NewRiver reports strong third quarter

(Sharecast News) - NewRiver REIT reported a strong third quarter on Wednesday, underpinned by positive leasing momentum, rising occupancy and continued capital recycling, as it said its portfolio entered the new financial year in its strongest position since before the pandemic.

During the quarter, NewRiver completed 234,500 square feet of new lettings and renewals across 98 transactions, securing £2.1m of annualised rental income.

Long-term transactions were completed in line with estimated rental value and at rents 56.9% higher than previous levels.

Key deals included lettings with Boots and B&M in Middlesbrough and H&M in Bexleyheath.

Year-to-date, leasing activity totalled 650,800 square feet, with long-term transactions 8.2% above ERV and 31.1% ahead of prior rents.

The London-listed company said it remained in constructive discussions to mitigate the impact of retailer restructurings seen in the first half, with no further restructurings announced since.

Operational metrics continued to trend positively, with portfolio occupancy rising to 96.1% from 95.3% at the end of September, while retailer retention remained high at 91%.

Consumer spending across NewRiver's portfolio was resilient, with total in-store spend during the Christmas quarter in line with the prior year.

Grocery, the largest spending category, recorded growth of 6.2% year-on-year, while for the full year to December non-food discount sales rose 7.2%, food and beverage increased 4% and health and beauty grew 2.4%, offsetting a 1.1% decline in value fashion.

NewRiver said that from 1 April, new rateable values across its portfolio were expected to rise by around 7%, but that would be more than offset by recently announced discounts for retail, hospitality and leisure properties, resulting in an estimated 11% reduction in rates payable by tenants.

The group said that would support tenant affordability.

Its Snozone leisure business also performed ahead of expectations, delivering EBITDA of £2m in the third quarter compared with a £1.6m loss in the first half due to seasonality, taking year-to-date EBITDA to £0.4m ahead of both prior year and budget.

The company said it remained on track to complete around £40m of disposals in the second half in line with book values.

During the quarter it completed the sale of The Marlowes in Hemel Hempstead and Sprucefield Retail Park in Lisburn for combined proceeds of £12.6m.

In January, NewRiver exchanged contracts to sell Cuckoo Bridge Retail Park in Dumfries for £26.5m, with completion expected during the fourth quarter.

Progress was also made on regeneration and asset repositioning.

In December, NewRiver entered into a conditional agreement to form a joint venture with Mid Sussex District Council to redevelop The Martlets shopping centre in Burgess Hill, with formalisation expected by the end of March subject to conditions.

The group signed an agreement in January for lease with an experiential leisure operator on around 80,000 square feet at the Capitol Centre in Cardiff, which would reposition the asset as core and reduce exposure to work-out and other assets to 1% of the portfolio.

"We delivered another strong quarter of operational performance, with growing demand across our core markets driving strong leasing activity and rising occupancy," said chief executive Allan Lockhart.

"We remained disciplined in recycling capital, improving our portfolio quality and strengthening our financial position.

"With market conditions becoming more supportive and our portfolio in its best shape since before the pandemic, we move into the 2027 financial year with real momentum.

"We are confident in our ability to deliver further earnings growth and a well covered dividend."

At 0911 GMT, shares in NewRiver REIT were up 1.85% at 71.6p.

Reporting by Josh White for Sharecast.com.