NewRiver REIT has posted static results for its retail operations in its first quarter of the financial year, alongside a sharpened focus on residential.
Following a strategic review of its entire portfolio during the quarter, the company has identified the potential to deliver up to 1,300 residential units adjacent to or above its retail assets over the next five to 10 years.
The REIT noted that opportunities within the residential sector could generate up to £140m of development profit. This is in addition to 1,100 units already included within its 1.9m sq ft development pipeline.
On the other end of the spectrum, retail occupancy dipped during Q1 to 96.2%, from 96.5% in March 2018.
Shopping centre footfall declined by 2.5% on a like-for-like basis, but this still outperformed the UK market benchmark by 50 bps.
Allan Lockhart, chief executive, said: “Since the start of this financial year we have invested more than £140m across our core sectors of community shopping centres, retail parks and community pubs at a blended initial yield of 13%, demonstrating our disciplined approach to capital allocation and the diversified nature of our assets.
“Across our portfolio we are progressing a number of opportunities to unlock further value, having identified the potential to develop an additional 1,300 residential units across our retail portfolio and commenced a review of the Hawthorn Leisure portfolio to identify convenience store development sites.”
Average retail rent stayed mostly static at £12.35 per sq ft, compared with £12.36 per sq ft in March.
The company added that more than 99% of rents for Q1 have been collected, while there has been a 94% retention rate based on lease expiries and breaks during the quarter.
The REIT said that after its acquisitions during the quarter, its loan to value ratio grew to 35% from 28% in March.
It upped its first quarter ordinary dividend by 3% to 5.40p, compared with 5.25p in the first quarter of the previous financial year, citing the acquisitions and strong underlying cash flow.
Acquisitions made during the period included its purchases of pub group Hawthorn Leisure in May for £106.8m, which expects to complete integration by Q4 and Grays Shopping Centre in June in a £20.2m deal.
It also bought Hollywood Retail & Leisure Park in Barrow-in-Furness in July for £15.3m.
NewRiver added that it has also been selected as an asset manager by a local authority shopping centre owner, subject to final agreement, while community pubs now account for 19% of its £1.4bn portfolio.
The company completed £2.2m of profitable capital recycling on terms 11% ahead of March 2018 valuation, with a further £22.8m of disposals under offer and £32.2m in the market.
To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette
