NewRiver says retail in ‘best position for several years’

NewRiver REIT has reported record occupancy levels in its latest financial year and signalled that retail values are stabilising, citing its “most modest decline in valuation for several years”. Chief executive Allan Lockhart said the retail sector is “arguably in the best position it’s been in for several years”, following a “wave of corporate restructurings” and the repositioning of many retailers. The REIT made an IFRS profit after tax of £3m for the year ending 31 March, compared with a loss of £16.8m, citing a 2.3% valuation decline. The value of its portfolio fell to £543.8m, from £593.6m. EPRA NTA per share stood at 115p in March, down year-on-year from 121p. Net property income fell to £45.6m, from £50.5m. Occupancy levels reached 98%, up from 96.7% year-on-year. It achieved 785,100 sq ft of leasing during the period. The EPRA vacancy rate across the portfolio was 2.1%. The vacancy rate for core shopping centres stood at 1.6%, the lowest level for four years, while retail parks recorded a 2.6% rate. Earlier this year, the REIT started searching for potential partners to form a long-term joint venture for a retail park portfolio. It is seeking to raise £200m of private capital from core plus investors. The REIT said it is trading at a material discount to net asset value because of its size, share liquidity constraints and the wider equity market conditions for listed REITs and investment trusts. It added that it will look to overcome it through “earnings growth and pursuing a number of growth avenues”. It is also aiming to create public-private partnerships focusing on regeneration, which it will co-invest in. NewRiver said its retail portfolio demonstrated valuation stability in the second half of the year, and that consumers are “increasingly seeking value and convenience”. Lockhart said: “During the fourth quarter, we have seen a continuation of the positive operational momentum that has built over recent years, which is reflective of both the steadily improving health of the underlying retail market and the inherent strengths of our business. “The retail sector is arguably in the best position it’s been in for several years following a wave of corporate restructurings and the successful repositioning of many retailers, which have created a healthier operating environment, as well as the increased market share of omnichannel retailers with physical retail playing a central role.” The news comes as the REIT is deliberating a takeover offer for listed peer Capital & Regional. It has until 18 July to decide whether to make a formal bid. Image from PR