NewRiver REIT PLC Q4 Company Update (0380W)

TIDMNRR

RNS Number : 0380W

NewRiver REIT PLC

13 April 2023

NewRiver REIT plc

("NewRiver" or the "Company")

Trading Update - Resilient Performance and Strategic Progress

NewRiver is today providing a trading update for the year ended 31 March 2023 ahead of the announcement of its Full Year Results in June 2023.

 
 --              Resilient operational metrics with increased occupancy and strong 
                  leasing performance 
 --              Asset management mandate with M&G Real Estate expanded, taking 
                  the total number of assets managed under this arrangement to 16 
                  retail parks and two shopping centres 
            --   Work Out portfolio exit on track with two disposals completed in 
                  Q4 equating to 23% of September 2022 Work Out portfolio by valuation 
            --   Portfolio valuation decline of c.4.7% in H2 representing a significant 
                  outperformance versus the MSCI Monthly Index(1) ; continued resilience 
                  from Core Shopping Centres and Retail Parks, Regeneration assets 
                  impacted by increases in development cost assumptions 
            --   Balance sheet strength maintained with LTV expected to remain in-line 
                  with September 2022 at c.34%, no maturity on drawn debt until 2028, 
                  no exposure to interest rate rises on drawn debt, and increased 
                  cash & cash equivalents of c.GBP111 million 
            --   FY23 Underlying Funds From Operations ('UFFO') per share and EPRA 
                  Net Tangible Assets ('NTA') per share expected to be in-line with 
                  analyst consensus(2) 
 

Resilient operational performance

 
 --              High, stable retail occupancy at 31 March 2023 of 96.7% (30 September 
                  2022: 96.3%) 
            --   Average rent remains affordable at 31 March 2023 at GBP11.98 per 
                  sq ft (30 September 2022 GBP11.58 per sq ft), with the occupational 
                  affordability for our tenants set to further improve from 1 April 
                  2023 when reduced business rates become effective 
            --   Rent collection for Q1-Q4 FY23 currently stands at 98% of rent 
                  demanded 
            --   979,200 sq ft of new lettings and renewals agreed in FY23 with 
                  long-term transactions on average 1.1% ahead of ERV, 9.7% ahead 
                  of previous rent and with a Weighted Average Lease Expiry of 8.2 
                  years 
 

Expanded capital partnerships

 
 --              As previously disclosed, and aligned with our strategic aim to 
                  use our specialist retail platform to enhance earnings in a capital 
                  light way by working in partnership with institutions and other 
                  capital providers, in November 2022 NewRiver was appointed by M&G 
                  Real Estate to manage a UK portfolio of 16 retail parks and one 
                  shopping centre 
            --   Following a successful first quarter of the mandate, and further 
                  demonstrating the growth potential embedded within our specialist 
                  retail platform, in April 2023 NewRiver was appointed by M&G Real 
                  Estate to manage an additional shopping centre located in the South 
                  East of England, taking the total number of assets managed under 
                  this arrangement to 16 retail parks and two shopping centres 
 

Disposal target delivered

 
 --              Completed GBP23 million of disposals since 30 September 2022, the 
                  majority of which relates to the sale of two assets from the Work 
                  Out portfolio during Q4, meaning we have achieved our FY23 Work 
                  Out disposal target 
            --   Work Out portfolio now represents only 11% of the NewRiver portfolio 
                  which we have targeted selling or completing turnaround strategies 
                  on by the end of FY24 
 

Portfolio valuation outperformance

 
 --              The independent valuers have concluded their work on NewRiver's 
                  property portfolio as at 31 March 2023, valuing the portfolio at 
                  GBP594 million, with the reduction in H2 due to a c.4.7% reduction 
                  in capital values and GBP23 million of completed disposals 
            --   Core Shopping Centres, representing 37% of the total portfolio, 
                  were broadly stable in H2 and Retail Parks, representing 28% of 
                  the total portfolio, recorded a modest c.3.5% decline due to market 
                  driven yield movement, partially offset by positive ERV growth 
            --   The majority of the reduction in capital values was focused on 
                  the Regeneration portfolio, which has been impacted by higher estimated 
                  development costs as a result of the inflationary environment 
 

Strong balance sheet position

 
 --              Cash & cash equivalents increased to c.GBP111 million at 31 March 
                  2023 (30 September 2022: GBP95 million) through completed disposals 
                  and continued operational strength 
            --   LTV at 31 March 2023 is expected to be in-line with the 34% reported 
                  as at 30 September 2022 
            --   Fully unsecured balance sheet with interest rate fixed at 3.5% 
                  on drawn debt and no maturity on drawn debt until March 2028 
            --   Cost of debt compares to portfolio Topped-up Net Initial Yield 
                  of 8.0% as at 31 March 2023, one of the highest spreads in the 
                  real estate sector 
 

1. Latest available MSCI Monthly Index data covering 5 months ended 28 February 2023. Capital reduction for All Property -16.8%, All Retail -13.1%, Shopping Centres -8.7%, Retail Parks -13.2%.

2. Current analyst consensus for 31 March 2023 UFFO is GBP25.0 million / 8.1 pence per share, comprising six analyst forecasts ranging from GBP22.5 million to GBP28.0 million / 7.3 pence per share to 9.1 pence per share. Current analyst consensus for 31 March 2023 EPRA NTA per share is 123 pence per share, comprising six analyst forecasts ranging from 113 pence per share to 131 pence per share.

For further information

 
                                                     [phone] 
     NewRiver REIT plc                                5800 
     Allan Lockhart (Chief Executive) 
      Will Hobman (Chief Financial Officer) 
     Lucy Mitchell (Communications 
      & Investor Relations) 
 
 
                               [phone] 
     FGS Global                 3801 
     Gordon Simpson 
      James Thompson 
 

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 GBP0.6 billion UK wide portfolio covers 7 million sq ft and comprises 26 community shopping centres and 14 conveniently located retail parks occupied by tenants predominately focused on essential goods and services. 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 long term attractive recurring income returns and capital growth for our shareholders.

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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April 13, 2023 02:00 ET (06:00 GMT)