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NewRiver REIT PLC

Newriver REIT PLC Good progress on strategies to deliver Underlying FFO growth

Allan Lockhart, Chief Executive of Newriver REIT PLC commented: “We have made a good start to the year despite continued retail sector headwinds, delivering robust operational metrics, with occupancy and average rents remaining stable, footfall outperforming the benchmark, and long-term leasing deals ahead of previous passing rent and estimated rental values.

We have progressed our strategies to deliver Underlying Funds From Operations growth and to re-establish a fully covered dividend with a net neutral investment approach, recycling £27.5 million of lower-yielding assets and acquiring £30.3 million of high-yielding retail parks, with robust cashflows, in a new joint venture with BRAVO. We signed our third mandate within a year to our third-party asset-management platform, for the Nicholsons Shopping Centre in Maidenhead, which is a significant endorsement of our in-house capabilities and demonstrates the attractiveness of our scale, governance and asset management expertise to a wide range of third-party asset owners. Our pub portfolio has also continued to deliver high occupancy and robust cash returns, as it benefited from its first full quarter of the scale-based synergies secured through the integration of Hawthorn Leisure, completed in January 2019.

Looking ahead, we remain confident that our diversified portfolio, underpinned by affordable and therefore sustainable rents, and a focus on convenience, value and services, alongside our identified growth strategies, will position us well to weather the current challenges and pursue value-creating opportunities.”

Good progress with strategies to deliver Underlying FFO growth and re-establish dividend cover

·      Disposed of £27.5 million of assets at a blended net initial yield (‘NIY’) of 6.7% and 1.6% below book value, comprising an Asda foodstore and petrol filling station at St Elli Shopping Centre, Llanelli for £17.9 million, one shopping centre, six c-stores and three pubs; exchanged or under offer on a further £10.7 million of assets; altogether representing a blended NIY of 6.0%; on track to recycle 5% of our portfolio in FY20

·      Deployed proceeds into acquisition in BRAVO JV of four retail parks: Kittybrewster Retail Park in Aberdeen, units at Kingsway East Retail Park in Dundee, Telford Retail Park in Inverness, and Wakes Retail Park on the Isle of Wight, for £60.5 million (NRR share: £30.3 million), reflecting a NIY of 9.8%

·      Asset Management Agreement signed with developer Areli Real Estate for the management of Nicholsons Shopping Centre, Maidenhead; third mandate for our third-party asset management platform within a year of its launch; discussions ongoing with a number of Local Authority owners of retail assets to expand platform further

Affordable rents and focus on convenience, value and services delivers robust operational metrics

·      Retail occupancy remained high at 95.4% (March 2019: 95.2%)

·      172,200 sq ft of leasing activity in the quarter; includes lease renewals on 29 Amazon Lockers across our community shopping centre portfolio, securing £52,000 of rent and underscoring the importance of our centres as click & collect destinations; long-term retail deals completed on terms 1.4% ahead of previous rent and 3.2% ahead of estimated rental values  

·      Average retail rent remained affordable at £12.58 per sq ft (March 2019: £12.52 per sq ft)

·      Well-positioned portfolio proved resilient to CVAs and administrations during the quarter: 0.5% of gross income impacted by CVAs and administrations during the quarter; includes Arcadia Group exposure of 0.3% of gross income, with no reduction to rental income as a result of its CVAs

·      Like-for-like footfall across our shopping centres declined -2.5%, outperforming the UK benchmark by 70 bps

Community pub portfolio continues to deliver robust cash flows and opportunities to extract further value

·      Community pub portfolio delivered like-for-like EBITDA per pub of +5.5% in first quarter, driven by the scale-based synergies secured in FY19

·      Occupancy remained high at 97.6% (March 2019: 97.9%) across our 661 community pubs

·      Extracting further value through risk-controlled development: on site with the redevelopment of the Sea View Inn in Poole, Dorset to deliver a scheme comprising 10 apartments and a Co-op convenience store (‘c-store’)

Performance underpinned by a fully unsecured balance sheet and disciplined capital allocation

·      Ordinary dividend for Q1 FY20 held at 5.4 pence (Q1 FY19: 5.4 pence)

·      Pro forma LTV remained stable at 37% based on March 2019 valuations, within our stated guidance of less than 40%, and reflecting our net neutral investment approach