NewRiver REIT agrees to run Canterbury shopping centre – NewRiver REIT (NRR) has announced that it has signed an asset management agreement with Canterbury City Council for the asset management of Whitefriars Shopping Centre.
Implementing a new strategy
NewRiver announced in May 2018 that it would become more involved in the running and managing of properties. Known as “asset management”, this includes working with tenants, developing and refurbishing sites to increase the revenue they can make on them. NewRiver state in the announcement that they have a “market-leading asset management platform to manage third-party assets” and in addition to its existing property portfolio, this strategy is a reaction to the changing retail real estate market.
The agreement with Canterbury City Council
Under the terms of the agreement, NewRiver will perform full asset management responsibilities for the shopping centre. In exchange, the company will receive a management fee calculated as a proportion of net operational income received from the shopping centre and a development fee “calculated on third-party-tendered development costs”
The agreement will initially be for two years, with the option of a roll on for a further two years subject to the agreement of both parties.
NewRiver will not acquire an equity stake in the asset as part of the agreement.
Whitefriars Shopping Centre
Whitefriars Shopping Centre is a major regional shopping centre for East Kent and is located in the heart of Canterbury, with an annual footfall of 13 million visitors / shoppers. The catchment area within a 30 minute drive of the shopping centre is 270,000 people.
The shopping centre has 75 units across 474,000 sq ft and 530 car parking spaces, including Fenwicks, Marks & Spencer, Next and Primark.
The shopping centre has been fully owned by the Council since February 2018, when it purchased the remaining 50% of the asset from its 50:50 joint venture with TH Real Estate for £75 million, equating to a net initial yield of 6.5%. The joint venture was formed in 2016, when the Council paid £79 million for its initial 50%, equating to a net initial yield of 6.0%.
Comment from Allan Lockhart, Chief Executive, NewRiver
“We are delighted to have signed this Asset Management Agreement with Canterbury City Council to bring our asset management expertise to Whitefriars Shopping Centre. NewRiver’s selection by the Council in a competitive tender process demonstrates that our strong relationships with retailers and track record of successful asset management makes us the clear choice for third-party retail asset owners. Against a growing trend of local authorities purchasing shopping centre assets and taking control of their town centres, NewRiver is ideally positioned to provide best-in-class asset management expertise to them, delivering thriving assets for local communities and sustainable, long-term revenue for our shareholders.”
Comment from Colin Carmichael, Chief Executive, Canterbury City Council
“Our purchase of Whitefriars Shopping Centre in February 2018 was a once-in-a-generation opportunity to take control of one our city’s key sites and ensure it works for the benefit of the community. The Council is very pleased to be partnering with one of the UK’s leading retail asset managers in NewRiver to realise this ambition. Their passion and expertise give the Council the confidence that Whitefriars will continue to go from strength to strength.”
NRR : NewRiver REIT agrees to run Canterbury shopping centre