TIDMNRR
RNS Number : 1554E
NewRiver Retail Limited
07 April 2014
NewRiver Retail Limited
("NewRiver" or "the Company")
NewRiver agrees to lease a significant portfolio of new
convenience stores
to The Co-operative Group
NewRiver Retail Limited (AIM: NRR), the UK REIT specialising in
value-creating retail property investment and active asset
management, announces that The Co-operative Group Limited (the
"Co-operative Group") has signed a conditional agreement to lease
(the "Agreement") a significant element of the public house
portfolio (the "Portfolio") acquired by NewRiver's BRAVO II joint
venture partnership (a fund advised or managed by Pacific
Investment Management Company LLC) on 28 November 2013.
Highlights:
-- Conditional agreement to lease 54 new convenience stores
("C-Store") from public house estate
-- Phased development programme over two years creating almost
200,000 sq ft of new retail space
-- Rental income agreed varies from GBP15.00 per sq ft to GBP17.50 per sq ft
-- Institutional quality standard lease length of 15 years with
no break option and RPI-linked rental increase
-- Incentivised completion programme realising up to GBP2.7 million in additional proceeds
-- Efficient delivery of NewRiver's stated plan to identify
viable demand from major food store operators for C-Store
portfolios
Under the Agreement, NewRiver has agreed to lease a portfolio of
54 new C-Store across the UK to The Co-operative Group. The
majority will be new-build projects constructed on surplus land
adjacent to the existing public houses. The remaining part of the
Portfolio will be conventional conversions from public house use to
C-Stores, or redeveloped as standalone convenience retail stores.
NewRiver will undertake all planning, development and contract
requirements to deliver the end product to The Co-operative Group.
It is expected that the majority of the completed assets will be
delivered within two years.
In total, NewRiver is developing almost 200,000 sq ft of new
C-Store space for The Co-operative Group. Finished unit sizes, each
with appropriate car parking, will range from 3,000 sq ft to 4,500
sq ft which allow for stores to be open seven days a week.
This unique portfolio leasing arrangement reflects the
significant demand from national food store operators and consumers
for accessible, community-based multi-range food stores.
The lease terms are 15 years with no break clause and an annual
RPI-linked rental increase formula capped at 4% and collared at 1%.
The rental income agreed varies between GBP15.00 per sq ft and
GBP17.50 per sq ft.
As a result of NewRiver's position to be able to rapidly provide
The Co-operative Group with a large portfolio of C-Stores, the
Agreement is performance incentivised whereby NewRiver will receive
additional payments upon delivery of various tranches of the
Portfolio. The total fee payable is up to GBP2.7 million.
Importantly, as the majority of the Portfolio will utilise
surplus land (car parking, under-utilised garden space) a number of
the public houses will continue to operate in their original
format, maintaining a high yielding rental income.
In November 2013, NewRiver announced its GBP90 million
acquisition of a portfolio of 202 public houses from Marston's with
the primary intention of conversion of land and buildings to
alternative use, principally into convenience stores. At completion
Marston's agreedthrough a leaseback arrangement to lease the entire
portfolio for a minimum term of up to four years for a total annual
rent of GBP12,235,000, reflecting a net initial yield of 12.8%.
Allan Lockhart, Property Director at NewRiver Retail, said:
"We are delighted to complete this unique and innovative leasing
agreement less than five months since we acquired the Portfolio.
NewRiver has efficiently delivered on its stated intention to
identify viable demand from major food store operators to expand
their convenience store portfolios."
"The agreement is a prime example of how NewRiver's successful
strategy of strong retailer relationships, active asset management
and risk-controlled development generates significant value through
the creation of institutional investment class assets. The
agreement significantly develops the Co-operative Group's UK
footprint and we look forward to expanding our strong relationship
with them in the future."
-Ends-
For further information
NewRiver Retail Limited Tel: 020 3328 5800
David Lockhart, Chief Executive
Mark Davies, Finance Director
Bell Pottinger Tel: 020 7861 3232
David Rydell/Guy Scarborough/Charlotte
Offredi
Liberum Tel: 020 3100 2000
Shane Le Prevost/Tim Graham/Simon
Atkinson
About NewRiver
NewRiver Retail Limited is an AIM listed REIT. The Company is a
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, with over 100 years combined experience in
the UK commercial property market, actively engages with retailers,
stakeholders and consumers. NewRiver Retail is the UK's third
largest Shopping Centre owner by number with assets under
management of approximately GBP600 million principally comprising
25 UK wide shopping centres, two supermarkets and a portfolio of
202 public houses mainly suitable for conversion to alternative
uses. The portfolio has in excess of 1155 occupiers, a total of 4.6
million sq ft, total annual footfall of over 112 million and a
retail occupancy rate of 964 per cent.
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.
Founded in 2009, NewRiver has become the UK's leading
retail-focused property investment business. The Company's shares
were admitted to London's AIM in September of the same year. For
more information on NewRiver, please visit www.nrr.co.uk
Please see below the statement issued by The Co-operative this
morning:
THE CO-OPERATIVE TO DEVELOP 54 PUBS SITES FOLLOWING INNOVATIVE
DEAL WITH NEWRIVER RETAIL
The Co-operative Food has signed an agreement to lease 54 pub
sites from the Marston's Plc public house portfolio owned by
NewRiver Retail.
Last month Steve Murrells, Chief Executive of The Co-operative's
retail division, announced that the Food business plans to open
more than 100 new convenience stores this year. This is the first
major lease agreement that the business has secured since that
announcement. In order to maintain its position as the UK's leading
convenience retailer, The Co-operative Group is building its
pipeline to enable the opening of 150 food stores per year across
the UK.
The properties are located throughout the country but with a
concentration in Central, Eastern and Northern England. The
majority will be new-build projects to be constructed on surplus
land adjacent to the existing public houses. A smaller number of
public houses will be either converted to convenience store use or
redeveloped as standalone convenience retail stores, whilst some of
the assets will be significantly expanded in size through the
addition of an extension or new-build.
Finished unit sizes will range from 3,000 sq ft to 4,500 sq ft,
and the first of the new stores is expected to open early in
2015.
The lease terms are 15 years with no break clause and an annual
RPI-linked rental increase formula capped at four per cent and
collared at one per cent. The rental income agreed varies between
GBP15.00 per sq ft and GBP17.50 per sq ft.
Importantly, as the majority of the portfolio will utilise
surplus land such as car parks and under-utilised garden space, a
number of the public houses will continue to operate in their
original format under lease to NewRiver Retail.
Steve Murrells said: "The Co-operative Group has a clear vision
to establish itself as the best local food retailer in the UK and
over the coming years our focus will be to develop and grow our
existing convenience estate of over 2,000 stores.
"Our focus is on convenience stores and a move away from larger
stores, as we look to highlight our strengths and consolidate our
position as number one in the competitive convenience market. To do
this we are investing in our stores to ensure that the product
offering, the service and the prices appeal to shoppers."
Stuart Hookins, Head of Portfolio Strategy, Acquisitions and
Disposals at The Co-operative Food, added: "Part of our
acquisitions strategy is to explore creative ways to acquire
stores, and this is a great example of that approach at work,
adding over 50 stores in one transaction. The speed at which this
acquisition was completed - four months from start to finish - is a
testament to our decision making and ability to progress deals
quickly."
Allan Lockhart, Property Director at NewRiver Retail, said: "We
are delighted to complete this unique and innovative leasing
agreement less than five months since we acquired the Portfolio.
NewRiver has efficiently delivered on its stated intention to
identify viable demand from major food store operators to expand
their convenience store portfolios.
"The agreement is a prime example of how NewRiver's successful
strategy of strong retailer relationships, active asset management
and risk-controlled development generates significant value through
the creation of institutional investment class assets. The
agreement significantly develops the Co-operative Group's UK
footprint and we look forward to expanding our strong relationship
with them in the future."
In November 2013 NewRiver announced its GBP90 million
acquisition of a portfolio of 202 public houses from Marston's,
with the primary intention of conversion of land and buildings to
alternative use, notably convenience stores.
Ends
This information is provided by RNS
The company news service from the London Stock Exchange
END
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