Balance sheet strength and sector focus supports NewRiver REIT’s performance – NewRiver REIT (NRR) has published its report for the year ending 31st March 2018.
The objective of NewRiver REIT is to own and operate retail properties that generate a high, sustainable income and provide an attractive environment for retailers and shoppers. Its continued focus is on the most sustainable segments of the UK retail market, characterised by frequent spend on everyday essentials, have positioned us well for growth.
The company’s EPRA NAV per share of 292 p was unchanged; mostly because the assets raised over the year have not been fully put to work. As a result, the diluted NAV remains unchanged. However, the total property return delivered 8.2%, which is an outperformance of the MSCI-IPD All Retail benchmark of 1.9%. The company reported that the focus on income delivered a “total accounting return” of 8.1% (FY17: 5.7%)
The company’s funds from operations or FFO was up by 4% to £60.3 million (FY17: £58.2 million) The FFO per share reduced to 21.2 pence (FY17: 24.9 pence), following issue of 67 million new ordinary shares in July 2017.
The dividend per share increased by 5% to 21.0 pence (FY17: 20.0 pence) and was fully covered by the company’s FFO
During the year, the company successfully raised £1 billion of financing. In July 2017, an equity raising was over-subscribed and brought in £225 million at a 14.7% premium to March 2017 EPRA NAV.
The company also arranged £730 million of unsecured financing to complete transition from a secured to an unsecured balance sheet. This included the debut issue of a £300 million sterling-denominated senior unsecured bond, which Fitch assigned rating of BBB+.
Allan Lockhart, Chief Executive of NRR, described the year as “transformational” for NewRiver in the debt and equity capital markets, during which they raised £1 billion on accretive terms. He went on to report that “in July 2017 we successfully raised £225 million of equity at a 14.7% premium to March 2017 EPRA NAV. The equity raise gave us the capacity to grow, but importantly also the scale we required to complete our long-held ambition to move from a secured to an unsecured debt structure, which meant that we ended the year with an unencumbered balance sheet having raised £730 million of unsecured financing. This included £430 million of new unsecured bank facilities, which we raised in August 2017, and our debut £300 million sterling-denominated corporate bond which was assigned an investment grade rating by Fitch Ratings. These actions mean that we have diversified our sources of funding, increased operational flexibility, increased debt maturity to 7.9 years and reduced our cost of debt to 3.1% – this is a fantastic achievement, especially given the market backdrop. With an LTV of 28% at 31 March 2018, safely within our stated guidance of less than 40%, and interest cover of 4.7x, we have capacity to grow through disciplined stock selection and our inbuilt risk-controlled development pipeline.”
NRR : Balance sheet strength and sector focus supports NewRiver REIT’s performance