NewRiver reports solid quarter as it mulls offer for Capital & Regional

5th Aug 2024 08:46

(Sharecast News) - NewRiver REIT reported a solid first-quarter performance on Monday, maintaining a high occupancy rate of 97.3% across its portfolio and achieving significant leasing success.

The London-listed company completed 147,300 square feet of leasing, with long-term transactions outperforming estimated rental values (ERV) by 4.3%, marking the fifth consecutive quarter of such outperformance.

Its leasing retention rate remained robust at 95%, with the average rent standing at £11.96 per square foot.

Additionally, NewRiver continued to make progress in its 'Work Out' disposal programme, completing one more disposal in line with March valuation.

Financially, NewRiver said its balance sheet remains strong, with cash and cash equivalents increasing to £134m as of 30 June, up from £133m at the end of March.

The company's loan-to-value (LTV) ratio remained stable at 30.8%.

NewRiver said it continued to explore opportunities to allocate capital while generating a 5% return on its cash holdings.

The company's balance sheet was fully unsecured, with a fixed interest rate of 3.5% on drawn debt and no maturity until March 2028.

NewRiver also announced the expansion of its capital partnerships through the acquisition of Ellandi Management, an asset and development management business focused on UK retail and regeneration.

The acquisition, completed in July for initial cash of £5m, was expected to enhance NewRiver's capital partnership business by adding scale, diversification, and expertise in managing destination shopping centres and regeneration projects.

The combined capital partnership business now had assets under management (AUM) of £1.5bn, covering 21 shopping centres and 18 retail parks.

Including NewRiver's wholly-owned portfolio, total assets under management increased to £2bn.

NewRiver had confirmed on 23 May that it made a preliminary proposal to Capital & Regional's majority shareholder, Growthpoint Properties, regarding a possible cash and share offer for the entire issued share capital of Capital & Regional.

The company said it has until 15 August to either announce a firm intention to make an offer or to withdraw from the process.

"The strong operational performance delivered in our last financial year continued into the first quarter of the 2025 financial year, with leasing transactions ahead of ERVs and occupancy and tenant retention rates maintained at elevated levels," said chief executive officer Allan Lockhart.

"Our portfolio continues to perform well underpinned by good occupational demand and the quality of our asset management.

"The acquisition of Ellandi, a high-quality asset and development management business, in early July accelerates the growth in our Capital Partnership business, where we have now established a meaningful platform."

Lockhart said the company now owned or managed £2bn of retail real estate assets, collecting nearly £190m of annual rent from over 3,000 tenants.

"This scale provides us with an incredible insight into the consumer, retail and capital markets.

"Finally, our balance sheet is in a good position with cash up to £134 million which provides us significant deployment optionality."

At 0946 BST, shares in NewRiver REIT were down 1.59% at 80.3p.

Reporting by Josh White for Sharecast.com.