The board reported an "affordable" average retail rent of £12.52 per square foot, up from £12.36 year-on-year, and said it had deliberately limited its exposure to "structurally challenged" sub-sectors such as department stores, which made up less than 0.1% of total income, and casual dining, which made up 1.2%.Like-for-like footfall across its shopping centres declined 2.4%, which was still ahead of the UK benchmark by 20 basis points.The company said it was undertaking strategies to deliver underlying funds from operations growth, and a fully covered dividend with a net neutral investment approach, having established a joint venture with BRAVO to acquire four retail parks in Aberdeen, Dundee, Inverness, and on the Isle of Wight for £60.5m.NewRiver's share of that was £30.3m, reflecting a net initial yield of 9.8%, with the board saying the move re-established a successful partnership and would grow its exposure to conveniently-located retail parks.It also signed three asset management agreements, including with Canterbury City Council, for the management of Whitefriars Shopping Centre, Canterbury, and with Areli Real Estate for Nicholsons Shopping Centre in Maidenhead.The firm said it was still active in the capital markets while remaining net neutral in retail, deploying its capital into pubs.In retail, it acquired £35.5m of assets at a blended net initial yield of 9.1%, and recycled £36.2m at a blended net initial yield of 6.4%, at pricing 7.0% ahead of book value.For its pub estate, NewTiver acquired £126.6m of assets at a blended net initial yield of 13.9% and recycled £31.3m of pubs, pub land and convenience stores at a blended net initial yield of 4.0%, with pricing 2% ahead of book value.Hawthorn Leisure was acquired in May last year for an enterprise value of £106.8m, representing a net initial yield of 13.6%, with that portfolio consisting of 298 "high quality" community pubs and an established pub management platform.Integration of the acquisition was completed in January of this year, which NewRiver said unlocked £2.1m of £3m of expected annualised operating cost synergies.On the development front, NewRiver said that In November, it completed the 62,000 square foot Canvey Island Retail Park development, confirming M&S Foodhall, B&M, Sports Direct and Costa were now open and trading, with a fully-let annualised rent roll of £1m and a projected yield on cost of 9%.Its convenience store development programme for the Co-op saw the completion of six stores during the year, bringing the total number delivered to 25.Eight were sold in the period, at a blended net initial yield of 4.9%."We have delivered a robust performance during the year despite the significant headwinds facing the UK retail sector," said chief executive Allan Lockhart."While we have not been immune to these challenges, our retail portfolio is focused on the most resilient sub-sectors of the market, providing consumers with convenience, value and services which cannot easily be replicated online."In addition, the specialist and hands-on retail asset management platform we have built since NewRiver's inception almost 10 years ago means that we have been able to mitigate the impact of any retailer distress in our portfolio."Lockhart noted that the pubs business was continuing to deliver "strong" cash returns, a modest valuation uplift and opportunities to extract further value, with the integration of Hawthorn Leisure providing a solid platform for future growth."Looking ahead, we have held our dividend because we are confident that our market positioning, our growth prospects and the strength of our balance sheet give us a clear path to dividend cover."The UK retail real estate market is starting to look attractive to new capital, seeking to capitalise on market dislocation, and we plan to benefit from this by leveraging our asset management platform to manage assets on behalf of partners and third party owners."In that regard, Lockhart said the company was "delighted" to announce its new joint venture with BRAVO - a fund managed by PIMCO - and the acquisition of a portfolio of retail parks."We are pleased to have re-established this successful partnership, and we are aiming to quickly growth this portfolio, and deliver growing returns to our shareholders."