Last checked at 22 Aug 2011 07:00
NewRiver Retail Limited
("NewRiver" or "the Company")
Portfolio Update
NewRiver Retail Limited (AIM: NRR), the UK REIT specialising in value-creating retail property investment and active asset management, today announces the following update on portfolio activities.
Acquisition of The Sovereign Centre, Boscombe
The Company is pleased to announce that it has completed the acquisition of the long leasehold interest of The Sovereign Shopping Centre, Boscombe. The property is being acquired from UBS Global Asset Management (UK) Ltd for a total consideration of £12.0 million, funded through a mixture of cash and debt, reflecting a net initial yield of circa. 9.6%. The shopping centre provides approximately 86,000 sqft of retailing space anchored by Sports Direct, Poundland, Peacocks, 99p Stores and New Look together with direct links into adjoining anchor tenants Wilkinson, Lidl and Boots.
Boscombe is a busy Bournemouth district centre with consistent year on year footfall of over 6 million people. The Sovereign Centre is located close to the town's principal bus station and includes a 620 space car park. The Centre links directly into Christchurch Road, the pedestrianised retail thoroughfare.
In total there are 48 tenancies and the current gross rent roll is £1.6 million per annum with an average weighted unexpired lease length of 10.7 years. 64% of the income, including the car park is secured to non-discretionary retail traders offering defensive characteristics.
Management believe that this is an excellent fit with NewRiver's investment strategy of targeting food and value anchored district centres, with low occupational costs, stable cashflows and identified development and value creating opportunities.
Acquisition of 23-24 Market Place, Great Yarmouth
The Company has recently completed the purchase of 23-24 Market Place, Great Yarmouth for a total consideration of £2.5 million. The property, which is located in a prime retailing position, has a total gross internal area of 41,280 sqft. Based on NewRiver's purchase price the capital value per sqft is £60.56 which is below replacement cost.
The property was let to Life & Style Retail Ltd at £200,000 per annum, although they are currently in administration and no longer trading from the premises. Simultaneously with the purchase, an agreement for lease was negotiated with Poundland for a new 10 year lease at £295,000 per annum, reflecting a net initial yield on purchase costs of 11.2%. The purchase has been funded with cash and once a debt facility has been arranged the cash on cash return is estimated to be 45% per annum.
This is an opportunistic purchase enabling value creation from day one through the Company's excellent relationship with Poundland. It fits with the Company's investment strategy of targeting retail properties where the predominant tenant profile is from value retailers occupying "big box" space. Furthermore, this acquisition is highly profitable and will provide an attractive annual cash on equity return.
Disposal of 41 George Street, Canterbury
The Company has completed the sale of 41 George Street, Canterbury to a private client of Henderson Global Investors, for a total consideration of £5.0 million, reflecting an exit yield of 6.3%. The property was the lowest yielding investment in the REDEVCO portfolio acquired in May 2010 and is currently let to Wilkinson. NewRiver successfully increased the rent at review following a full store refit and branding.
The sale yielded a profit over the original purchase price and also exceeds the most recent valuation of 31 March 2011. It delivered a geared IRR of 16% and the cash realised will be recycled into new high yielding, value creating opportunities.
Appointment as development and asset manager for The Market Centre Crewe by Scottish Widows Investment Partnership (SWIP)
NewRiver is delighted to announce that the Company has been appointed by SWIP as the development manager on The Market Centre, Crewe. The partially covered shopping centre provides 155,000 sq ft of retail accommodation in 25 units and benfits from a 290 space surface car park. This further extends NewRiver's relationship with SWIP, as the Company also advises on asset management and development at Abbey Shopping Centre in Abingdon, Oxon.
Property Director of NewRiver, Allan Lockhart said:
"The transactions announced today demonstrate the capabilities of NewRiver to acquire attractive real estate, enhance value and recycle capital through sales. In particular the purchase and simultaneous re-let of the asset at Great Yarmouth demonstrates our opportunistic capabilities and strong relationships with dynamic and growing retailers. We are also delighted to extend the existing relationship with Scottish Widows Investment Partnership who we regard as an important partner. Total assets under management by NewRiver are now circa £250 million and involve a range of risk controlled development and refurbishment opportunities.
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For further information
NewRiver Retail Limited Tel: 020 3328 5808
David Lockhart, Chief Executive
Pelham Bell Pottinger Tel: 020 7861 3232
David Rydell/Rosanne Perry
Cenkos Securities
Ian Soanes/Max Hartley Tel: 0207 397 8900
About NewRiver
NewRiver Retail Limited is a REIT status specialist real estate investor and asset manager focusing solely on the UK retailing sector with a particular focus on food and value retailing. The management team, led by David Lockhart, have more than 75 years' combined experience in UK commercial property markets. With assets under management at circa £250 million 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. It is NewRiver's intention to become one of the leading sector-focused value-creating property investment businesses operating in the UK retail sector. The Company was founded in 2009 and its shares were admitted to London's AIM and Channel Islands Stock Exchange (CISX) in September of the same year. For more information on NewRiver, please visit www.nrr.co.uk.