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(Alliance News) - NewRiver REIT PLC on Friday said its joint venture with Bravo Strategies III LLC - in which it holds a 10% stake - has acquired Moor, a 28-acre estate in Sheffield city centre.
The estate comprises 15 assets capable of being sold separately, which provides inherent liquidity and offers a range of mixed-use development opportunities. NewRiver said it has identified the potential to develop up to 1,100 build-to-rent residential units and up to 300 purpose-build student accommodation units, offering significant capital growth opportunities.
The London-based developer of retail and leisure assets said the estate was bought from CEP ASI UKPF Nominee 1 Ltd and CEP ASI UKPF Nominee 2 Ltd forGBP41.0 million, representing a capital value of GBP60 per square feet.
The acquisition price of GBP41.0 million reflects a significant discount to the breakup value of these individual assets, the company said. It also represents a net initial yield of 9.1%, which is expected to rise imminently following the completion of a number of leasing deals to 9.8%.
NewRiver said its share of the consideration will be satisfied from existing resources, with completion scheduled for April 1. NewRiver will hold a 10% interest in the asset and will benefit from 10% of the net rental income of GBP4.0 million per annum.
NewRiver said it will also be appointed as asset and development manager, in return for a management fee calculated with reference to the gross rental income and development costs of the asset, and will receive a promote based on financial performance.
"This acquisition will generate very attractive returns for NewRiver, driven by sustainable rental income and capital growth through the redevelopment of parts of the estate, principally for residential uses," said NewRiver Chief Executive Allan Lockhart.
"Taking a 10% stake ensures we maintain our financial discipline, as we remain on track to meet our target of GBP80 million to GBP100 million of disposals this financial year," added Lockhart.
NewRiver shares were trading 2.0% higher in London on Friday at 87.70 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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