NewRiver Retail has confirmed it has exchanged contracts for its £140m Swallowtail portfolio purchase.
The UK REIT is buying three shopping centres from Abbey Group and Foyleside Group through its joint venture with PIMCO in a deal that reflects a net initial yield of “just under 8%”.
Both parties are taking a 50% equity stake using existing cash resources “ahead of a new debt facility which is at an advanced stage”.
The 758,000 sq ft portfolio comprises Priory Meadow , Hastings, East Sussex; The Avenue , Newton Mearns south west of Glasgow; and Abbey Centre, Newtonabbey, north of Belfast, Northern Ireland.
The portfolio has a total annual footfall in excess of 15m and is let to 185 tenants including Marks & Spencer, Asda, Primark, Next, Top Shop, H&M and Poundland. It has a 3.5% average vacancy rate.
Current rental levels across the three shopping centres range from £50 zone A to £65 zone A, reflected in an average turnover to rent ratio of 9%.
NewRiver Retail property director Allan Lockhart said: “In addition to benefiting from an attractive double-digit cash-on-cash return underpinned by strong underlying retailer sales, there are opportunities to enhance returns through our proven asset management and development skills.
“Following our successful equity fund raising earlier this year, this transaction demonstrates NewRiver Retail’s ability to deploy shareholder funds efficiently and wisely and strengthens our position as one of the UK’s leading value-creating real estate specialists.
“This major acquisition increases the growth asset base of NewRiver Retail to £730m and represents a significant milestone in the company’s plan to reach £1bn of assets under management in the near future.”
Individually, the portfolio’s assets include Priory Meadow, Hastings, East Sussex. Priory Meadow opened in 1997 and comprises 292,000 sq ft of retail space, 1,086 car parking spaces and a range of food, fashion and value retailers thereby proving a balanced mix for the 5.2m customers that visit the centre annually. Key high quality retailers include Marks & Spencer, New Look, Poundland and a new H&M store. The centre has a WALE of 8.7 years. NewRiver has identified a range of asset management initiatives which the company believes will deliver long-term benefits.
The Avenue, Newton Mearns comprises 202,000 sq ft of retail space, 1,084 free car parking spaces and is a convenience led shopping centre anchored by Asda and Marks & Spencer alongside retailers including Boots, Superdrug, O2, and Costa Coffee. This shopping centre generates over 4m customer visits pa and is underpinned by an income stream that has a WALE of 7.2 years. A range of asset management initiatives has been identified including a significant development opportunity to undertake a mixed-use scheme on surplus land within the ownership.
Abbey Centre, Newtonabbey, Northern Ireland, is ranked the third most dominant centre in Northern Ireland. It comprises 264,000 sq ft of shops, over 1,104 free car parking spaces with an annual footfall in excess of 6m. The centre is underpinned by a WALE of 5.1 years and offers NewRiver a range of asset and development opportunities to pursue. Terms have been agreed to significantly upsize Next to provide it with a new 43,000 sq ft store through a partial redevelopment of the centre.
bridget.oconnell@estatesgazette.com
