Re Joint Venture

RNS Number : 8096H

NewRiver Retail Limited

01 March 2010

 



NewRiver forms co-investment partnership with Morgan Stanley Real Estate Investing to launch £250 million UK retail property joint venture

 Announces first JV acquisition - £49 million

portfolio purchase from UBS

NewRiver Retail Limited (AIM: NRR, "NewRiver"), the specialist value-creating retail property investment and asset management company, is pleased to announce that it has been selected  to form a new co-investment joint venture (the "JV") with Morgan Stanley Real Estate Investing (MSREI) targeted at acquiring UK retail property assets.

The JV, to be called NewRiver Retail Investments LP, is a closed end Guernsey-registered Limited Partnership, and will have an acquisition capacity in excess of £250 million including appropriate leverage. The JV will initially be owned equally by NewRiver and MSREI with future respective equity commitments being decided on a transaction by transaction basis.

NewRiver Capital Limited, the wholly-owned subsidiary and property manager, and adviser to NewRiver, is pleased to announce that it has been appointed as asset manager on behalf of the JVand will receive asset management fees as well as performance-related returns.

The investment period will run for two years with the life of the JV likely to be for a minimum of five years. The JV will have first right of refusal on any assets with a value in excess of £25 million identified as potential acquisition opportunities by NewRiver. Under the terms of the Partnership, MSREI has been granted the right to convert its interest in the JV or part thereof on an NAV for NAV basis into shares of NewRiver, to up to 10 per cent of the share capital of NewRiverduring the joint venture period.

In line with the existing NewRiver investment strategy, the JV will target UK retail property assets with the objective of delivering added value and above average returns through NewRiver's proven skills in active and entrepreneurial asset management and risk controlled development and refurbishment.

On behalf of the JV, NewRiver is pleased to announce that it has exchanged contracts to acquire its first acquisition - a large UK retail portfolio from the UBS Triton Property Fund for the sum of £49 million.

The acquisition commences the JV's investment programme with a nationwide portfolio reflecting an attractive net initial yield of circa nine per cent and comprising nine large retail assets totalling more than 400,000 square feet and let to more than 100 tenants.

Importantly, nearly 90 per cent of the portfolio's rental income is secured by strong national and regional retailers predominantly operating in food and value retailing, the two strongest performing retail sectors.

The portfolio properties are as follows:

Location	Net Lettable Area (sq ft)	Key Retail Tenants
Andover - High Street	30,400	Poundland/Superdrug
Canterbury - High Street	3,250	A Jones
London -  East Ham	30,000	J Sainsbury
Glasgow - Union Street	16,900	Nobles/Ladbrokes
Huddersfield- Packhorse S/C	103,250	Argos/Peters/Phones 4 U
Norwich - Guildhall	43,250	Tesco
Shrewsbury - High Street	50,800	HSBC/Starbucks/Viyella
Widnes - Albert Square S/C	84,500	Iceland/WH Smith/Argos
Wrexham - Regent Street	39,500	Waterstones/Bon Marche/JJB

The average unexpired lease length is approximately seven years and J Sainsbury and Tesco are the two largest tenants in the portfolio, accounting for more than 16% of the total rent roll.

Both parties have committed equity capital with the senior debt facility being provided by Santander Corporate Banking.

NewRiver believes that this opportunistic acquisition fits with its investment strategy of acquiring assets at an attractive initial yield with identifiable capital value enhancement opportunities.  The portfolio offers a wide range of compelling value creation opportunities where NewRiver believes it can add significant value through active and entrepreneurial asset management.

NewRiver believes the formation of the JV and its initial acquisition of a major portfolio is a further significant step forward since its IPO in September 2009. A core team has been put in place, some £22m of equity deployed in acquisitions and the co-investment strategy has now been secured.  The Company believes that while UK property market conditions are improving there are still good value-enhancement opportunities to be found for active asset managers with sector specific expertise.

Additionally, NewRiver announces the appointment of Cenkos Securities Plc as Nomad to the Company with immediate effect.

David Lockhart, Chief Executive of NewRiver Capital Limited, said:

"Morgan Stanley Real Estate Investing is one of the premier global property investors and we are delighted to be partnering with them in this exciting JV.  Having MSREI on board not only endorses our focused sector specific  business strategy and investment case but also validates our view that our opportunistic approach to acquisition and active asset management is the best route to value generation at this point of the commercial property and economic cycle. The acquisition of the UBS Triton retail portfolio fits exactly with the strategy stated when NewRiver listed on AIM and is a significant step forward in the development of the NewRiver business."

Philipp Westermann, Managing Director, Morgan Stanley Real Estate Investing, said:

"We are delighted to form this partnership with a talented retail property specialist and active asset manager. We are confident that NewRiver can add substantial value to our first acquisition and we look forward to growing our joint venture."

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For further information:

NewRiver Capital Limited                                                   Tel: [phone]

David Lockhart

MSREI                                                                                    Tel: [phone]

Michael Wang

Cenkos Securities                                                                Tel: [phone]

Ian Soanes

Max Hartley

Pelham Bell Pottinger                                                          Tel: [phone]

David Rydell

Rosanne Perry

About NewRiver

NewRiver Retail Limited is a specialist real estate investor and asset manager with a particular focus on the UK retail sector. NewRiver Retail is advised on property matters by its wholly-owned subsidiary, NewRiver Capital Limited, whose management team, led by David Lockhart, have more than 50 years combined experience in UK commercial property markets. 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 and www.newrivercapital.co.uk 

About Morgan Stanley Real Estate

Morgan Stanley Real Estate Investing is one of the largest real estate investment managers globally. Since 1991, it has acquired $173.7 billion of real estate assets worldwide and currently manages $59.5 billion in real estate assets on behalf of its clients.  For more information about Morgan Stanley Real Estate Investing, please visit www.morganstanley.com

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services.  The firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 37 countries.  For further information about Morgan Stanley, please visit www.morganstanley.com 

 

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