NewRiver Retail Limited Q2 Portfolio Update (8926C)

TIDMNRR

RNS Number : 8926C

NewRiver Retail Limited

21 October 2015

NewRiver Retail Limited

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

Q2 Portfolio Update

Strong second quarter sees GBP222.3 million of strategic acquisitions at a combined average yield of 9.6% and continued progress on value-enhancing asset management and risk-controlled development

NewRiver Retail Limited (AIM: NRR), the UK REIT specialising in value-creating retail property investment and active asset management, announces the following portfolio update for the second quarter, beginning 1 July 2015 and ending 30 September 2015.

HIGHLIGHTS

   -- Deployment of GBP150 million equity fundraise and the completion of four strategic acquisitions totalling 
      GBP222.3 million, reflecting an average yield of 9.6%: 
 
   -- GBP69.10 million acquisition of the Ramsay Retail Warehouse Portfolio, equating to a net initial yield of 8.0% on 
      the income producing assets 
 
   -- GBP60.75 million acquisition from LVS, a subsidiary of Bravo II, for the acquisition of the 50% stake not already 
      owned by NewRiver in the Trent JPUT - the Marston's public house portfolio, at an implied net initial yield of 
      10.1% 
 
   -- GBP38.95 million acquisition from LVS, a subsidiary of Bravo II, of the 50% stake not already owned by NewRiver, 
      in the Camel III JPUT - a portfolio of five shopping centres reflecting an implied net initial yield of 7.2% 
 
   -- GBP53.50 million acquisition of 158 pubs from Punch Taverns at a net initial yield of 13.5% 
 
   -- Announced second quarterly dividend of 4.5 pence per share in respect of the year ended 31 March 2016 totalling 9 
      pence per share for the half year to 30 September 2015. 
 
   -- Debt facility agreed with Lloyds Bank Plc to fund NewRiver's retail warehouse portfolio with a 1.90% margin 
      payable on the investment facility and intention to convert to a fixed rate for at least 75% of the loan equating 
      a total loan interest cost at inception of 3.16%. The Company's current cost of debt remains low at 3.72% with 
      good maturity of 4 years. 
 
   -- Assets under management increased by 17% to GBP1 billion at the end of September 2015 (30 June 2015: GBP849 
      million). 
 
   -- Detailed planning application submitted following successful pre-application discussions with Mid Sussex Council 
      on a GBP65 million major mixed use town centre development in Burgess Hill totalling 465,000 sq ft. 
 
   -- Public consultation completed for a GBP64 million mixed-use 225,000 sq ft regeneration development of Templars 
      Square, Cowley, Oxford, with a planning submission targeted for the end of 2015. 
 
   -- Significant progress on the Company's alternative use and extension strategy within the existing pub portfolio, 
      submitting a further three planning applications and successfully securing another nine approvals taking the 
      total number of planning applications submitted to 48 and the total planning approvals received to 22. 
 
   -- Construction commenced on surplus land for the first of the Company's convenience stores for the Co-operative 
      Group with completion expected for December 2015 and handover to the Co-Operative Group planned for January 
      2016. 
 
   -- Great progress on the retail warehouse portfolio with three planning applications secured in Felixstowe, 
      Kirkstall and Hull with a further five planning applications due for submission in Q3. 
 
   -- Total rent roll under management increased by 19% to GBP85.3 million per annum (30 June 2015: GBP71.7 million). 
 
   -- Weighted Average Lease Expiry ("WALE") for the retail portfolio is 7.4 years (30 June 2015: 7.5 years). 
 
   -- Improved retail occupancy rate of 96.3% (30 June 2015: 96.0%). 
 
   -- The average retail rent for the portfolio, including recent acquisitions, remains at an affordable level of 
      GBP12.35 per sq ft. 
 
   -- 54 leasing events achieved during the period of which 21 were new lettings and lease renewals, securing a total 
      of GBP0.6 million per annum in long-term rent. New long-term leasing events achieved a rental income 22.6% above 
      ERV (30 June 2015: 2.1%) with an average lease length of 8.7 years. Occupier incentives continue to decrease, now 
      at an average of 5.7 months equivalent rent for the period. 
 
   -- Strong retail covenants across the portfolio with the top 15 retailers defined by rental income including 
      Poundland, New Look, Boots, Primark, ASDA, Argos, Wilkos and Sainsbury's. 
 
   -- Good progress continues across the Company's growing development pipeline, comprising over 1.25 million sq ft of 
      mixed-use space including retail, leisure, hotels and residential. 

David Lockhart, Chief Executive at NewRiver Retail, said:

"The second quarter of the year has once again demonstrated NewRiver's ability to successfully deploy equity capital into targeted acquisitions, following our recent GBP150 million fundraise. Acquisitions completed during the period totalled GBP222.3 million, growing assets under management to GBP1 billion, the vast majority of which are now on our own balance sheet. We were also pleased to announce a second quarterly dividend of 4.5 pence per share, equating to a total of 9 pence per share for the half year to 30 September 2015.

The Company's risk-controlled development programme is growing significantly. Our pub portfolio and convenience store programme for the Co-operative Group is advancing well and we are making good progress on major town centre developments in Burgess Hill and Oxford, which promise to make a real difference to these town centres, in turn creating significant value for the Company and its shareholders."

DIVIDEND

During the period the Company announced that it has declared a second quarterly dividend of 4.5 pence per share in respect of the year ended 31 March 2016. The ex-dividend date will be 22 October 2015. The quarterly dividend will be payable as a REIT Property Income Distribution (PID) on 13 November 2015, to shareholders on the register at close of business on 23 October 2015. For the half year to 30 September 2015, the dividend increased by 5.9% to total 9 pence per share (2014: 8.5 pence).

ACQUISITIONS

During the period, NewRiver completed four strategic acquisitions totalling GBP222.3 million, deploying the proceeds from the recent GBP150 million equity fundraise into strategically selected acquisitions. Acquisitions during the period saw the Company's assets under management increase to GBP1 billion. Acquisitions included:

   -- GBP69.10 million Ramsay Retail Warehouse Portfolio acquisition, equating to a net initial yield of 8.0% on the 
      income producing assets. The geographically diverse portfolio was acquired from a major foodstore operator and 
      comprises 13 assets including nine value-led retail parks and four development sites each with approved planning 
      consents together with pre-let interest from retailers 
   -- GBP60.75 million acquisition from LVS, a subsidiary of Bravo II, of the 50% stake not already owned by NewRiver 
      in the Trent JPUT - the Marston's public house portfolio - at an implied net initial yield of 10.1% bringing the 
      portfolio 100% under NewRiver's ownership 
   -- GBP38.95 million acquisition from LVS, a subsidiary of Bravo II, of the 50% stake not already owned by NewRiver, 
      in the Camel III JPUT - a portfolio of five shopping centres reflecting an implied net initial yield of 7.2% 
      bringing the portfolio 100 per cent. under NewRiver's ownership 
   -- GBP53.50 million acquisition of a portfolio of 158 pubs across England and Wales from Punch Taverns which equates 
      to a net initial yield of 13.5%. On a levered basis, the portfolio will generate an attractive cash on cash 
      equity return in excess of 20%. 

KEY ASSET MANAGEMENT HIGHLIGHTS

NewRiver continues to enhance and drive the value of its portfolio through strategic active asset management. The Company successfully completed 54 leasing events during the period including key lettings with Pandora, Holland & Barratt, Evans and Warren James. Long-term leasing events achieved a rental income 22.6% above valuation ERV at an average lease length of 8.7 years securing an annual rent of GBP0.6 million.

The Company has delivered an improved occupancy of 96.3% and a sustained footfall, with a total of 27.6 million shoppers visiting NewRiver's shopping centres during the period with the Company's annual footfall now totalling 126 million. The portfolio's top 15 retailers defined by rental income continue to be underpinned by successful national retailers including Poundland, New Look, Boots, Primark, ASDA, Argos, Wilkos and Sainsbury's.

   -- Next, Belfast: The Company is making excellent progress on the construction of a new 43,000 sq ft store for Next 
      at the Abbey Centre in Newtownabbey, Belfast, to create one of Northern Ireland's largest Next stores. Completion 
      and handover of the new Next store is expected in September 2016. Next are upsizing from their existing 15,000 sq 
      ft to create a new three-storey anchor store, scheduled to open in time for Christmas 2016. In addition, NewRiver 
      are progressing plans with Dunnes Stores to significantly extend and upgrade their existing store to create a new 
      flagship Dunnes store for Northern Ireland. 
   -- Packhorse Centre, Huddersfield: Development works are in the final stages to deliver The Packhorse Kitchen, a 
      modern new food court offer, including the pre-let of 20,000 sq ft of formerly vacant space to introduce a new 
      leisure offer including a new bar, pan-Asian restaurant and Burger King, supporting the Company's strategy to 
      re-position the Packhorse Centre into one of Huddersfield's leading food and leisure destinations. 
   -- Retail warehouse portfolio: The Company has made great progress on the value-enhancing asset management of its 
      retail warehouse strategy successfully securing three planning consents during the period. The planning 

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