Over the year to the end of March 2016, NewRiver Retail delivered an 11% increase in its EPRA NAV (295p vs. 265p). EPRA adjusted profit increased 125% to GBP47.1 million (2015: GBP20.9 million) resulting in a 34% increase in EPRA adjusted earnings per share (26.6 pence vs. 19.8 pence). Profit before tax increased 76% to GBP69.5 million (2015: GBP39.5 million). The dividend, which is paid quarterly, increased by 9% to 18.5 pence (2015: 17 pence) – this was fully covered by earnings.
The portfolio is valued at GBP1.1 billion which reflects an EPRA topped up net initial yield of 7.8%. On a like-for like-basis the portfolio valuation has increased by 3.9%. They say the Company benefited from progressive H1 performance with an overall like-for-like valuation gain of 2.6% in the period which moderated in H2 to 1.3% due to slowing yield compression and the impact of the increase in Stamp Duty Land Tax announced at the March Budget which reduced the value of assets located in England, Wales and Northern Ireland by approximately 1%. The Company equivalent yield as at 31 March 2016 was 8.2%, reflective in part of a like-for-like, year-on-year contraction of just 21 basis points, demonstrating, they say, that performance has been predominantly generated through income growth, asset management and development activity.
Shopping Centre Valuations: The core shopping centre and high street portfolio represents approximately 70% of total asset value and provided progressive income and valuation performance with a like-for-like aggregate gain of GBP17.0 million reflecting an improvement of 3.5%.
Retail Warehouse Valuations: They have continued investment into retail warehousing where they see excellent value creating opportunities. The sector continues to trade above its long term average yield and we are seeing increasing demand as high street brands, including many of their core retailers, move into the sector. The NewRiver retail warehouse portfolio benefitted from a like-for-like valuation gain of GBP5.0 million, equating to 10.2% during the year.
Public House Portfolio Valuations: The public house portfolio benefitted from considerable gain in the preceding year and is now producing steady valuation and income growth. The like-for-like valuation growth was GBP2.0 million, equating to 1.7%, driven by like-for-like income growth of 0.7%.
Development Valuations: Across the development portfolio, a like-for-like valuation gain of GBP1.9 million or 14% was achieved driven by progress in pre-lets and the grant of planning permissions. In total, across the portfolio, over 60 planning applications have been submitted resulting in 24 permissions being granted.
Net operational income growth across the core portfolio increased by 2.4% on a like-for-like basis. Active asset management and prudent capital allocation strategy have also translated into a like for like ERV growth of 4.6%.
During the year the Company raised a total of GBP300 million of equity capital through two placings of GBP150 million each. Both fund raisings were over-subscribed and well supported by new and existing shareholders. With this money they made acquisitions totalling GBP342 million at an average yield of 9.2%. Post the year end NewRiver Retail announced the GBP120 million acquisition of Broadway Shopping Centre and Retail Park in Bexleyheath at an equivalent yield of 7%. Disposals (totalling GBP48.2m), by contrast, were made at an average exit yield of 5.7%.
NewRiver Retail’s development programme, totalling over 1.5 million sq ft, continued to advance during the year and should provide long term income streams and enhanced asset values. During the year, 24 planning applications were approved including consent for a GBP65 million mixed-use redevelopment of Burgess Hill town centre in the Gatwick triangle. Their convenience store programme within the pub portfolio is well advanced. They have handed over three new stores to the Co-Operative and are on site for the construction of a further five stores.
NRR : NewRiver Retail portfolio hits £1bn mark