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NewRiver REIT PLC

NewRiver REIT delivering a resilient operational performance

Allan Lockhart, NewRiver REIT (LON: NRR) Chief Executive commented: “In the third quarter, we saw continued stability in our operational metrics with an increase in retail occupancy to 96.1%, footfall outperforming the UK benchmark by 60 bps and a healthy demand for our retail space having signed deals across 152,000 sq ft, with long-term deals on terms ahead of previous passing rent and ERVs. Our Hawthorn Leisure pubs business also delivered growth through the acquisition of Bravo Inns and from strong like-for-like EBITDA per pub growth.

Our disposal programme continues apace, with £70.3 million of disposals now completed, exchanged or under offer in FY20 to date, at a blended yield of 4.9%. In line with our strategy, we have recycled sales proceeds into £92.6 million of retail park and community pub acquisitions in FY20 to date, at a blended net initial yield of 10.1%.

We were pleased with the robust Christmas trading performance of a number of our top 15 tenants, including Sainsbury’s, B&M, Primark, Next and Iceland. With a clear strategy and a portfolio focused around occupiers providing convenience, value and services, we feel well-positioned to navigate our way through these challenging market conditions.”

Continued progress in disposing of a minimum of 5% of our portfolio in FY20

· So far in FY20, disposals completed, exchanged or under offer total £70.3 million, at a blended NIY of 4.9%; completed disposals on terms in-line with March 2019 valuation

· Completed disposals in FY20 to date total £39.3 million across all asset types, at a blended NIY of 5.6%, with a further £31.0 million of disposals exchanged or under offer, at a blended NIY of 3.8%

Disposal proceeds recycled into high yielding acquisitions across retail parks and community pubs

· So far in FY20, acquisitions total £163.1 million (NewRiver share: £92.6 million), at a blended NIY of 10.1%

· Poole Retail Park acquired in October 2019 in a 10% investment with BRAVO for £44.7 million (NewRiver share: £4.5 million), representing a NIY of 8.0%

· Sprucefield Retail Park, Lisburn acquired in December 2019 for £40.0 million, representing a NIY of 8.7%; acquisition to generate £3.7 million of annualised Net Property Income for NewRiver and provides opportunity to extract further value through active asset management and the disposal of parcels of land for development

· Bravo Inns acquired in December 2019 for £17.9 million, representing an EBITDA multiple of 6.8x; transaction expected to generate annualised outlet EBITDA of £2.6 million across the 44 pubs and grows our exposure to the highly profitable operator manager pub model

Retail portfolio delivered robust operational metrics, as platform signs fourth asset management mandate

· Retail occupancy remained high at 96.1% (September 2019: 95.6%)

· 152,000 sq ft of leasing activity completed; long term deals on terms 3.0% ahead of previous passing rent and 2.5% ahead of ERV; includes a letting to The Gym Group in Victoria Retail Park, Beverley, one of the brand’s first “small-box” sites, which further increases our exposure to the growing low-cost gym sub-sector

· Affordable average retail rent of £12.59 psf (September 2019: £12.49 psf)

· Tenant mix remains well-diversified with our largest tenant, Sainsbury’s, representing just 2.3% of gross income

· Like-for-like footfall across shopping centres outperformed UK benchmark by 60 bps, with a decline of -1.9%

· In November 2019, signed fourth third-party asset management mandate with Knowsley Council to become strategic asset manager for Kirkby Town Centre; agreement includes fees for acquisition due-diligence, asset management and a potential development monitoring fee

Hawthorn Leisure: continued like-for-like EBITDA growth per pub, supported by solid Christmas trading

· Like-for-like EBITDA growth per pub of +4.9% in FY20 to date, as the portfolio continued to benefit from the scale-based synergies secured in FY19 and a solid Christmas; rate of growth expected to moderate following annualisation of Hawthorn Leisure integration in January 2020

· Pub occupancy remained high at 97.9% (September 2019: 96.7%) across our 698 community pubs

· 26th convenience store (“c-store”) to be handed over to the Co-op this week at site of the Sea View Inn in Poole, triggering £275,000 performance receipt from the Co-op; nine c-stores sold in FY20 to date

Solid performance underpinned by conservative financial policies and a fully unsecured balance sheet

· Third quarter ordinary dividend held at 5.4 pence per share (Q3 FY19: 5.4 pence); dividend for FY20 to date held at 16.2 pence per share (FY19 to Q3: 16.2 pence)

· Following acquisitions, pro forma LTV of 41% (based on September 2019 valuations); net borrowings expected to reduce as disposal programme progresses; guidance remains for LTV to be below 40%

· In November 2019, Fitch Ratings affirmed NewRiver’s IDR at ‘BBB’ with Stable Outlook and corporate bond rating at ‘BBB+’; an endorsement of our conservative balance sheet and financial policies, and resilient business model

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