The digital age presents a wealth of opportunities for NewRiver
and our retailers and we are excited to be in the final phases of
our E-Commerce strategy. Worldwide, the number of mobile devices
outnumbers people. Responding to the evolving retail landscape we
are creating a highly sophisticated and powerful community-led
click n collect platform for our shoppers and retailers, leading
the field in digital innovation for regional community shopping
centres.
Development
With the improvement in the capital, consumer and occupational
markets retail development viability has also improved. Our
intention is to increase our development activities to provide
increasing capital profits or valuation growth. The Company is
committed to undertaking developments in a risk controlled manner
underpinned by occupational pre-letting agreements.
During the period we have completed three fully risk-controlled
developments, one of which was a turn-key town development and are
progressing well on the development of existing assets and new
acquisitions.
Risk-Controlled Development Creates Value
Completion & Disposal of Town-Regenerative Customer First
Centre & Library at the Forum Shopping Centre, Wallsend
After successfully securing planning permission in December
2012, this town-regenerative development has now been completed on
time and within budget. Prior to commencing construction, the
development was fully pre let to North Tyneside Council, Home
Bargains, Iceland and 99p Stores.
In total the development comprised 77,000 sq ft including three
retail units and a new Customer First Centre and Library. The total
contractual rent agreed is GBP723,000 pa and the weighted average
lease length is 20 years.
Construction completed on the 28 February 2014 and all of the
retailers are now trading following their fit-outs.
Our total development costs were GBP6.7 million providing an
attractive yield on cost of 10.8%. The completed Customer First
Centre and Library, let to North Tyneside Council, has been sold
for GBP7.9 million.
This development has already had a positive impact on the rest
of the shopping centre with the introduction of three new high
profile retailers and a new Customer First Centre and Library
providing greater choice for our consumers. There has been an
immediate uplift in footfall in excess of 10% resulting from the
development and the external refurbishment of the shopping
centre.
Phase ll, Wallsend
We are now progressing a second development through the
extension of the shopping centre on land acquired by NewRiver from
the Council. This development is intended to be anchored by a
discount food retailer supported with additional retail.
Discussions are also underway with the Council for a potential
Health Centre facility.
Finally, we will be undertaking a comprehensive internal
refurbishment of the shopping centre that will result in
significant improvements to the mall flooring, lighting, entrances
and signage.
Primark, Warrington
Europe's leading value fashion retailer opened its doors in
early December 2013 following NewRiver's successful completion of
the development on time and within budget.
In 2012 we successfully acquired the long-leasehold interest of
a unit from Standard Life to gain vacant possession of two adjacent
units by relocating the existing New Look thus releasing space to
begin a complicated restructuring to create a single 56,000 sq ft
unit for Primark, who signed an agreement for lease in November
2012 for a term of 25 years at an annual rent of GBP475,000.
This asset let on a long term lease to Primark is generating an
attractive cash on cash return of 15%
Iceland, The Piazza, Paisley
Following the successful amalgamation of two shop units and
office accommodation, we created 9,500 sq ft of new retail space
pre-let to Iceland at an annual rent of GBP135,000 on a 15 year
lease. Iceland opened for trade in August 2013 and exceeded initial
turnover targets by 58% during their first week of trading.
Driving Progress on existing Developments
Updated Master Plan for Locks Heath Shopping Village, Fareham,
Hampshire
We have revised our development proposals for Locks Heath
Fareham during the last 12 months following the acquisition of the
Co-op food store by Waitrose.
The impact of Waitrose has been significant with increased
footfall and car park numbers up substantially. The quality of the
Waitrose offer will assist our ability to attract a wider range of
retailers to the centre and we expect to benefit from future rental
growth given the current low base.
To facilitate this demand we are still seeking to provide new
floor space by developing on part of the car park. Strong interest
has been received from a major food discount retailer and this is
being progressed by the Company.
Planning Application Awarded for Albert Square Shopping Centre,
Widnes, Cheshire
NewRiver Retail was awarded planning consent in late 2013 to
redevelop the Prince of Wales, a vacant public house located
adjacent to Albert Square Shopping Centre in Widnes which was
acquired in 2010 as part of NewRiver Retail's Joint Venture with
Morgan Stanley.
As part of the Company's risk-controlled development programme,
an agreement for lease was exchanged with 99p Stores for a 10-year
term at a rent of GBP135,000 pa. Following the demolition of the
public house, the development of a new 10,000 sq ft retail store is
well underway with completion expected as per the planned
programme, in July 2014.
Master Planning of Templars Square, Cowley Commences
Following the recent acquisition of Templars Square in December
2012, in our Joint Venture with BRAVO, NewRiver have entered into a
detailed master planning exercise to reposition the asset working
with Oxford City Council on a phased development plan. The master
planning exercise identifies how all aspects of the centre can be
enhanced and improved by repositioning and adding to the existing
retail mix to include leisure to establish the scheme as the
principal shopping destination for the area.
Oxford City Centre Master Planning for Gloucester Green
Purchased at the end of 2013 as part of two centres acquired,
Gloucester Green presents an exciting retail and leisure
development opportunity for NewRiver in the heart of Oxford. Plans
are progressing to form a joint venture with Oxford City Council to
improve the centre and surrounding area which is set around a large
open pedestrian market square area. Proposals include a
refurbishment of the market square and improved retail mix together
with a greater restaurant and leisure offering repositioning the
asset as a principle food, beverage and leisure destination.
The Martlets, Burgess Hill, West Sussex
Progress with the Burgess Hill masterplan has been slower than
we had hoped due to the importance that we place on pre-let
commitments and the shifting focus of the food retailers to smaller
convenience stores which has had an impact on our ability to
advance this project. However through further discussions with the
local authority and design changes, terms have been agreed with a
major cinema operator and assuming that we can secure an anchor
store letting, we are confident with current retailer demand to
support the development and that the local authority will be
supportive through the planning process.
Rapid progress on Marston's 202 pub portfolio conversion
Following the acquisition of the 202 pubs from Marston's in
December 2013, NewRiver has, in less than four months, agreed to
lease a portfolio of 54 new C-Stores 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 stores.
Additional uses such as branded restaurants, drive-through food
outlets, residential and medical centres have also been
identified.
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 and stores will trade 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.
Financial Review
It has been an active year at NewRiver, raising GBP152m of
equity, GBP154m of new debt facilities and investing in GBP200m of
income producing acquisitions with our joint venture partner BRAVO
II (a fund advised or managed by Pacific Investment Management
Company LLC). EPRA adjusted profit is up 80% to GBP9.5m
(2013:GBP5.2m) and this is expected to increase further in
2014/2015 when the current year acquisitions will have a full
year's annualised impact.
Our equity placing in July 2013 raised GBP67 million enabling us
to pursue four separate transactions that have helped increase our
EPRA adjusted profit to GBP9.5m an increase of 80% on last year
leading to an EPRA adjusted EPS of 15.7 pence.
Following the full deployment of the capital raised in July, a
further placing of GBP85 million completed in February 2014.
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