New River Reit has announced results for the six months ended 30 September 2016. David Lockhart, Chief Executive commented: “I am pleased to report that NewRiver has again produced growing cash profits from its high quality and defensively positioned portfolio. We have a proven track record of generating secure income returns and delivering a growing dividend to our shareholders, and this half has been no exception with the dividend per share up by over 11%. We completed our move to the Main Market in August, only seven years after the Company was founded, with FTSE All Share and EPRA index qualification in December our next target. Following the EU Referendum, our operational metrics remain strong and we have continued to see good levels of demand across the portfolio. The Brexit vote has impacted the investment market but created some good buying opportunities for us in the short term as demonstrated by our recent retail warehouse acquisition in Sheffield from an open-ended property fund.
Looking ahead, while uncertainty remains, with the convenience-led profile of our portfolio, affordable rents, conservative balance sheet and risk controlled development pipeline, our proven business model is well equipped to continue to deliver secure and sustainable cash returns to our shareholders.”
Over the period, the EPRA NAV fell by 1.7% to 290p. The Board approved two quarterly dividend payments of 5.0 pence per share resulting in a fully covered interim dividend of 10.0 pence per share, up 11% compared to the same period last year. They also announced a third quarter dividend of 5.0 pence per share.
178 new lettings and renewals were completed on terms 0.9% ahead of ERV. Our operational metrics remain robust, with occupancy unchanged from March 2016 at 96%.
They completed acquisitions totalling GBP158 million at an equivalent yield of 7.2%, including buying the Broadway Shopping Centre and Broadway Square Retail Park in Bexleyheath, South East London, for GBP120 million at a blended equivalent yield of 7%. In the six months since acquisition they have been working to improve the rental tone in the shopping centre and working in partnership with the London Borough of Bexley to design a masterplan for the shopping centre, retail park and surrounding council owned land.
They also completed the acquisition of Cuckoo Bridge Retail Park in Dumfries in June off-market for GBP20 million, and a retail warehouse in Sheffield in September for GBP18 million. They moved quickly to acquire the Sheffield asset from an open-ended property fund and it is a great example of a NewRiver deal. As they completed the Sheffield acquisition they exchanged contracts with the current occupier, a bulky goods retailer, to accept a surrender premium of up to GBP12.25 million which must be exercised by May 2017. In essence, this means that they have acquired a 110,000 sq ft prominently located retail warehouse for less than GBP6 million, well below replacement cost. They plan to sub-divide and re-position the asset and are in discussions with a number of retailers interested in taking the space.
They say that they made good progress in the period implementing active asset management initiatives at those assets acquired in the last 12 months. They purchased the Neptune Portfolio, consisting of 3 shopping centres in Darlington, Wakefield and Cardiff, in January 2016 for GBP92 million. Pre-acquisition they identified that at the Ridings Centre, Wakefield, there was an opportunity to significantly increase net rental income. They have made good progress since acquisition, commencing phase one of works costing GBP1.2 million which they aim to complete in the second half of the current financial year and which they believe will increase net rent. They are also in pre-planning for a major 147,000 sq ft retail and leisure re-development at the Capitol Shopping Centre in Cardiff, which will include almost 180 apartments in the air space above the centre.
Their 1.6 million sq ft risk-controlled development pipeline has also moved forward since the year end. At our 465,000 sq ft regeneration scheme in Burgess Hill, they have exchanged contracts with Cineworld for a 10 screen multiplex cinema, meaning that the retail & leisure element of the scheme is now 41% pre-let with a further 22% in solicitors’ hands. Post period end, they received planning consent at Canvey Island for a 62,000 sq ft retail park which is already 52% pre-let, with a further 23% in solicitors’ hands. In November, they submitted the planning application for our exciting 236,000 sq ft mixed-use regeneration in Cowley, Oxford. Their current development commitment is modest, with 24,800 sq ft under construction, and our risk-controlled approach to development means they will not commit to further developments without substantial pre-letting.
The convenience store programme within the pub portfolio continued to progress, and they handed over a further six C-stores to the Co-operative in the period taking the total number completed to date to nine and adding GBP0.6 million to our rent roll. They are on site for the construction of a further two totalling 6,500 sq ft and we have consent to construct a further 25 totalling 85,400 sq ft.
LTV was 38% at 30 September, up from 27% at March 2016 predominantly due to the acquisition of our assets in Bexleyheath which completed in April. Our interest cover remained robust at 4.3x and our weighted average cost of debt was 3.65%, down from 3.70% in March 2016.
NRR : New River REIT bumps up dividend by 11%