Major portfolio Acquisition

RNS Number : 1222X

NewRiver Retail Limited

01 December 2010

 



NewRiver Retail Ltd ("NewRiver")

Major Portfolio Acquisition

NewRiver Retail, the UK specialist REIT focused on the retail sector, announces that it has completed the acquisition of a major portfolio of five UK shopping centres from the CPI Retail Active Management (CReAM) fund.  

The portfolio, over which fixed charge receivers were appointed in July 2010 by Barclays Bank plc, the security agent appointed by the senior debt providers, has been acquired off market by NewRiver at an aggregate cost of approximately £53.0 million, which represents in aggregate an attractive net initial yield of 8.35 per cent.

The acquisition has been financed by a £34.58 million facility, provided by HSBC, a new banking relationship to NewRiver.  The outstanding equity requirement of approximately £19.0 million has been provided by the proceeds of the issue of the Convertible Unsecured Loan Stock to Forum and Spearpoint, as announced by the Company on 28 October 2010. 

The assets within the portfolio offer a good diversification of income in terms of geography, number of tenancies and lease expiry profile. With a total approximate lettable area of 518,000 sq ft, the five shopping centres are located across the UK in: Bramley in Leeds, Burgess Hill in West Sussex, Erdington in Birmingham, Fareham in Hampshire and Wallsend in the Newcastle upon Tyne area.

The majority of tenants are in the food, value and mass market retail market and represent 67 per cent. of the portfolio's rental income. Key tenants include strong covenants such as Tesco, Iceland, Lidl, Argos, New Look, Poundstretcher and Boots.

The portfolio offers an attractive weighted average lease expiry profile of 6.74 years and the current rental levels within the portfolio range from £25.00 to £47.50 Zone A which reflects NewRiver's strategy of targeting assets with stable and affordable rental income streams that can benefit from further active asset management.

The transaction was complex and structured to minimise acquisition costs through NewRiver being assigned the corporate entity that owned the assets and simultaneous to that assignment NewRiver has refinanced the existing outstanding debt.

Commenting on the acquisition, Allan Lockhart, Executive Property Director of NewRiver, said:

"We are delighted to have been able to complete the acquisition of this major portfolio of five shopping centres off market and at an attractive cost of £53 million which represents a discount of circa 32 per cent. to the last time this portfolio was traded in the market in 2005 at a price of £78.1 million and a 42 per cent. discount to the portfolio's peak value of £92m in December 2006.

"The portfolio is an excellent transaction for NewRiver, exactly consistent with the Company's investment strategy of targeting food anchored and value retail centres with stable income profiles and low occupational costs. 

"There are a number of attractive features within this portfolio including the excellent income security that an unexpired lease term average of 6.74 years provides. Four out of the five shopping centres offer significant retail extension opportunities for food retailers which have the potential to provide NewRiver with enhanced returns and in addition each asset provides significant opportunity to add value through targeted asset management initiatives.

"We are highly confident that this portfolio will exceed NewRiver's minimum total return target of 15 per cent. given the attractive entry price, the low interest cost and the significant pre-identified active asset management opportunities.  Following this acquisition, NewRiver will have acquired approximately £150 million of retail assets in the last 12 months and demonstrates NewRiver's continuing ability to source attractive deals that compliment the Company's disciplined and well researched investment strategy."

ends

For further information:

NewRiver Retail                                                                                                                               Tel: [phone]

David Lockhart, Chief Executive                                                                                                               

New River Retail                                                                                                                              Tel: [phone]

Allan Lockhart, Executive Property Director                                                                                       

Cenkos Securities                                                                                                                            Tel: [phone]

Ian Soanes

Max Hartley                                                                                                                                      

Pelham Bell Pottinger                                                                                                                   Tel: [phone]

David Rydell

Rosanne Perry

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 more than £150 million of assets under management 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.newriverretail.com 

 

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