NewRiver acquires GBP24m shopping centre portfolio
UK REIT NewRiver Retail Limited has acquired a portfolio of three shopping centres for a total consideration of GBP24m from Zolfo Cooper, acting as administrator on behalf of SPVs controlled by Clydesdale Bank.
NewRiver was appointed asset manager of the portfolio by Zolfo Cooper when it was placed into administration in December 2012. The asset management appointment provided the company with the opportunity to evaluate the likely future performance of the assets.
NewRiver has identified a number of asset management and development initiatives to enhance the income and capital value of the assets.
The portfolio was acquired at a net initial yield of 10.4 per cent and comprises the 99,500 sq ft Newkirkgate Shopping Centre in Edinburgh; the 183,046 sq ft Beacon Centre in North Shields, Tyne & Wear; and the 25,000 sq ft La Porte Precinct in Grangemouth, near Falkirk.
The portfolio offers a combined weighted average lease expiry of approximately 5.3 years and a total lettable area in excess of 300,000 sq ft. The three centres comprise 77 tenancies. The portfolio features a range of national retailers including Wilkinson, Boots, WH Smith, Home Bargains and New Look. The occupancy rate is 94 per cent.
The acquisition is being funded through the company's BRAVO II joint venture partnership (a fund advised and managed by Pacific Investment Management Company LLC). Both parties are taking a 50 per cent equity stake in the acquisition and the joint venture will benefit from the portfolio's projected high yielding income returns. The acquisition was funded from existing cash resources and the joint venture has Credit Committee approval for a debt facility that it intends to draw down on in due course.
Allan Lockhart, property director at NewRiver Retail, says: "After nearly 12 months of managing these assets on behalf of the administrator, we are delighted to have acquired this portfolio at an attractive yield of over 10 per cent. The three centres are an excellent addition to our high yielding and diversified portfolio that is predominately focused on everyday non-discretionary retail.
“Following our oversubscribed equity fundraise in July, we have undertaken four major transactions, the majority of which have been off market, totalling circa GBP200m at an average yield of 11 per cent. This demonstrates our ability to deploy our shareholders capital with speed but without compromising our investment strategy."
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