TIDMNRR
RNS Number : 3958U
NewRiver REIT PLC
23 November 2023
NewRiver REIT PLC
Unaudited results for the six months ended 30 September
2023
23 November 2023
Balance sheet strength underpins growth opportunities
Allan Lockhart, Chief Executive commented: " During the first
half we have continued to deliver the positive operational momentum
which has been building consistently over the last 2 years.
Our occupational market today is in the best position it has
been for five years. As a result, we have seen active demand for
space which has led to our occupancy increasing to almost 98%, the
highest level we have recorded since NewRiver was founded in 2009
and a tenant retention rate at lease expiry or break of 98%.
Importantly our leasing transactions were positive versus ERV and
previous passing rent. Our operations are supported by the strength
of our balance sheet position, with an LTV of 29.5%, GBP138 million
of cash available, a newly extended Revolving Credit Facility and
no refinancing requirement until 2028.
For some time now, we have deliberately built up our cash
position in anticipation of securing the right opportunities to
deliver compelling returns and, encouragingly, growth opportunities
are now starting to emerge. In the meantime, so that our
shareholders receive benefit as we wait to deploy, we have taken
the decision to temporarily increase our dividend payout, resulting
in a comfortably covered first half dividend of 3.4 pence per
share."
Financial Position Strengthened Further
-- Completed the disposal of the Napier Joint Venture which generated
an IRR of 16% since acquisition
-- LTV of 29.5% vs 33.9% at 31 March 23
-- Cash increased to GBP138.0m vs GBP111.3m at 31 March 23
-- Interest cover increased to 5.2x vs 4.3x at 31 March 23 and 3.9x
at 30 September 22
-- Net debt to EBITDA further improved to 4.4x vs 4.9x at 31 March
23 and 5.1x at 30 September 22
-- Refinanced GBP100m undrawn Revolving Credit Facility to extend
maturity to November 2026 at reduced cost
-- Fully unsecured balance sheet with interest rate fixed at 3.5%
on drawn debt and no maturity on drawn debt until 2028
Resilient Underlying Financials
-- UFFO of GBP12.3m, slightly ahead of GBP12.2m in H2 FY23 and reduced from GBP13.6m in HY23
due to disposals completed in the last 12 months and Covid related credits recognised in HY23
-- UFFO per share of 4.0 pence vs 3.9 pence per share in H2 FY23 and 4.4 pence per share in HY23
-- Dividend temporarily topped-up to 85% payout / 118% covered pending capital deployment; dividend
of 3.4 pence per share vs 3.2 pence per share in H2 FY23 and 3.5 pence per share in HY23
-- Portfolio valued at GBP553m, delivering a total return of 1.7% vs MSCI All Retail of 0.3%
-- IFRS loss after tax of GBP2.6m due to 2.0% valuation decline vs profit of GBP4.1m in HY23
-- EPRA NTA per share down 3.3% to 117 pence vs 121 pence at 31 March 23 due to the modest decline
in portfolio valuation
-- HY24 Total Accounting Return of -0.7% vs -5.7% in H2 FY23 and +1.0% in HY23
Continued Operational and Strategic Delivery
-- Rent collection stable at 98% vs 98% in FY23
-- Occupancy increased to 97.7% vs 31 March 2023 position of 96.7% - highest occupancy level
since the Company was founded in 2009
-- 361,800 sq ft of leasing transactions; long-term transactions +11.0% vs previous rent and
+3.9% vs ERV
-- Retention rate improved to 98% on lease expiry or break vs 92% at 31 March 2023
-- Asset management fee income from Capital Partnerships increased by GBP0.5m or 71% vs HY23,
with the key driver being the mandate from M&G Real Estate which started in Q4 FY23
-- Major regeneration planning application submitted in Grays
-- On track with Work Out disposal programme; of the four assets identified for disposal by the
end of FY24, one asset is under offer and one has exchanged
-- GRESB score improved to 72 from 70 and maintained Gold Level for EPRA Sustainability Best
Practice Recommendations
Results summary
Performance Note HY24 H2 FY23 HY23
Unaudited Unaudited Unaudited
Underlying Funds From Operations ('UFFO') (1) GBP12.3m GBP12.2m GBP13.6m
----- ----------- ----------- -----------
UFFO per share (1) 4.0p 3.9p 4.4p
----- ----------- ----------- -----------
Net Property Income GBP23.0m GBP24.8m GBP25.7m
----- ----------- ----------- -----------
Ordinary dividend 3.4p 3.2p 3.5p
----- ----------- ----------- -----------
Ordinary dividend cover (2) 118% 125% 125%
----- ----------- ----------- -----------
IFRS (Loss) / Profit after taxation GBP(2.6)m GBP(20.9)m GBP4.1m
----- ----------- ----------- -----------
IFRS Basic EPS (0.8)p (6.7)p 1.3p
----- ----------- ----------- -----------
Interest cover (3) 5.2x 4.3x 3.9x
----- ----------- ----------- -----------
Total Accounting Return (4) (0.7)% (5.7)% +1.0%
----- ----------- ----------- -----------
GRESB Score (5) 72 70 70
----- ----------- ----------- -----------
Balance Sheet Note 30 September 2023 31 March 30 September 2022
2023
IFRS Net Assets GBP367.7m GBP378.6m GBP409.5m
----- ------------------ ---------- ------------------
EPRA NTA per share (6) 117p 121p 132p
----- ------------------ ---------- ------------------
Balance Sheet (proportionally consolidated) (7) 30 September 2023 31 March 30 September 2022
2023
----- ------------------ ---------- ------------------
Properties at valuation GBP553.1m GBP593.6m GBP643.2m
----- ------------------ ---------- ------------------
Net debt GBP163.1m GBP201.3m GBP217.1m
----- ------------------ ---------- ------------------
Principal value of gross debt (8) GBP304.0m GBP316.0m GBP316.0m
----- ------------------ ---------- ------------------
Cash GBP138.0m GBP111.3m GBP95.1m
----- ------------------ ---------- ------------------
Net debt: EBITDA 4.4x 4.9x 5.1x
----- ------------------ ---------- ------------------
Weighted average cost of debt - drawn only (9) 3.5% 3.5% 3.5%
----- ------------------ ---------- ------------------
Weighted average debt maturity - drawn only (9) 4.4 years 4.7 years 5.2 years
----- ------------------ ---------- ------------------
Loan to value (10) 29.5% 33.9% 33.8%
----- ------------------ ---------- ------------------
(1) Underlying Funds From Operations ('UFFO') is a Company measure of
operational profits, which includes other income and excludes one
off or non-cash adjustments, such as portfolio valuation movements,
profits or losses on the disposal of investment properties, fair
value movements on derivatives and share-based payment expense as
set out in Note 11 to the Financial Statements and in the Finance
Review. UFFO is used by the Company as the basis for ordinary dividend
policy and cover
(2) Ordinary dividend cover is calculated with reference to UFFO
(3) Interest cover is tested at corporate level and is calculated by
comparing actual net property income received versus net cash interest
payable on a 12 month look-back basis
(4) Total Accounting Return is the EPRA NTA per share movement during
the period, plus dividends paid in the period, divided by EPRA NTA
per share at the start of the period
(5) GRESB is the leading sustainability benchmark for the global real
estate sector, and its annual assessment scores participating companies
out of 100
(6) EPRA Net Tangible Assets ('NTA') is based on IFRS net assets excluding
the mark to market on derivatives and debt instruments, deferred
taxation on revaluations and diluting for the effect of those shares
potentially issuable under employee share schemes, see Note 11 to
the Financial Statements
(7) Proportionally consolidated means Group and share of JVs & associates
(8) Principal value of gross debt being GBP300.0 million of Group and
GBP4.0 million share of JVs & associates (31 March 2023 and 30 September
2022: GBP300.0 million of Group and GBP16.0 million share of JVs
& associates)
(9) Weighted average cost of debt and weighted average debt maturity
on drawn debt only (including share of JV & associate drawn debt)
(10) Is the ratio of gross debt less cash, short-term deposits and liquid
investments to the aggregate value of properties and investments
For further information
NewRiver REIT plc +44 (0)20 3328 5800
Allan Lockhart (Chief Executive)
Will Hobman (Chief Financial Officer)
+44 (0)20 7251
FGS Global 3801
Gordon Simpson
James Thompson
This announcement contains inside information as defined in
Article 7 of the EU Market Abuse Regulation No 596/2014 and has
been announced in accordance with the Company's obligations under
Article 17 of that Regulation. This announcement has been
authorised for release by the Board of Directors.
Results presentation
The results presentation will be held at 10.30am today, 23
November 2023, at DL/78, 78 Charlotte Street, London, W1T 4QS.
A live audio webcast of the presentation will be available
at:
https://secure.emincote.com/client/newriver/HY24
A recording of this webcast will be available on the same link
after the presentation, and on the Company's website (www.nrr.co.uk
) later in the day.
Forward-looking statements
The information in this announcement may include forward-looking
statements, which are based on current projections about future
events. These forward-looking statements reflect the directors'
beliefs and expectations and are subject to risks, uncertainties
and assumptions about NewRiver REIT plc (the 'Company'), including,
amongst other things, the development of its business, trends in
its operating environment, returns on investment and future capital
expenditure and acquisitions, that could cause actual results and
performance to differ materially from any expected future results
or performance expressed or implied by the forward-looking
statements.
None of the future projections, expectations, estimates or
prospects in this announcement should be taken as forecasts or
promises nor should they be taken as implying any indication,
assurance or guarantee that the assumptions on which such future
projections, expectations, estimates or prospects have been
prepared are correct or exhaustive or, in the case of the
assumptions, fully stated in the document. As a result, you are
cautioned not to place reliance on such forward-looking statements
as a prediction of actual results or otherwise. The information and
opinions contained in this announcement are provided as at the date
of this document and are subject to change without notice. No one
undertakes to update publicly or revise any such forward looking
statements. No statement in this document is or is intended to be a
profit forecast or profit estimate or to imply that the earnings of
the Company for the current or future financial years will
necessarily match or exceed the historical or published earnings of
the Company.
Chief Executive's Review
Our operational performance in the first half of the financial
year has been excellent with our occupancy increasing to 98%, the
highest position since NewRiver was founded in 2009, a leasing
retention rate of 98% and another reporting period of leasing ERV
outperformance and rent secured above the previous passing
rent.
Our consistently strong operational performance is reflective of
our portfolio positioning, focused on essential goods and services
offering consumers value for money, and the quality of our asset
management platform. It is also a result of the retail occupational
market being in its best position for at least five years.
Whilst UK real estate capital markets continue to be disrupted
by increased interest rates, we continue to outperform our MSCI
benchmark due to the stability of our rental cashflows, our
portfolio yield premium to the 10 year Gilt and the average capital
size of our assets being more aligned with the liquidity in the
market. Our portfolio delivered a modest like-for-like valuation
movement of -2.0% with the negative movement concentrated in our
Regeneration asset in Bexleyheath. Importantly, our Core Shopping
Centres and Retail Parks delivered valuation growth of 0.7% and
0.2% respectively. As a result of the valuation movement, our EPRA
Net Tangible Assets (NTA) per share at the half year was 117 pence
versus 121 pence at 31 March 2023.
Our balance sheet remains in great shape with cash increasing
during the period to GBP138.0 million generated by excellent rent
collection, tight control on capital and administration expenditure
and the disposal of the Napier Joint Venture. As a result, LTV
reduced during the period to 29.5%, the lowest rate since 2018.
Post period end, we were delighted that NewRiver has retained the
confidence of our key banking partners with the refinancing of our
GBP100 million Revolving Credit Facility until November 2026, at a
lower annual cost.
Our key focus is to deliver attractive shareholder returns and,
given that we have significant available cash and liquidity to
deploy, a growing capital partnership business and a core portfolio
that has returned to rental growth, we are well positioned to
deliver future earnings growth. For some time we have been patient,
increasing our cash position in anticipation of opportunities that
will deliver double digit IRRs through direct investment and asset
management and we are now starting to see those opportunities
emerge.
Strong Financial Performance & Fully Covered Dividend
Our UFFO in HY24 was GBP12.3 million which represents a modest
increase from H2 FY23 albeit lower than HY23 due to asset
disposals, Covid insurance claim and the release of Covid rent and
service charge provisioning during that period. Reduction in net
property income from HY23 has been partially offset by a reduction
in administration expenses of 4%, a 71% increase in asset
management fees and a 28% decrease in net finance costs due to the
increase in cash interest earned on our cash holdings.
Like-for-like net rental income was stable during the period.
We have declared a half year dividend of 3.4 pence per share,
118% covered by UFFO per share of 4.0 pence. We have flexed upwards
from the 3.2 pence per share per our dividend policy by paying out
100% of the cash interest received on our cash holdings during the
half because we recognise that our shareholders' patience should be
rewarded while we await the compelling investment opportunities we
expect to materialise in the near-term. Our intention would be to
temporarily top up the dividend at the full year too, subject to
deployment progress in H2.
As a result of a stable UFFO, a tight control on capital
expenditure and completed disposals, our cash position increased
from GBP111.3 million at 31 March 2023 to GBP138.0 million at 30
September 2023. Our balance sheet is in great shape with an LTV of
29.5% at the half year, the lowest it has been for five years.
Equally important is balance sheet gearing which for us is 43.5%,
Net debt to EBITDA is reduced further to 4.4x, one of the lowest in
the real estate sector, and interest cover has increased to 5.2x,
one of the highest in the real estate sector.
Valuation Outperformance
UK real estate markets continue to be impacted by increased
interest rates with all sectors experiencing re-pricing over the
past twelve months, especially low yielding sectors. Throughout
this period, retail real estate has been one of MSCI's best
performing total return sectors due to greater stability in capital
values given its existing yield premium and higher contribution
from income.
Our portfolio valuation, which recorded a modest -2.0%
like-for-like movement, has outperformed MSCI All Retail and MSCI
All Property on income and capital returns over the six month
period leading to a +140bps and +220bps total return
outperformance. Over a twelve month period, this increases to
+900bps and +1,330bps. As at 30 September 2023 our portfolio
equivalent yield was 8.8%, +200bps higher than MSCI All Retail and
+450bps higher than the UK 10-year Gilt. Our portfolio yield
premium remains an important factor in insulating our capital
return performance from the impact of rising interest rates. Across
the portfolio, both equivalent yields and ERVs remained stable.
Pleasingly, our Core Shopping Centre portfolio, representing 40%
of our total portfolio, delivered a like-for-like valuation
movement for HY24 of +0.7%. Taking account of our consistently
higher income returns, we have significantly outperformed MSCI
Shopping Centres on a total return basis by +440bps.
Our Retail Park portfolio, representing 25% of our total
portfolio, recorded a like-for-like valuation movement of +0.2% and
outperformed the MSCI on a total return basis by +150 bps.
The overall portfolio valuation movement was concentrated at our
South-East London Shopping Centre and Retail Park in Bexleyheath
which forms the largest component of our Regeneration portfolio. It
has been impacted by inflation through higher estimated
construction and finance costs and, more recently, the slowdown in
the housing market.
The Work Out portfolio which only accounts for 11% of our total
portfolio recorded a like-for-like valuation movement of only
-GBP1.0 million (-1.5%), a significant improvement on the previous
period.
Resilient Operational Performance
Operationally, we saw good performance during the first half in
terms of leasing volume and pricing. That, together with our high
retention rate when it comes to lease expiry or lease break, has
resulted in an increase in our occupancy to 98% (FY23: 97%), the
highest level we have recorded since NewRiver was founded in 2009.
Rent collection is back to pre-Covid levels and car park and
commercialisation net income all improved during the half.
In total we completed 361,800 sq ft of leasing transactions
during the period, securing GBP3.4 million of annualised income.
Our long-term leasing transactions which represented 73% of the
total rent secured were transacted at rents 3.9% above valuer's
ERV. Furthermore, 62% of the annualised long-term rent secured was
in our Core Shopping Centre portfolio exceeding valuer's ERV by
+7.7% and 25% within the Retail Park portfolio at -1.6% versus
valuer's ERV although most transactions were aligned with the
valuer's ERV.
Whilst rent secured within our Regeneration portfolio was down
-3.8% versus valuer's ERV, it was +14.8% ahead of the previous
passing rent and therefore accretive to rental cashflows. It is
also reflective of our ongoing strategy to ensure greater lease
flexibility to support our vacant possession strategy. The Work Out
portfolio leasing activity was on terms -1.4% versus valuer's ERV,
however, this only represents a small proportion of the total
portfolio long-term rent secured.
For total portfolio leasing events in HY24, the rents achieved
had a positive Compound Annual Growth Rate (CAGR) versus the
previous passing rent of +0.9% over the average previous lease
period of 12.2 years. Over the past three and half years, which
totals GBP17.9 million of annualised rent, this is only -0.2% based
on an average previous lease period of 10.3 years. Taking into
account the significant disruption the retail sector has faced over
the last 10 years from the growth of online retailing and Covid-19,
this clearly demonstrates the underlying resilience in our rental
cashflows.
Overall, our long-term leasing transactions had a weighted
average lease expiry (WALE) of 8.0 years, in-line with FY23, with
Retail Parks at 11.2 years and Core Shopping Centres at 6.6 years.
In terms of occupier incentives for long-term leasing transactions,
the average rent free period was just 3.7 months with many
occupiers receiving no rent free period.
The demand for space that we saw in our portfolio during the
year remained broadly based with 69% of the space leased to
Discount, Value Fashion, Grocery, Home, Books & Stationery,
Health & Beauty and F&B.
Well Positioned Portfolio
As at 30 September 2023, our Core Shopping Centre portfolio
represented 40% of our total portfolio value and comprised 14
assets located in the centre of local communities providing a range
of essential goods and services with an occupancy of 98% and
leasing retention rate of 99%. The consistent occupational demand
is reflected in the positive leasing performance during the period
with long-term deals transacted +7.7% ahead of ERV and +7.8% ahead
of the previous passing rent. Over the past three and half years,
we have completed GBP7.0 million of long-term leasing transactions
which compared to the previous passing rent, delivered a CAGR of
only -0.4% per annum over the average previous lease period of 10.6
years. Our Core Shopping Centres delivered a total return of 5.6%,
outperforming the MSCI Shopping Centres Index, which recorded a
1.1% total return, by +440 basis points. Over a twelve month
period, the total return outperformance is +1,430bps.
As at 30 September 2023, Retail Parks accounted for 25% of our
portfolio, totalling 12 assets with an average lot size of GBP14.9
million. We have continued to see strong occupational and investor
demand for our Retail Parks which are predominately located
adjacent to major supermarkets, benefit from free surface car
parking and are supportive of retailers' omnichannel strategies.
Occupancy stands at 98%, the leasing retention rate is at 100% and
whilst leasing transactions were completed marginally below
valuer's ERV at -1.6%, the majority of transactions were aligned
with valuer's ERV. Over the last three and a half years, we have
completed long-term leasing transactions totalling GBP5.1 million
of annualised rent across our Retail Parks which versus the
previous passing rent equates to a positive CAGR of +0.7% per annum
over the average previous lease period of 12.5 years. Our Retail
Parks delivered a total return of 2.9%, outperforming the MSCI
Retail Warehouse Index by +150bps, which recorded a 1.4% total
return. Over a twelve month period, the total return outperformance
is +1,120bps.
We have three Regeneration assets, representing 23% of the total
portfolio value, and where we have planning consent for 187
residential units, over 850 residential units at the planning
application stage and a further 350 residential units in the
masterplan stage for phase one. None of these projects will be
built-out by NewRiver as our intention is to deliver value either
through sale or by partnering with residential developers, once
planning consents are secured. Whilst we advance our regeneration
proposals, we have maintained a high occupancy at 98% whilst at the
same time building flexibility into the leases to deliver future
vacant possession. As such, the leasing deals completed within our
Regeneration portfolio were transacted at -3.8% below valuer's ERV.
Our Regeneration portfolio underperformed relative to MSCI Shopping
Centres by -650bps and this was entirely concentrated in
Bexleyheath where the valuer assumed 50bps equivalent yield
expansion to reflect a reduction in the residential hope value.
Post period end, we have formally submitted our planning
application in Grays, Thurrock.
Our Work Out portfolio represents 11% of our portfolio and
comprises nine assets which we intend to dispose of or complete
turnaround strategies on. Since our FY23 results, we have exchanged
on the disposal of one shopping centre, with a further shopping
centre under offer. The remaining two sales are to be completed by
the end of FY24. We are making good progress on those assets
subject to a turnaround strategy, the largest being our Work Out
asset in Cardiff City centre where we are close to signing a major
letting to a multi entertainment operator. In the interim,
occupancy and retention rates for our Work Out assets remain high
at 96% and 97% respectively and leasing transactions completed
during the period were transacted at a modest -1.4% below valuer's
ERV. In respect of capital and total returns, our Work Out
portfolio has outperformed the MSCI Shopping Centres Index by
+80bps and +180bps respectively.
Growing Capital Partnerships
Capital Partnerships are an important component of our strategy
to deliver earnings growth in a capital light way. The mandate with
M&G real estate has been expanded since we were appointed in Q4
FY23 to include a further shopping centre and a further retail
park. The benefit of that mandate is now seen in our UFFO with
asset management fee income up 71% versus HY23.
Currently, we have three key Capital Partnerships: in the public
sector with Canterbury City Council; in the private equity sector
with BRAVO; and now in the institutional sector with M&G Real
Estate. Combined, we asset manage 18 retail parks and five shopping
centres with a total value of more than GBP750 million and
annualised rent of over GBP60 million.
The expansion and breadth of our Capital Partnerships is a clear
recognition of the need for a best-in-class platform to extract
performance in the highly operational retail sector. We believe
that we have a significant opportunity to deliver further earnings
growth through our Capital Partnership activities and we are
currently actively seeking a new long-term partner to operate in
the retail park sector, to enable us to co-invest to generate
rental income and asset management fees.
Committed progress to ESG
We take our role as the custodians of assets within the
community very seriously and part of that responsibility is helping
to protect the long-term sustainability of the environment that our
assets sit within, and we are pleased to report good progress in
the delivery of our committed ESG Strategy. Key highlights in the
first half include a 36% and 25% reduction in gas and electricity
consumption respectively across the areas of our portfolio for
which we have direct control. We have also continued to use
renewable energy across the portfolio and have maintained our zero
waste to landfill policy.
Our operational control portfolio is fully compliant with
current MEES legislation and, assuming the Government does not
defer the 2027 target date for C ratings, we remain on target to
achieve compliance in 2027.
Our various ESG activities continue to be recognised by industry
benchmarks. Most recently, this includes achieving our 2023 target
GRESB score of 72/100 for the "Standing Portfolio" Benchmark. What
is pleasing is that GRESB ranked NewRiver 1(st) out of 1,013
European real estate companies for management which means that
NewRiver is performing particularly well at implementing
comprehensive risk management, stakeholder engagement and
governance (leadership, policies and reporting) processes. Finally
we retained our EPRA Gold sBPR award in recognition of excellence
in the transparency and comparability of our environmental, social
and governance disclosures.
In terms of our social impact, we were pleased to have been
recognised by The Sunday Times as one of the UK's best
employers.
Board succession planning
The Board and the Nomination Committee recognise the importance
of a managed approach to Board succession planning. Cognisant of
the tenures of some of our longest serving directors, NewRiver
today announces that it has embarked on a search process for a new
Chair. Margaret Ford, Non-Executive Chair of the Company, is
entering her seventh year as a Non-Executive Director of the
Company and has proposed to the Board that she will step down from
her role once a successor has been appointed, ensuring a smooth
handover of responsibilities. Alastair Miller, the Company's Senior
Independent Director, is leading this process with the appointment
of an Executive Search firm to undertake the search to find
Margaret's successor. It is expected that this process will be
completed before the Company's next Annual General Meeting in July
2024. The Company will make a further announcement on the progress
of this process in due course.
Outlook
Through the decisive actions we have taken over the last few
years and with our clear and focused strategy that is delivering,
NewRiver is today in a great position. We have much more to achieve
but we are confident in our ability to deliver consistent,
attractive returns for our shareholders.
This will be achieved through a laser focus on delivering future
rental growth on a consistent basis, the prospects for which are
encouraging. How we deploy our available capital will be a key
factor in driving future growth and we are determined to do so
wisely. Finally, we are excited with the growth potential of our
capital partnerships to deliver increasing earnings in a capital
light way.
Our long held view of the importance of income returns today
serves us well. The portfolio is performing well, supported by a
highly experienced and motivated team underpinned by arguably one
of the strongest balance sheets in the listed real estate sector
and so we are confident, while remaining alert to the wider macro
risks, of our prospects as we move into 2024.
Portfolio Review
Highlights
Portfolio Metrics as at 30 September 2023
-- Occupancy: 97.7% (FY23: 96.7%)
-- Retention Rate: 98% (FY23: 92%)
-- Rent Collection: 98% (FY23: 98%)
-- Affordable Average Rent: GBP11.85 per sq ft (FY23: GBP11.98 per sq
ft)
-- Gross to Net Rent Ratio: 87% (FY23: 88%)
-- Leasing Volume: 361,800 sq ft (HY23: 493,200 sq ft)
-- Leasing Activity: +3.9% ahead of valuer ERV (HY23 +3.0%)
-- Average CAGR FY21-HY24: -0.2% on 10.3yr average previous lease period
-- Total Return of 1.7% outperforming the MSCI All Retail by +140bps
over 6 months
-- Portfolio NIY of 7.9%, +190bps versus the MSCI All Retail at 6.0%
-- Expanding Capital Partnerships across public, private equity and institutional
sectors
Our portfolio continues to deliver resilient operational
metrics, supported by underlying strength in the retail
occupational markets due to the importance of the physical store
network and sustained consumer spending. Occupancy continues to
improve, increasing by 1.0% to 97.7% (FY23 96.7%), net rental
income was slightly down at -0.5% on a like-for-like basis, and
rent collection remains at normalised levels at 98% (FY23:
98%).
As at Occupancy Retention Rent Affordable Gross Leasing Average
30 Rate Collection Average Rent to Volume Leasing CAGR FY21-HY24
September Net Activity
2023 Rent
Ratio
(%) (%) (%) (GBP (Ave. (%) (sq % vs (%) (Average
psf) pa) ft) valuer Lease
ERV Length)
---------- ---------- ----------- --------- ----------- ------ -------- ---------- ------ ---------
Retail
Parks 97.7% 100% 99% GBP11.97 GBP123,000 97% 48,000 -1.6% 0.7% 12.5
---------- ---------- ----------- --------- ----------- ------ -------- ---------- ------ ---------
Shopping
Centres
- Core 98.3% 99% 98% GBP13.37 GBP40,000 94% 110,600 7.7% -0.4% 10.6
---------- ---------- ----------- --------- ----------- ------ -------- ---------- ------ ---------
Shopping
Centres
- Regen 98.4% 100% 100% GBP12.77 GBP70,000 87% 68,100 -3.8% -0.6% 9.2
---------- ---------- ----------- --------- ----------- ------ -------- ---------- ------ ---------
Shopping
Centres
- Work
Out 95.9% 97% 94% GBP8.97 GBP23,000 61% 121,300 -1.4% -0.4% 6.7
---------- ---------- ----------- --------- ----------- ------ -------- ---------- ------ ---------
Total
(1) 97.7% 98% 98% GBP11.85 GBP45,000 87% 361,800 3.9% -0.2% 10.3
---------- ---------- ----------- --------- ----------- ------ -------- ---------- ------ ---------
1. Total includes Other representing 1% of total portfolio by value
Overall, we completed on a total of 361,800 sq ft of leasing
transactions securing GBP3.4 million of annualised income.
Long-term leasing transactions accounted for 73% of the total rent
secured at rents +3.9% above valuer's ERVs and +11.0% against the
previous passing rent.
Long-term leasing activity for the period was concentrated
within the Core Shopping Centre Portfolio, accounting for 62% of
long-term rent secured on the total portfolio, transacting at +7.7%
above valuer's ERV and +7.8% above previous passing rent. A further
25% of long-term letting activity was within the Retail Parks
Portfolio at -1.6% versus valuer's ERV overall, with the majority
of deals aligned, and +24.1% above the previous passing rent. We
continue to experience excellent occupational demand across these
portfolios given their convenient locations at the heart of their
local communities.
Whilst leasing activity within the Regeneration Portfolio were
on terms below valuer's ERV at -3.8%, it only accounted for 5% of
long-term rent secured and was +14.8% above the previous passing
rent. The focus on the Regeneration Portfolio is to realise capital
receipts in the short term. Burgess Hill is under offer to an
active South coast developer and an outline planning application
has been submitted on Grays with a decision expected in early FY25,
at which point this significant residential scheme will be marketed
for sale. At Bexleyheath, we continue to work collaboratively with
the Council to draw up plans for a high density scheme on surplus
car parking which offers a significant value-creation
opportunity.
Rent secured within our Work Out Portfolio was marginally below
valuer's ERV at -1.4% and -4.5% versus the previous passing rent,
however, this leasing activity only represents a small proportion
of the long-term rent secured. We intend to dispose of or complete
turnaround strategies on assets within the Work Out Portfolio,
which accounts for only 11% of the total portfolio, with disposals
and turnaround strategies on 64% by asset value due to complete in
the next few months. We currently have GBP5.2 million of the Work
Out assets under offer/exchanged and GBP35.1 million where the
turnaround strategy is near complete whereafter the assets will be
transferred to the Core Portfolio. The remaining assets, which
account for only 4% of the total NewRiver portfolio, are well
progressed on their turnaround strategy or in active discussions on
a disposal.
For total portfolio lease events in HY24, the rents achieved had
a positive CAGR versus the previous passing rent of +0.9% over the
average previous lease period of 12.2 years. Over the past three
and half years, this is only -0.2% based on an average previous
lease period of 10.3 years, illustrating the limited annualised
rental decline. For Retail Parks the CAGR is positive at +0.7% and
given our Retail Parks have limited availability of space, with
occupancy at 98%, this should deliver further rental growth going
forward.
Overall, our long-term leasing transactions had a weighted
average lease expiry (WALE) of 8.0 years, in-line with FY23 at 8.2
years and a significant improvement over the 6.4 years in FY22. In
terms of tenant incentives, due to the continued competitive
tension in the occupational market, for long-term leasing
transactions the average rent free period is just 3.7 months,
slightly up on FY23 at 2.8 months, with many occupiers receiving no
rent free period.
The demand for space that we saw in our portfolio during the
period was broadly based with 69% of the space leased to Discount,
Value Fashion, Grocery, Home, Books & Stationery, Health &
Beauty and F&B.
Car park and commercialisation net income continues its recovery
from the pandemic, increasing +7.3% in HY24 compared to HY23.
Overall, net income is now back up to 85% against pre-pandemic
levels.
Our portfolio valuation at GBP553.1 million, represents a
capital return outperformance against the MSCI All Property and All
Retail indices of +40bps and +20bps respectively with a
like-for-like valuation movement of -2.0% for the 6 months to
September 2023.
We experienced valuation growth within both the Core Shopping
Centre and Retail Parks Portfolios meaning we have now seen within
these segments three consecutive reporting periods of stable
valuations. The decline was centred on the Regeneration Portfolio
which accounted for 98% of the portfolio movement, due to the
impact on residential viability at Bexleyheath, our South-East
London Shopping Centre and Retail Park, as a result of the wider
macro environment.
The majority of assets within the portfolio experienced minimal
movement. Out of the 43 assets within the portfolio, only two
assets had a valuation movement of greater than GBP1m, underpinning
the underlying resilience of our portfolio.
We continue to have success within Capital Partnerships. Since
securing the high-quality mandate from M&G Real Estate in Q4
FY23 to asset manage a large retail portfolio, we have added a
significant south-east Shopping Centre and a Retail Park to the
appointment including development management services. The
portfolio currently comprises 17 retail parks and two shopping
centres. Within our BRAVO joint venture, we have completed the
final disposals within the Napier Joint Venture with the total sale
receipt from Napier 26% higher than the price paid, crystallising
the returns contributing to the financial promote.
In Canterbury where we are the asset manager for the City
Council on two shopping centres that they own, we have been
appointed as development manager in relation to the construction
works involved in relocating the Council offices to the shopping
centre.
Our key partnerships across the public, private equity and
institutional sectors illustrate the importance of specialist
retail partners in a highly operational sector and endorsement of
the quality of our asset management platform.
Valuation
As at 30 September 2023, our portfolio was valued at GBP553.1
million (31 March 2023: GBP593.6 million). Movements in the 6
months to 30 September 2023 were the disposal of two Retail Park
assets (GBP31.3 million) and a -2.0% like-for-like valuation
movement. This shows an outperformance relative to the MSCI Monthly
All Retail Index which recorded a -2.5% decrease over a
like-for-like period.
The Core Shopping Centre Portfolio, which accounts for 40% of
the portfolio, delivered capital growth of 0.7% driven by modest
equivalent yield compression of -0.1% although our equivalent yield
remains high at 9.3% whilst income and ERVs remained stable. Over a
like-for-like period the MSCI Shopping Centres Index recorded
negative capital growth of -2.4%.
The Retail Park Portfolio, which represents 25% of the
portfolio, also saw capital growth at 0.2% driven by +1.7% ERV
growth with yields stable, outperforming the MSCI Retail Warehouse
benchmark which recorded a negative growth of -1.6%.
The overall portfolio valuation movement was concentrated in the
Regeneration portfolio with a movement of -7.9% which accounts for
98% of the overall portfolio movement. This is reflective of the
high assumed construction and finance costs impacting the
underlying residential value in the near-term at our South-East
London Shopping Centre and Retail Park at Bexleyheath.
The Work Out portfolio, which now only accounts for 11% of the
portfolio experienced a marginal valuation decline of -1.5% due to
a -3.2% ERV movement.
As at 30 September Portfolio Valuation Topped-up NEY LFL LFL
2023 Weighting Movement NIY NEY Movement ERV Movement
(GBPm) (%) (%) (%) (%) (%) (%)
------- ----------- ---------- ---------- ------ -------------- --------------
Shopping Centres
- Core 221.8 40% 0.7% 9.5% 9.3% -0.1% -0.1%
------- ----------- ---------- ---------- ------ -------------- --------------
Retail Parks 135.7 25% 0.2% 6.8% 7.1% 0.0% 1.7%
------- ----------- ---------- ---------- ------ -------------- --------------
Shopping Centres
- Regen 129.2 23% -7.9% 6.0% 7.3% 0.5% -0.4%
------- ----------- ---------- ---------- ------ -------------- --------------
Total excl. Work
Out / Other 486.7 88% -1.9% 7.9% 8.1% 0.1% 0.3%
------- ----------- ---------- ---------- ------ -------------- --------------
Shopping Centres
- Work Out and Other
(1) 66.4 12% -2.8% 8.1% 13.3% -0.3% -3.8%
------- ----------- ---------- ---------- ------ -------------- --------------
Total 553.1 100% -2.0% 7.9% 8.8% 0.1% -0.3%
------- ----------- ---------- ---------- ------ -------------- --------------
1. Total includes Other representing a value of GBP3.8m
The portfolio Net Initial Yield now stands at 7.9%, and has a
Net Equivalent Yield of 8.8%, c.200bps higher than the MSCI All
Retail benchmark at 6.0% and 6.8% respectively and continues to
represent significant headroom above the 10 year Government Gilt
rate. The existing yield premium has meant our valuation
performance has been far more insulated from the impact of rising
interest rates over the past 12 months compared to the wider real
estate sector.
As set out in the table below, our portfolio continues to
outperform the MSCI All Retail, Shopping Centre and Retail
Warehouse benchmarks on a Total, Income and Capital Return for the
6 month period, save for our Shopping Centre capital return which
aligned with the market. Over 6 month, 12 month, 3 and 5 year
periods Shopping Centres and Retail Parks have continued to
outperform their respective MSCI Total Return benchmark.
6 months to 30 September Total Return Capital Growth Income Return
2023
NRR Portfolio 1.7% -2.3% 4.1%
------------- --------------- --------------
MSCI All Retail Benchmark 0.3% -2.5% 2.9%
------------- --------------- --------------
Relative performance +140bps +20bps +110bps
------------- --------------- --------------
Shopping Centres Retail Parks
Total Return: 6 months to 30 September
2023
----------------- -------------
NewRiver 1.5% 2.9%
----------------- -------------
MSCI Benchmark 1.1% 1.4%
----------------- -------------
Relative Performance +40bps +150bps
----------------- -------------
Total Return: 12 months to 30 September
2023
----------------- -------------
NewRiver 0.4% 3.7%
----------------- -------------
MSCI Benchmark -4.1% -7.5%
----------------- -------------
Relative Performance +450bps +1,120bps
----------------- -------------
Total Return: Annualised 3 years
to 30 September 2023
----------------- -------------
NewRiver 0.9% 11.2%
----------------- -------------
MSCI Benchmark -5.4% 7.8%
----------------- -------------
Relative Performance +630bps +330bps
----------------- -------------
Total Return: Annualised 5 years
to 30 September 2023
----------------- -------------
NewRiver -3.4% 4.9%
----------------- -------------
MSCI Benchmark -10.5% 0.0%
----------------- -------------
Relative Performance +710bps +490bps
----------------- -------------
Core Shopping Centres
-- Portfolio weighting: 40%
-- No. assets: 14
-- NIY 9.5% versus MSCI Shopping Centre NIY of 7.6%
-- Average value: GBP19.2 million
-- Key occupiers: Primark, Superdrug, M&S, Poundland, Boots,
Next
-- Occupancy: 98.3%
-- Retention rate: 99%
-- Rent collection: 98%
-- Affordable average rent: GBP13.37 per sq ft / GBP40,500 per
annum
-- Gross to Net Rent Ratio: 94%
-- Leasing volume: 110,600 sq ft
-- Leasing activity: 7.7% ahead of valuer ERV
-- Average CAGR FY21-HY24: -0.4% on 10.6yr average previous
lease period
-- Total Return 5.6% outperforming the MSCI Shopping Centres
by +440 basis points
As at 30 September 2023, our Core Shopping Centre portfolio
represented 40% of our total portfolio, and comprised 14 core
community shopping centres with an occupancy of 98%. Our Core
Shopping Centres are located in the heart of their local
communities, accessed via short travel times, and play a key role
to the local social and economic prosperity providing a range of
essential goods and services to local people.
Selected highlights include:
Newtownabbey, Abbey Centre: At our centre in Belfast, totalling
320,000 sq ft and anchored by Primark, Next and Dunnes, we recently
added a new service based anchor to the centre, upsizing Danske
Bank to a new flagship store on a 10 year term increasing the rent
payable by +59%. In addition, we have recently completed works to
create a new external unit for Greggs, having agreed a 10 year
lease and as part of the works refurbishing the entrance to improve
the access from the surface level car park. The new lettings will
produce an additional annualised net income of +GBP110,000 with
total capex to be incurred of GBP865,000.
Hastings, Priory Meadow: At our dominant south-east Shopping
Centre in the heart of Hastings town centre, anchored by Primark
and M&S, Black Sheep Coffee have taken one of the last
remaining vacancies on a new 20 year lease at GBP60,000 per annum,
aligned with valuer's ERV. Occupiers continue to benefit from a
strong trading performance at the scheme as reflected at lease
renewal with H&M renewing on terms +11.4% above valuer's ERV
and +23.1% above the previous passing rent. Within the period, we
have also completed renewals with EE, Schuh and Boots at rents
aligned with valuer's ERV.
Skegness, The Hildreds: This is the retail centre of a vibrant
seaside town, anchored by Home Bargains and Sports Direct,
benefitting from surface level car parking and a mixture of
national and independent retailers. Having recently completed the
upsize of JD Sports, there have been new lettings to Shoezone, O2
and an independent mobile repair retailer in addition to a renewal
with Cardzone. Overall, the lettings are aligned with valuer's ERV
and will produce an additional annualised net income of
+GBP22,000.
Bridlington, The Promenades: The only shopping centre within
this popular coastal town with a strong offering of discount, food
and fashion occupiers, anchored by Poundland, Sports Direct and
Heron Foods. We completed a new letting at a previously vacant unit
to Shoezone on a new 5 year lease, at a rent +1.2% ahead of
valuer's ERV.
Retail Parks
-- Portfolio weighting: 25%
-- No. assets: 12
-- NIY: 6.8% versus MSCI Retail Warehouse NIY of 6.3%
-- Average value: GBP14.9 million
-- Key occupiers: B&M, TK Maxx, Halfords, Aldi
-- Occupancy: 97.7%
-- Retention rate: 100%
-- Rent collection: 99%
-- Affordable average rent: GBP11.97 per sq ft / GBP123,000 per
annum
-- Gross to Net Rent Ratio: 97%
-- Leasing volume: 48,000 sq ft
-- Leasing activity: -1.6% below valuer ERV
-- Average CAGR FY21-HY24: 0.7% on 12.5yr average previous lease
period
-- Total Return 2.9% outperforming the MSCI Retail Warehouse
by +150 basis points
As at 30 September 2023, Retail Parks accounted for 25% of the
total portfolio, totalling 12 assets following the final sales
within the Napier Joint Venture. At 98% occupancy and a retention
rate of 100% the portfolio has consistently outperformed with
several asset management initiatives completed over the past 6
months.
Selected highlights include:
Barrow-in-Furness, Hollywood Retail & Leisure Park: This
retail park provides the key retail and leisure offer to the town
benefiting from a line-up including Vue cinema, the only cinema
within the catchment, along with Aldi, TK Maxx, Currys, Dunelm,
McDonald's and KFC. We have strengthened this offer with the
introduction of CVS Vets on a 10 year term and Smyths Toys on a 15
year term at rents of GBP60,000 and GBP150,000 per annum
respectively, both in line with valuer's ERV.
Cardiff, Valegate Retail Park: This 94,000 sq ft discount-led
park, adjacent to a high performing M&S and Tesco Extra stores,
has shown the continued demand for supermarket anchored retail
parks to a variety of occupiers. We have now completed on the
27,000 sq ft letting to Poundland on a 10 year term and 10,000 sq
ft letting to Boulders, an indoor climbing centre, on a 15 year
term at rents aligned with valuer's ERVs.
Dewsbury, Rishworth Centre: At this 99,000 sq ft retail park
anchored by Sainsbury's and Aldi, we have exercised the landlord
break on the Poundstretcher unit and have exchanged an agreement
for lease with Pure Gym on terms substantially above the previous
passing rent. On completion, the park will be fully let with Pure
Gym joining Aldi, Shoezone, Iceland, Halfords, Matalan and Pets at
Home on the park.
Dumfries, Cuckoo Bridge Retail Park: Demand from existing and
new occupiers at this supermarket, DIY and discount anchored park
remains strong. We have completed the lease with Food Warehouse for
a new 12,500 sq ft foodstore which is open for trade, renewed the
lease with Dunelm on a 20,000 sq ft store and we are currently
under offer on the last remaining vacancy at the park.
Lisburn, Sprucefield Retail Park: We have successfully received
planning permission for three new drive-thru/restaurant units on
surplus land adjacent to the retail park and exchanged on agreement
for leases with Starbucks and Nando's and are in advanced
negotiations with a third operator. Works have started on site with
completion due in Summer 2024. This park benefits from its
accessibility, located just off the M1 connecting Belfast to
Dublin, and broad tenant mix with anchors Sainsbury's and B&Q
sitting alongside The Range, Argos, Next and B&M.
Regeneration
-- Portfolio weighting: 23%
-- No. assets: 3
-- NIY: 6.0% versus MSCI Shopping Centre NIY of 7.6%
-- Average value: GBP43.1 million
-- Key occupiers: Sainsbury's, M&S, Boots, H&M, WH Smith
-- Occupancy: 98.4%
-- Retention rate: 100%
-- Rent collection: 100%
-- Affordable average rent: GBP12.77 per sq ft / GBP70,000 per
annum
-- Leasing volume: 68,100 sq ft
-- Leasing activity: -3.8% behind valuer ERV
-- Average CAGR FY21-HY24: -0.6% on 9.2yr average previous lease
period
-- Total Return -5.4% underperforming the MSCI Shopping Centres
by -650 basis points
We have three regeneration assets, representing 23% of the total
portfolio value where the strategy is to deliver capital growth
through redeveloping surplus retail space predominantly for
residential.
Grays, Grays Shopping Centre: The centre is located just 35
minutes from central London by train and we have submitted a
planning application to redevelop the shopping centre for a
high-density residential-led redevelopment of up to 850+ homes.
Bexleyheath, Broadway Shopping Centre: This Greater London
asset, comprising a shopping centre and a retail park, presents a
significant opportunity to generate capital growth through
maintaining the existing dominant retail core whilst delivering new
residential development across this 11 acre site. We are continuing
to work collaboratively with the Council to draw up plans for the
redevelopment of Broadway Square, predominately on surplus car
parking.
Burgess Hill, The Martlets: This site, which is located in a
prominent and affluent south-east location, currently benefits from
a planning consent for a mixed-use development including
residential units, a food store, hotel and expansion of the car
park. The site is currently under offer to a residential
developer.
Work Out
-- Portfolio weighting: 11%
-- No. assets: 9
-- NIY: 8.2% versus MSCI Shopping Centre NIY of 7.6%
-- Average value: GBP7.0 million
-- Key occupiers: Poundland, Iceland, Home Bargains, Tesco
-- Occupancy: 96.1%
-- Retention rate: 97%
-- Rent collection: 94%
-- Affordable average rent: GBP8.97 per sq ft / GBP23,000 per
annum
-- Gross to Net Rent Ratio: 61%
-- Leasing volume: 121,200 sq ft
-- Leasing activity: -1.4% below valuer ERV
-- Average CAGR FY21-HY24: -0.4% on 6.7yr average previous lease
period
-- Total Return 2.9% outperforming the MSCI Shopping Centres
by +180 basis points
Our Work Out portfolio makes up 11% of our portfolio and
comprises nine assets which we intend to dispose of or complete
turnaround strategies. Our intention is still to be fully out of
the Work Out portfolio by the end of FY24.
The key turnaround strategies include:
Cardiff, Capitol Shopping Centre: We have made significant
progress on the wholesale re-positioning of this asset, which
accounts for 31% of the total Work Out portfolio, and we are
currently in advanced legals on an agreement for lease with a
leading national competitive and social leisure operator. On
completion, they will occupy over 100,000 sq ft which represents
the majority of the centre's floor area, boosting the annualised
net income in excess of GBP1 million per annum and is expected to
be the catalyst for the Food & Beverage lettings on the
remainder of the centre. The Capitol Shopping Centre sits alongside
the Council's major upgrade to the wider area which will improve
the infrastructure and public realm, including reinstating a
stretch of canal next to the Centre's entrance.
Paisley, The Piazza: This centre has been revitalised by renewed
occupier interest, creating a long-term sustainable retail centre.
We have introduced JD Sports to the tenant line-up and completed a
new letting to Bon Marche in the former M&Co unit. The centre
has benefited considerably from the planned redevelopment of the
neighbouring shopping centre in the catchment, removing surplus
supply and the proposed upsize of Poundland stands to further
improve the centre's standing within the town.
Kilmarnock, Burns Mall: We are working collaboratively with the
Council on plans to demolish the former BHS to create a surface car
park to be let to the Council on a long-term lease and upsize key
occupiers within the centre. We are confident that the removal of
surplus retail, improvement in public realm and accessibility will
revitalise the centre. The works are to be part funded by the
Council.
Wallsend, The Forum: This turnaround strategy is near complete
with a new medical centre recently completed on surplus car park
space, sitting alongside Aldi and Burger King which we developed in
2016. The final stage centres on removing a small element of
surplus retail space and making public realm improvements. This
will improve the connectivity between the Aldi store, the health
centre and the retail centre whilst facilitating potential
development opportunities on the surplus car park for
residential.
Capital Partnerships
As well as managing assets on our own balance sheet, we also
actively manage assets on behalf of our capital partners by
leveraging our market leading asset management platform across
three sectors: private equity, institutional investors and local
authorities.
Capital Partnerships are an important part of our business,
delivering earnings growth in a capital light way through asset
management fees, a share of rent and the potential to receive
financial promotes. We currently asset manage 18 retail parks and
five shopping centres across 5 million sq ft with an asset value in
excess of GBP750 million.
The expansion and breadth of our Capital Partnerships is a clear
indication of the need for specialist retail partners with a
best-in-class asset management platform to enhance performance in
the highly operational retail sector.
Our three Capital Partnerships are:
Local Authorities: with Canterbury City Council across two
shopping centres in Canterbury. Key highlights:
-- We have completed 10 long-term leasing transactions across 55,300
sq ft, securing GBP1.1 million of rent
-- In our role as development manager, we have started on site with Canterbury
City Council's new office headquarters. The new offices are being
re-purposed from surplus retail accommodation within Whitefriars Shopping
Centre, and we expect to hand over the completed offices in July 2024
Private Equity Sector: with BRAVO on one retail park and one
shopping centre in Sheffield. Key highlights:
-- At The Moor, Sheffield, in addition to improving the income profile,
we have generated significant capital receipts on non-core elements
of the retail estate. This includes selling a vacant site to Lidl,
a low yielding car park, an office long leasehold interest and most
recently we have marketed for sale a prime Build to Rent development
site
-- At Sprucefield Retail Park, Northern Ireland we have received planning
consent for three drive-thru units across 9,800 sq ft with terms agreed
with operators on each unit. This follows the sale, subject to planning
consent, of surplus land to Lidl. In addition, regear terms with Sainsbury's
are progressing well
Institutional Sector: with M&G Real Estate across 17 retail
parks and two shopping centres. Key highlights:
-- Following our appointment in Q4 FY23, the mandate was expanded
to include an additional South-East shopping centre and a
retail park
-- We have completed 8 long-term leasing transactions across
31,200 sq ft, securing GBP0.8 million of rent
Finance review
During the first half, we have been successful in further
improving our already strong financial position, and we ended the
period with GBP138.0 million of cash holdings, Net debt to EBITDA
reduced to 4.4x, Interest Cover increased to 5.2x and LTV reduced
to 29.5%, its lowest level since March 2018. Demonstrating the
strong support we have from our key banking relationships, we were
delighted that post balance sheet we extended the maturity of our
undrawn GBP100 million Revolving Credit Facility to November 2026,
with two one-year extension options (subject to lender consent)
taking maturity to November 2028 at a lower annual cost.
We have been increasing our cash position in anticipation of
securing opportunities that will deliver compelling returns and
encouragingly in recent months we have seen that such opportunities
are now starting to emerge which gives us confidence that our
patient and disciplined approach to capital deployment will be
rewarded. Given that the majority of our cash holdings are on
deposit earning a blended return in excess of 5%, we have taken the
decision to temporarily increase our dividend payout in the first
half so that our shareholders receive benefit as we wait to deploy.
Therefore, 100% of the interest income we received in the first
half will be distributed as dividend, resulting in a fully covered
first half dividend of 3.4 pence per share. This represents a
payout of 85%, compared to our usual payout of 80%, and is
comfortably 118% covered by Underlying Funds From Operations
('UFFO'). Our intention would be to temporarily top up the dividend
at the full year too, subject to deployment progress in H2.
UFFO for the six months ended 30 September 2023 was GBP12.3
million, a modest increase when compared to the UFFO reported for
the second half of FY23 of GBP12.2 million. UFFO has reduced when
compared to the GBP13.6 million reported for the first half of
FY23, due to GBP54.1 million of completed disposals over the last
12 months and one-off Covid related credits received in the first
half of the prior year. Importantly, UFFO for the six months ended
30 September 2023 includes GBP1.2 million of asset management fee
income, an increase of GBP0.5 million when compared to the first
half of the prior year, reflecting the progress we have made over
the last 12 months in our key strategic priority to grow our
Capital Partnerships.
Taking account of GBP31.3 million of disposals completed during
the first half and the modest valuation movement of -2.0%, our
portfolio was valued on a proportionally consolidated basis at
GBP553.1 million as at 30 September 2023, compared to GBP593.6
million as at 31 March 2023. The modest portfolio valuation decline
is reflected in the reduction in EPRA Net Tangible Assets per share
from 121 pence at 31 March 2023 to 117 pence at 30 September 2023.
We delivered a total accounting return of -0.7%, compared to -5.7%
in the second half of the prior year and +1.0% in the first half of
the prior year.
Key performance measures
The Group financial statements are prepared under IFRS, where
the Group's interests in joint ventures are shown as a single line
item on the income statement and balance sheet. Management reviews
the performance of the business principally on a proportionally
consolidated basis which includes the Group's share of joint
ventures on a line-by-line basis. The Group's financial key
performance indicators are presented on this basis.
In addition to information contained in the Group financial
statements, Alternative Performance Measures ('APMs'), being
financial measures that are not specified under IFRS, are also used
by management to assess the Group's performance. These include a
number of the financial statistics included on Page 2 of this
document. These APMs include a number of European Public Real
Estate Association ('EPRA') measures, prepared in accordance with
the EPRA Best Practice Recommendations reporting framework, which
are summarised in the 'Alternative Performance Measures' section at
the end of this document. We report these measures because
management considers them to improve the transparency and relevance
of our published results as well as the comparability with other
listed European real estate companies. Definitions for APMs are
included in the glossary and the most directly comparable IFRS
measure is also identified. The measures used in the review below
are all APMs presented on a proportionally consolidated basis
unless otherwise stated.
The APM on which management places most focus, reflecting the
Company's commitment to driving income returns, is UFFO. UFFO
measures the Company's operational profits, which includes other
income and excludes one off or non-cash adjustments, such as
portfolio valuation movements, profits or losses on the disposal of
investment properties, fair value movements on derivatives and
share-based payment expense. We consider this metric to be the most
appropriate for measuring the underlying performance of the
business as it is familiar to non-property investors, and better
reflects the Company's generation of profits. It is for this reason
that UFFO is used to measure dividend cover.
The relevant sections of this Finance Review contain supporting
information, including reconciliations to the financial statements
and IFRS measures. The 'Alternative Performance Measures' section
also provides references to where reconciliations can be found
between APMs and IFRS measures.
Underlying Funds From Operations
The following table reconciles IFRS (loss) / profit after
taxation to UFFO, which is the Company's measure of underlying
operational profits.
Reconciliation of (loss) / profit after taxation to UFFO
30 September 30 September
2023 2022
GBPm GBPm
------------- -------------
(Loss) / profit for the period after taxation (2.6) 4.1
----------------------------------------------------- -------------
Adjustments
------------- -------------
Revaluation of property 11.6 10.3
------------- -------------
Revaluation of joint ventures investment properties - (1.9)
------------- -------------
(Profit) / loss on disposal of investment
properties (0.1) 0.6
------------- -------------
Changes in fair value of financial instruments (0.1) (0.6)
------------- -------------
Loss on disposal of joint venture 2.3 -
------------- -------------
EPRA Earnings 11.1 12.5
----------------------------------------------------- -------------
Forward looking element of IFRS 9 0.4 -
------------- -------------
Head office relocation costs - 0.5
Share-based payments charge 0.8 0.6
Underlying Funds From Operations 12.3 13.6
Underlying Funds From Operations is presented on a
proportionally consolidated basis in the following table.
UNDERLYING FUNDS FROM 30 September 2023 30 September
OPERATIONS 2022
-------------------------------------------------------
Group JVs & Adjustments(1) Proportionally Proportionally
Associates consolidated consolidated
-----------------------------
GBPm GBPm GBPm GBPm GBPm
----------------------------- ------- ------------ --------------- --------------- ---------------
Revenue 33.2 1.2 - 34.4 37.7
----------------------------- ------- ------------ --------------- --------------- ---------------
Property operating expenses (11.7) (0.1) 0.4 (11.4) (12.0)
------- ------------ --------------- --------------- ---------------
Net property income 21.5 1.1 0.4 23.0 25.7
Administrative expenses (6.0) (0.1) 0.8 (5.3) (5.5)
Other income 0.4 - - 0.4 1.4
Operating profit 15.9 1.0 1.2 18.1 21.6
Net finance costs (5.3) (0.3) (0.1) (5.7) (7.9)
----------------------------- ------- ------------ --------------- --------------- ---------------
Taxation - (0.1) - (0.1) (0.1)
------- ------------ --------------- --------------- ---------------
Underlying Funds From
Operations 10.6 0.6 1.1 12.3 13.6
------- ------------ --------------- --------------- ---------------
UFFO per share (pence) 4.0 4.4
------- ------------ --------------- --------------- ---------------
Ordinary dividend per
share (pence) 3.4 3.5
------- ------------ --------------- --------------- ---------------
Ordinary dividend cover 118% 125%
------- ------------ --------------- --------------- ---------------
Admin cost ratio 14.8% 14.7%
------- ------------ --------------- --------------- ---------------
Weighted average # shares
(m) 311.3 309.0
------- ------------ --------------- --------------- ---------------
1. Adjustments to Group and JV & Associates figures to
remove non-cash and non-recurring items, principally forward
looking element of IFRS 9 GBP(0.4) million, share-based payment
charge GBP(0.8) million and revaluation of derivatives GBP0.1
million
Net property income
Analysis of net property income (GBPm)
------------------------------------------------------------- ------
Net property income for the six months ended 30 September
2022 25.7
------------------------------------------------------------- ------
Net disposals (1.9)
Net property income re-based 23.8
--------
Rent and service charge provisions (1.2)
NRI Core, Retail Parks & Other 0.2
NRI Regeneration 0.2
NRI Work Out (0.5)
--------------------------------------------------- -------- ------
Like-for-like net rental income (0.1)
Asset management fees 0.5
--------------------------------------------------- -------- ------
Net property income for the six months ended 30 September
2023 23.0
------------------------------------------------------------- ------
On a proportionally consolidated basis, net property income was
GBP23.0 million during the six months to 30 September 2023,
compared to GBP25.7 million for the six months ended 30 September
2022, predominantly due to the impact of GBP23.0 million of
disposals completed in FY23 and the disposal of the Napier Joint
Venture at the end of Q1 FY24, which together reduced net property
income by GBP1.9 million.
Rent and service charge provisions benefit reduced by GBP1.2
million, predominantly due to the release of rent and service
charge provisions in the first half of the prior year which was not
repeated in the current period. During FY22 and FY23 we had
significant success in continuing to collect Covid era rent arrears
which had been substantially provided against during the pandemic,
resulting in credits to the income statement in FY22 and FY23. Rent
collection for Covid era rent arrears was finalised during FY23 and
as such, we saw no further benefit from provision releases in the
second half of last year, and we have seen no further benefit in
the first half of this year. In terms of underlying trend, rent
collection for the first half of FY24 was 98%, in-line with
collection rates in FY23.
Like-for-like net rental income reduced modestly by GBP0.1
million or 0.5% during the six months ended 30 September 2023.
Encouragingly, our Core Shopping Centres and Retail Parks have
contributed to an increase in net rental income of GBP0.2 million
in the period, and the assets in our Regeneration portfolio have
also contributed a GBP0.2 million increase. Like-for-like net
rental income in our Work Out portfolio declined by GBP0.5 million,
but as previously disclosed we intend to dispose of or complete
turnaround strategies on these assets by the end of FY24.
Asset management fees generated from our Capital Partnerships
increased by GBP0.5 million from GBP0.7 million in the six months
ended 30 September 2022 to GBP1.2 million in the six months ended
30 September 2023, predominantly due to a full half of income from
the asset management mandate signed with M&G Real Estate in Q4
FY23. The scope of this mandate has already expanded, with an
additional shopping centre added in April 2023 and an additional
retail park in November 2023, increasing the number of assets
managed to 17 retail parks and two shopping centres.
Administrative expenses
Against a challenging inflationary backdrop, administrative
expenses fell by a further 4% to GBP5.3 million during the six
months ended 30 September 2023, from GBP5.5 million in the six
months ended 30 September 2022. It is also worth noting that in the
six months ended 30 September 2021, immediately prior to the launch
of our administrative cost reduction initiatives, administrative
expenses were GBP6.0 million and so the current period figure of
GBP5.3 million represents a 12% reduction versus this baseline.
The reduction during the period was a result of our dedication
to keeping our administrative expenses at a low level as we
continue to target savings each period. Although increasingly
challenging due to continued inflationary pressures, our aim is to
keep managing and where possible reducing administrative expenses
throughout this financial year and beyond.
Other income
Other income recognised during the six months ended 30 September
2023 of GBP0.4 million compared to GBP1.4 million during the six
months ended 30 September 2022. The income in the prior period
related to the settlement of an income disruption insurance claim
relating to our car park income during the first Covid lockdown
between March and June 2020. We stated in our FY23 results that a
more modest claim relating to our commercialisation and turnover
rent income during the same Covid period remained ongoing, and
during the first half we have settled the commercialisation element
of the claim, which contributed GBP0.4 million in the current
period.
Net finance costs
Net finance costs were GBP5.7 million in the six months ended 30
September 2023, compared to GBP7.9 million in the six months ended
30 September 2022 due predominantly to interest income. We are
currently holding cash reserves of GBP138.0 million, the majority
of which we are holding on deposit generating a return of over 5%,
which generated GBP2.3 million of income during the period,
increased from GBP0.2 million in the six months ended 30 September
2022 due to an increase in cash holdings and interest rates over
the last 12 months.
Taxation
As a REIT we are exempt from UK corporation tax in respect of
our qualifying UK property rental income and gains arising from
direct and indirect disposals of exempt property assets. The
majority of the Group's income is therefore tax free as a result of
its REIT status, albeit this exemption does not extend to other
sources of income such as interest or asset management fees.
Dividends
Under our dividend policy, we declare dividends equivalent to
80% of UFFO twice annually at the Company's half and full year
results, calculated with reference to the most recently completed
six-month period.
The Company is a member of the REIT regime whereby profits from
its UK property rental business are tax exempt. The REIT regime
only applies to certain property-related profits and has several
criteria which have to be met, including that at least 90% of our
profit from the property rental business must be paid as dividends.
We intend to continue as a REIT for the foreseeable future, and
therefore our policy allows the final dividend to be "topped-up",
including where required to ensure REIT compliance, such that the
payout in any financial year may be higher than our base policy
position of 80% of UFFO.
Pending deployment of the significant cash holdings we currently
have available, we have taken the decision to top-up the half year
dividend, so that we are paying out 100% rather than 80% of the
interest income earned on our cash holdings during the half. This
is a temporary flex of the policy only, due to the current size of
our cash holdings, which we are confident we will be able to deploy
into attractive opportunities to grow the portfolio and UFFO. This
increases the dividend by 0.2 pence per share and means that the
Board has declared a dividend in respect of the six months ended 30
September 2023 of 3.4 pence per share, which is an 85% payout /
118% cover of UFFO of 4.0 pence per share. The dividend will be
paid on 16 January 2024. The ex-dividend date will be 7 December
2023 with an associated record date of 8 December 2023. The
dividend will be payable as a REIT Property Income Distribution
(PID). Our intention would be to temporarily top up the dividend at
the full year too, subject to deployment progress in H2.
Balance sheet
EPRA net tangible assets ('EPRA NTA') include a number of
adjustments to the IFRS reported net assets and both measures are
presented below on a proportionally consolidated basis.
As at 30 September 2023 As at 31 March
2023
---------------------------------------
Group JVs & Proportionally Proportionally
Associates consolidated consolidated
GBPm GBPm GBPm GBPm
-------- ------------ --------------- ---------------
Properties at valuation(1) 543.2 9.9 553.1 593.6
Right of use asset 76.5 - 76.5 76.7
Investment in JVs & associates 5.7 (5.7) - -
Other non-current assets 0.3 - 0.3 1.9
Cash 137.3 0.7 138.0 111.3
Other current assets 10.3 0.4 10.7 15.9
Total assets 773.3 5.3 778.6 799.4
Other current liabilities (31.9) (0.5) (32.4) (30.6)
Lease liability (76.5) - (76.5) (76.7)
Borrowings (2) (297.2) (3.9) (301.1) (312.6)
Other non-current liabilities - (0.9) (0.9) (0.9)
Total liabilities (405.6) (5.3) (410.9) (420.8)
IFRS net assets 367.7 - 367.7 378.6
-------- ------------ --------------- ---------------
EPRA adjustments:
Deferred tax 0.9 0.9
Fair value financial instruments (0.1) (0.6)
-------- ------------ --------------- ---------------
EPRA NTA 368.5 378.9
-------- ------------ --------------- ---------------
EPRA NTA per share 117p 121p
-------- ------------ --------------- ---------------
IFRS net assets per share 117p 122p
-------- ------------ --------------- ---------------
LTV 29.5% 33.9%
-------- ------------ --------------- ---------------
1. See Note 13 for a reconciliation between Properties at
valuation and categorisation per Consolidated balance sheet
2. Principal value of gross debt, less unamortised fees
Net assets
As at 30 September 2023, IFRS net assets were GBP367.7 million,
reducing from GBP378.6 million at 31 March 2023 primarily due to
the modest 2.0% like-for-like decrease in our portfolio valuation,
which reflected an outperformance versus both the MSCI All Property
(-2.7%) and All Retail (-2.5)% indices.
EPRA NTA is calculated by adjusting net assets to reflect the
potential impact of dilutive ordinary shares, and to remove the
fair value of any derivatives, deferred tax and goodwill held on
the balance sheet. These adjustments are made with the aim of
improving comparability with other European real estate companies.
For the same reason noted above when discussing IFRS net assets,
EPRA NTA decreased by 2.7% to GBP368.5 million from GBP378.9
million at 31 March 2023. EPRA NTA per share decreased to 117 pence
from 121 pence at 31 March 2023 for the same reason.
Properties at valuation
Properties at valuation decreased by GBP40.5 million from
GBP593.6 million as at 31 March 2023 to GBP553.1 million as at 30
September 2023. The principal reason for the decrease was the
GBP31.3 million disposal of our Napier Joint Venture with BRAVO.
The remainder of the decrease reflects the modest portfolio
valuation decline explained above of 2.0%.
Debt & financing
Proportionally consolidated
30 September 31 March 2023 30 September
2023 2022
-------------------------------- ------------- -------------- -------------
Weighted average cost of debt
- drawn only(1) 3.5% 3.5% 3.5%
Weighted average debt maturity 4.4 yrs 4.7 yrs 5.2 yrs
- drawn only(1)
Weighted average debt maturity 4.1 yrs 3.8 yrs 4.3 yrs
- total(2)
-------------------------------- ------------- -------------- -------------
1. Weighted average cost of debt and weighted average debt maturity on drawn debt only
2. Weighted average debt maturity on total debt. Figures at 31
March 2023 and 30 September 2022 include GBP125 million undrawn
RCF. Figure at 30 September 2023 includes new GBP100 million
undrawn RCF which was agreed post period end
Proportionally consolidated 30 September 31 March 2023 30 September
2023 2022
GBPm GBPm GBPm
------------- -------------- --------------
Cash 138.0 111.3 95.1
------------- -------------- --------------
Principal value of gross debt (304.0) (316.0) (316.0)
------------- -------------- --------------
Net debt(1) (163.1) (201.3) (217.1)
------------- -------------- --------------
Drawn RCF - - -
------------- -------------- --------------
Total liquidity(2) 238.0 236.3 220.1
------------- -------------- --------------
Gross debt repaid / (drawn)
in the period / year 12.0 (2.0) (2.0)
------------- -------------- --------------
Loan to Value 29.5% 33.9% 33.8%
------------- -------------- --------------
1. Including unamortised arrangement fees
2. Cash and undrawn RCF. Positions at 31 March 2023 and 30
September 2022 include GBP125 million undrawn RCF. Position at 30
September 2023 includes new GBP100 million undrawn RCF which was
agreed post period end
Our weighted average cost of debt remains stable at 3.5% and our
weighted average debt maturity has reduced from 4.7 years to 4.4
years. Both cost of debt and weighted average debt maturity are now
closely aligned to our unsecured corporate bond because this now
accounts for GBP300 million of our GBP304 million of drawn debt
following the repayment of our share (GBP12 million) of the secured
bilateral facility in the Napier Joint Venture on its disposal
during the period.
Following the period end, in November 2023 we successfully
refinanced the Revolving Credit Facility with all four banks
involved in the previous facility (Barclays Bank PLC, HSBC UK Bank
plc, National Westminster Bank plc and Santander UK plc)
demonstrating their continued support for NewRiver by continuing to
support the refinanced facility. The new facility is for GBP100
million, with a GBP50 million accordion available subject to lender
approval (previous facility GBP125 million with a GBP50 million
accordion), and the maturity has been extended from August 2024 to
November 2026 with options to extend the facility by two additional
one-year terms (to November 2028), subject to lender approval. In
addition, the annual cost of holding the RCF has also reduced, as a
result in a reduction in both the headline margin and quantum.
Although the RCF is currently undrawn, maintaining the RCF ensures
we continue to benefit from access to valuable additional liquidity
and at the same time by reducing the size and margin of the RCF, we
have been able to do so at a reduced overall cost.
Financial policies
We have five financial policies in total, including LTV and
Interest cover which also appear as debt covenants on our unsecured
RCF and our bond. These form a key component of our financial risk
management strategy which remains as important as ever given the
macro-economic climate. For the period ended 30 September 2023, we
were in compliance with all of our financial policies.
Measure Financial Proportionally consolidated
policy
30 September 31 March 2023 30 September
2023 2022
--------------- ------------- -------------- -------------
Guidance <40%
Loan to value Policy <50% 29.5% 33.9% 33.8%
Group
30 September 31 March 2023 30 September
2023 2022
--------------- ------------- -------------- -------------
Balance sheet gearing <100% 43.5% 49.7% 49.8%
--------------- ------------- -------------- -------------
Proportionally consolidated
HY24 FY23 HY23
--------------- ------------- -------------- -------------
Net debt: EBITDA <10x 4.4x 4.9x 5.1x
Interest cover(1) >2.0x 5.2x 4.3x 3.9x
Ordinary dividend
cover(2) >100% 118% 125% 125%
--------------- ------------- -------------- -------------
1. 12 month look-back calculation, consistent with debt covenant
2. Calculated with reference to UFFO
We have seen improvements across all four of our debt related
financial policies during the period ended 30 September 2023.
Following the disposal of our Napier Joint Venture with BRAVO, LTV
reduced from 33.9% as at 31 March 2023 to 29.5% as at 30 September
2023, well within our guidance of <40%. Balance sheet gearing
also reduced from 49.7% as at 31 March 2023 to 43.5% as at 30
September 2023. Net debt: EBITDA, has continued to improve,
reducing by 0.5x to 4.4x from our position of 4.9x as at 31 March
2023. Given the current interest rate environment, we are pleased
that our interest cover has increased significantly to 5.2x as at
30 September 2023 from 4.3x as at 31 March 2023, primarily due to
the interest received on the cash reserves we are holding on
deposit.
The Board has declared a dividend of 3.4 pence per share, which
represents 85% of UFFO and so is comfortably fully covered, in-line
with our financial policy.
Additional guidelines
Alongside our financial policies we have a number of additional
guidelines used by management to analyse operational and financial
risk, which we disclose in the following table:
Guideline 30 September 2023
Single retailer concentration <5% of gross income 3.5% (Poundland)
------------------------- ---------------------
Development expenditure <10% of GAV <1%
------------------------- ---------------------
Risk-controlled development >70% pre-let or pre-sold N/A, no developments
on committed on site
------------------------- ---------------------
Conclusion
We have produced another strong set of financial results in a
challenging operating environment, underpinned by the consistency
of our portfolio's underlying cashflows. Encouragingly, we have
generated growth from our Capital Partnerships which we have
earmarked for further growth, and seen continued improvement across
all of our key financial metrics.
Pleasingly we have started to see evidence of the type of
compelling return investment opportunities we have been
anticipating and we are now in a position to deploy capital
selectively and decisively when the right opportunities arise,
while still maintaining a conservative position.
Looking forward, we remain confident in our ability to deliver
our medium term target of a consistent 10% total accounting
return.
Will Hobman
Chief Financial Officer
Notes to Editors
About NewRiver
NewRiver REIT plc ('NewRiver') is a leading Real Estate
Investment Trust specialising in buying, managing and developing
resilient retail assets throughout the UK.
Our GBP0.6 billion UK wide portfolio covers 7 million sq ft and
comprises 26 community shopping centres and 12 conveniently located
retail parks occupied by tenants predominately focused on essential
goods and services. Our objective is to own and manage the most
resilient retail portfolio in the UK, focused on retail parks, core
shopping centres, and regeneration opportunities in order to
deliver long-term attractive recurring income returns and capital
growth for our shareholders.
NewRiver has a Premium Listing on the Main Market of the London
Stock Exchange (ticker: NRR). Visit www.nrr.co.uk for further
information.
Principal risks and uncertainties
Managing our risks and opportunities
Risk is inherent in all businesses and effective risk management
enables us to manage both the threats and the opportunities
associated with our strategy and the operation of our business
model. The Board has ultimate responsibility for the risk
management and internal controls framework of the Company and
continually reviews and monitors the principal risks and
uncertainties which could have a material effect on the Group's
results. The Board considered the principal risks and uncertainties
disclosed in the Annual report for the year ended 31 March 2023 and
do not consider that they have changed significantly since that
date. A summary of the principal risks and uncertainties are set
out below. The full disclosure of these risks, including our
approach to their mitigation is set out in the Principal risks and
uncertainties section of the Annual Report 2023 on pages 88 to 94.
Any changes to the Principal risks and uncertainties since the
Annual Report are also included below.
External Risks
1. Macroeconomic Economic conditions in the UK and changes to fiscal
and monetary policy may impact market activity,
Gross Risk: demand for investment assets, the operations of
Medium to high our occupiers or the spending habits of the UK
impact risk population.
with a high
probability.
2. Political Changes in UK Government policy, the adverse effects
and regulatory of Brexit on our tenants, or the impact of political
uncertainty on consumers' retail and leisure spend.
Gross risk:
Medium to high
impact risk
with a high
probability.
-----------------------------------------------------------
3. Catastrophic An external event such as civil unrest or a civil
external event emergency including a large-scale terrorist attack
or pandemic, could severely disrupt global markets
Gross risk: and cause damage and disruption to our assets.
High impact
risk with a
medium to high
probability.
-----------------------------------------------------------
4a. Climate A failure to implement appropriate climate risk
change strategy management measures, comply with evolving regulations
or meet our ESG targets could impact the operation
Gross risk: and value of our assets, leading to a risk of
Medium to high asset obsolescence, reputational damage and erosion
impact risk of investor value.
with a medium
to high probability.
-----------------------------------------------------------
4b. Climate Adverse impacts from environmental incidents such
change impacts as extreme weather or flooding could impact the
on our assets operation of our assets. A failure to implement
appropriate climate risk management measures at
Gross risk: our assets could lead to erosion of investor value
Medium to high and increases in insurance premiums.
impact risk
with a medium Following a recent flooding incident which impacted
probability. our asset in Hastings the probability of this
risk has been increased to medium.
-----------------------------------------------------------
5. Changes Changes in the way consumers live, work, shop
in technology and use technology could have an adverse impact
and consumer on demand for our assets.
habits and demographics
Gross risk:
Low to medium
impact risk
with a high
probability.
-----------------------------------------------------------
6. Cyber security A cyber attack could result in the Group being
unable to use its IT systems and/or losing data.
Gross risk: This could delay reporting and divert management
Medium to high time. This risk could be
impact risk increased due to many employees working from
with a high home during the pandemic.
probability.
-----------------------------------------------------------
Operational risks
7. People The inability to attract, retain and develop our
people and ensure we have the right skills in
Gross risk: place could prevent us from implementing our strategy.
Medium impact
risk with a
medium probability.
8. Financing If gearing levels become higher than our risk
appetite or lead to breaches in bank covenants
Gross risk: this would impact our ability to implement our
Medium impact strategy. The business could also struggle to
risk with a obtain funding or face increased interest rates
medium probability. as a result of macroeconomic factors.
------------------------------------------------------------
9. Asset management The performance of our assets may not meet with
the expectations outlined in their business plans,
Gross risk: impacting financial performance and the ability
Medium to high to implement our strategies.
impact risk
with a medium
probability.
------------------------------------------------------------
10. Development Delays, increased costs and other challenges could
impact our ability to pursue our development pipeline
Gross risk: and therefore our ability to profitably recycle
Medium impact development sites and achieve returns on development.
risk with a
medium to high
probability.
------------------------------------------------------------
11. Acquisition The performance of asset and corporate acquisitions
might not meet with our expectations and assumptions,
Gross risk: impacting our revenue and profitability.
Medium impact
risk with a
medium probability.
------------------------------------------------------------
12. Disposal We may face difficulty in disposing of assets
or realising their fair value, thereby impacting
Gross risk: profitability and our ability to reduce debt levels
Medium impact or make further acquisitions.
risk with a
medium to high
probability.
------------------------------------------------------------
Directors' Responsibility Statement
The Directors confirm that these condensed consolidated interim
financial statements have been prepared with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8 namely:
(a) An indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed consolidated interim set of financial statements; and
(b) Material related-party transactions in the first six months
of the financial year and any material changes in the related-party
transactions described in the last Annual Report
On the behalf of the Board
Allan Lockhart Will Hobman
Chief Executive Chief Financial Officer
23 November 2023
Copies of this announcement are available on the Company's
website at www.nrr.co.uk and can be requested from the Company's
registered office at 89 Whitfield Street, London, W1T 4DE.
Independent review report to NewRiver REIT plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed NewRiver REIT plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the unaudited half year results of NewRiver REIT plc for the 6
month period ended 30 September 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed Consolidated Balance Sheet as at 30 September 2023;
-- the Condensed Consolidated Statement of Comprehensive Income for the period then ended;
-- the Condensed Consolidated Cash Flow Statement for the period then ended;
-- the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements
The interim financial statements included in the unaudited half
year results of NewRiver REIT plc have been prepared in accordance
with UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the unaudited
half year results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The unaudited half year results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the
unaudited half year results in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the unaudited half year
results, including the interim financial statements, the directors
are responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the unaudited half year results based on
our review. Our conclusion, including our Conclusions relating to
going concern, is based on procedures that are less extensive than
audit procedures, as described in the Basis for conclusion
paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and
for no other purpose. We do not, in giving this conclusion, accept
or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
23 November 2023
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 SEPTEMBER 2023
Six months ended Six months ended
Unaudited 30 September 2023 30 September 2022
================================ ===== ================================== ================================
Operating Fair Operating Fair
and value and value
financing adjustments Total financing adjustments Total
Notes GBPm GBPm GBPm GBPm GBPm GBPm
================================ ===== ========== ============ ======== ========== ============ ======
Revenue 4 33.2 - 33.2 35.5 - 35.5
Property operating expenses* 5 (11.7) - (11.7) (11.8) - (11.8)
================================ ===== ========== ============ ======== ========== ============ ======
Net property income 21.5 - 21.5 23.7 - 23.7
================================ ===== ========== ============ ======== ========== ============ ======
Administrative expenses 6 (6.0) - (6.0) (6.6) - (6.6)
Other income 7 0.4 - 0.4 1.4 - 1.4
Share of profit from joint
ventures 14 0.5 - 0.5 1.9 1.5 3.4
Share of profit from associates 15 0.1 - 0.1 0.2 0.4 0.6
Net property valuation movement 13 - (11.6) (11.6) - (10.3) (10.3)
Loss on disposal of a joint
venture 8 (2.3) - (2.3) - - -
Profit / (loss) on disposal
of investment properties 9 0.1 - 0.1 (0.6) - (0.6)
================================ ===== ========== ============ ======== ========== ============ ======
Operating profit 14.3 (11.6) 2.7 20.0 (8.4) 11.6
Finance income 10 2.3 - 2.3 0.2 - 0.2
Finance costs 10 (7.6) - (7.6) (7.7) - (7.7)
================================ ===== ========== ============ ======== ========== ============ ======
(Loss) / profit for the period
before taxation 9.0 (11.6) (2.6) 12.5 (8.4) 4.1
Taxation - - - - - -
================================ ===== ========== ============ ======== ========== ============ ======
(Loss) / profit for the period 9.0 (11.6) (2.6) 12.5 (8.4) 4.1
Total comprehensive (loss)
/ profit for the period 9.0 (11.6) (2.6) 12.5 (8.4) 4.1
================================ ===== ========== ============ ======== ========== ============ ======
There are no items of other comprehensive income
for the current or prior period
===================================================================== ==== ================================
(Loss) / earnings per share
Basic (pence) 11 (0.8) 1.3
Diluted (pence) 11 (0.8) 1.3
================================ ===== ========== ============ ======== ========== ============ ======
*Included in property operating expenses is an expected credit
loss charge of GBP0.8 million (30 September 2022: GBP0.8 million
reversal) relating to debtors.
CONDENSED CONSOLIDATED BALANCE SHEET
As AT 30 SEPTEMBER 2023
30 September
2023 31 March
GBPm 2023
Notes Unaudited GBPm
======================================== ===== ============ ========
Non-current assets
Investment properties 13 618.9 627.3
Right of use asset 0.8 0.9
Investments in joint ventures 14 0.1 23.8
Investments in associates 15 5.6 5.5
Property, plant and equipment 0.3 0.4
Total non-current assets 625.7 657.9
======================================== ===== ============ ========
Current assets
Trade and other receivables 16 10.3 15.0
Cash and cash equivalents 137.3 108.6
======================================== ===== ============ ========
Total current assets 147.6 123.6
Total assets 773.3 781.5
======================================== ===== ============ ========
Equity and liabilities
Current liabilities
Trade and other payables 17 31.9 29.5
Lease liability 0.4 0.4
Total current liabilities 32.3 29.9
======================================== ===== ============ ========
Non-current liabilities
Lease liability 76.1 76.3
Borrowings 18 297.2 296.7
======================================== ===== ============ ========
Total non-current liabilities 373.3 373.0
======================================== ===== ============ ========
Net assets 367.7 378.6
======================================== ===== ============ ========
Equity
Share capital 3.1 3.1
Share premium 3.2 2.4
Merger reserve (2.3) (2.3)
Retained earnings and other reserves 363.7 375.4
======================================== ===== ============ ========
Total equity 367.7 378.6
======================================== ===== ============ ========
Net Asset Value (NAV) per share (pence)
Basic 11 117p 122p
Diluted 11 117p 121p
EPRA NTA 11 117p 121p
======================================== ===== ============ ========
The interim financial statements were approved by the Board of
Directors on 23 November 2023 and were signed on its behalf by:
Allan Lockhart Will Hobman
Chief Executive Chief Financial Officer
NewRiver REIT plc
Registered number: 10221027
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2023
30 September 30 September
2023 2022
Unaudited GBPm GBPm
============================================================ ============ ============
Cash flows from operating activities
(Loss) / profit for the period before taxation (2.6) 4.1
Adjustments for:
(Profit) / loss on disposal of investment property (0.1) 0.6
Net valuation movement 11.6 10.3
Net valuation movement in joint ventures - (1.5)
Net valuation movement in associates - (0.4)
Share of profit from joint ventures (0.5) (1.9)
Share of profit from associates (0.1) (0.2)
Loss on disposal of joint venture 2.3 -
Net interest expense 5.3 7.5
Rent free lease incentives 0.1 0.2
Movement in expected credit loss 0.8 (0.8)
(Capitalisation) / amortisation of legal and letting
fees (0.4) 0.1
Depreciation and impairment on property plant and equipment 0.2 0.6
Share-based payment expense 0.8 0.6
Cash generated from operations before changes in working
capital 17.4 19.2
Changes in working capital
Decrease in trade and other receivables 1.7 4.5
Decrease in payables and other financial liabilities (2.9) (5.4)
============================================================ ============ ============
Cash generated from operations 16.2 18.3
Interest paid (1.9) (1.5)
Interest income 2.3 0.2
Dividends received from joint ventures 0.9 2.9
Dividends received from associates - 0.3
============================================================ ============ ============
Net cash generated from operating activities 17.5 20.2
============================================================ ============ ============
Cash flows from investing activities
Disposal proceeds from joint venture 21.0 -
Return of investment from associate - 2.2
Disposal of investment properties 2.3 (0.6)
Development and other capital expenditure (2.9) (1.8)
Purchase of plant and equipment - (0.3)
============================================================ ============ ============
Net cash generated from / (used in) investing activities 20.4 (0.5)
============================================================ ============ ============
Cash flows from financing activities
Repayment of principal portion of lease liability (0.2) (0.3)
Dividends paid - ordinary (9.0) (9.7)
============================================================ ============ ============
Net cash used in financing activities (9.2) (10.0)
============================================================ ============ ============
Cash and cash equivalents at beginning of the period 108.6 82.8
Net increase in cash and cash equivalents 28.7 9.7
============================================================ ============ ============
Cash and cash equivalents at 30 September 137.3 92.5
============================================================ ============ ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2023
Retained
earnings
Merger and other
Share capital Share premium reserve reserves Total
Notes GBPm GBPm GBPm GBPm GBPm
==================================== ===== ============= ============= ======== =========== =====
As at 31 March 2023 (audited) 3.1 2.4 (2.3) 375.4 378.6
Loss for the period after
taxation and total comprehensive
income - - - (2.6) (2.6)
===== ============= =============
Transactions with equity
holders
Share-based payments - - - 0.7 0.7
Issue of new shares - 0.8 - - 0.8
Dividends paid 12 - - - (9.8) (9.8)
==================================== ===== ============= ============= ======== =========== =====
As at 30 September 2023 (unaudited) 3.1 3.2 (2.3) 363.7 367.7
==================================== ===== ============= ============= ======== =========== =====
As at 31 March 2022 (audited) 3.1 1.1 (2.3) 412.2 414.1
Profit for the period after
taxation and total comprehensive
income - - - 4.1 4.1
==================================== === === ===== ====== ======
Transactions with equity
holders
Share-based payments - - - 0.6 0.6
Issue of new shares - 0.8 - - 0.8
Dividends paid 12 - - - (10.1) (10.1)
==================================== === === ===== ====== ======
As at 30 September 2022 (unaudited) 3.1 1.9 (2.3) 406.8 409.5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting policies
General information
NewRiver REIT plc (the 'Company') and its subsidiaries (together
the 'Group') is a property investment group specialising in
commercial real estate in the UK. The Company is registered and
domiciled in the UK and the registered office of the Company is 89
Whitfield Street, London, W1T 4DE.
The condensed consolidated interim financial statements
('interim financial statements') including the notes to the interim
financial statements are unaudited and do not constitute statutory
accounts as defined in section 434 of the Companies Act 2006. The
financial information for the year ended 31 March 2023 included in
this report was derived from the statutory accounts for the year
ended 31 March 2023, a copy of which has been delivered to the
Registrar of Companies. The auditor's report on these accounts was
unqualified, did not include a reference to any matters to which
the auditor drew attention by way of emphasis of matter and did not
contain a statement under sections 498 (2) or (3) of the Companies
Act 2006.
These interim financial statements have been approved for issue
by the Board of Directors on 23 November 2023.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these interim financial statements are set out below. These
policies have been consistently applied to all periods
presented.
Basis of preparation
These interim financial statements for the 6 month period ended
30 September 2023 have been prepared on the basis of the policies
set out in the annual consolidated financial statements for the
year ended 31 March 2023 and in accordance with UK adopted IAS 34
and the Disclosure and Transparency Rules sourcebook of the UK's
Financial Conduct Authority.
The interim financial statements need to be read in conjunction
with the annual consolidated financial statements for the year
ended 31 March 2023 which were prepared in accordance with the
requirements of the Companies Act 2006 and UK adopted international
accounting standards.
The current period financial information presented in this
document has been reviewed, not audited.
Going concern
The Group going concern assessment considers the Group principal
risks, and is dependent on a number of factors, including cashflow
and liquidity, continued access to borrowing facilities and the
ability to continue to operate the Group unsecured debt structure
within its financial covenants. The Group balance sheet is
unsecured, which means that none of its debt is secured against its
property assets. This type of financing affords significant
operational flexibility and the only debt currently drawn by the
Group is the GBP300 million unsecured corporate bond which matures
in March 2028. This bond has financial covenants that the Group is
required to comply with including an LTV covenant of less than 65%
and a 12 month historical interest cover ratio of more than
1.5x.
The going concern assessment is based on a 12 month outlook from
the date of the approval of these financial statements, using the
Group Board approved budget, flexed to create a reasonable worst
case scenario, which includes the key assumptions listed below.
- Capital values to decline further to a blended valuation
decline of -7.0% in FY24 and a blended valuation decline of -4.0%
pa throughout the remainder of the forecast horizon, in contrast to
the decline noted across the portfolio in HY24 of -2.0%, 98% of
which related to the Regeneration portfolio, primarily the impact
of cost inflation on valuations, with modest growth noted in Core
Shopping Centres and Retail Parks.
- A 15% reduction in net income. This reflects a significant
downside to rental agreements re-geared or re-negotiated throughout
the pandemic given that 95% of rents relating to FY21 and FY22 have
been collected at the time of reporting despite the multiple
national lockdowns in place during those periods; FY23 rent
collection is 99% and HY24 rent collection is 98% at the time of
reporting demonstrating that rent collection rates have normalised
back to pre Covid levels.
- No further disposals are assumed throughout the forecast
period which have not yet completed at the time of reporting,
despite the completion of GBP77.1 million of disposals during FY22,
GBP23.0 million during FY23, GBP31.3 million during HY24 and
GBP13.4 million of retail disposals now under offer or exchanged
and a further GBP9.6 million in active discussions or committed to
be disposed at the date of approval of these financial statements.
Similarly, no assumption is made for the deployment of any surplus
capital available as at 30 September 2023 and the growth and
returns that would otherwise generate.
Under this scenario, the Group is forecast to maintain
sufficient cash and liquidity resources and remain compliant with
its financial covenants over the going concern period. Further
stress testing was performed on this scenario which demonstrated
that the Group's drawn debt covenants could absorb a further
valuation decline of 44% or a further 59% reduction in annual net
rental income before breaching covenant levels. The Group maintains
sufficient cash and liquidity reserves to continue in operation and
pay its liabilities as they fall due throughout the going concern
assessment period and as such the Directors conclude a going
concern basis of preparation is appropriate.
Basis of consolidation
The interim financial statements incorporate the interim
financial statements of the Company and its subsidiaries. The
interim financial statements account for interests in joint
ventures and associates using the equity method of accounting per
IFRS 11. The Group's financial performance is not seasonal.
New accounting policies
There have been no new accounting policies adopted in the
period.
New standards and amendments
The Group has adopted the following amendments for the first
time in the 6 months ended 30 September 2023:
- Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
- Definition of Accounting Estimates (Amendments to IAS 8)
- Deferred Tax - Related to assets and liabilities arising from
a single transaction (Amendments to IAS 12)
- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
- Insurance contracts - (Amendments to IFRS 17)
Adopting these amendments has not impacted amounts recognised in
prior periods or are expected to have a material impact in future
periods based on the Group's current strategy.
Standards and amendments issued but not yet effective
A number of new amendments relevant to the Group have been
issued but are not yet effective for the current accounting period.
These were disclosed in the 31 March 2023 audited financial
statements and there has been no significant update as at the date
of this report. No material impact is expected upon the adoption of
these standards and amendments.
2. Critical accounting judgements and estimates
The preparation of interim financial statements requires
management to make estimates and judgements affecting the reported
amounts of assets and liabilities, of revenues and expenses, and of
gains and losses. The key assumptions concerning the future, and
other key sources of estimation uncertainty at the end of the
reporting period, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial period, are discussed below.
Estimates and judgements are continually evaluated and are based on
historical experience as adjusted for current market conditions and
other factors. There have been no changes since the year-end.
Significant judgements
REIT Status
NewRiver is a Real Estate Investment Trust (REIT) and does not
pay tax on its property income or gains on property sales, provided
that at least 90% of the Group's property income is distributed as
a dividend to shareholders, which becomes taxable in their hands.
In addition, the Group has to meet certain conditions such as
ensuring the property rental business represents more than 75% of
total profits and assets. Any potential or proposed changes to the
REIT legislation are monitored and discussed with HMRC. It is the
Directors' judgement that the Group continues to meet the REIT
conditions.
Sources of estimation uncertainty
Investment property
The Group's investment properties are stated at fair value. The
assumptions and estimates used to value the properties are detailed
in note 13. Small changes in the key estimates, such as the
estimated rental value, can have a significant impact on the
valuation of the investment properties, and therefore a significant
impact on the condensed consolidated balance sheet and key
performance measures such as Net Tangible Assets per share.
Rents and ERVs have a direct relationship to valuation, while
yield has an inverse relationship. Estimated costs of a development
project will inversely affect the valuation of development
properties. There are interrelationships between all these
unobservable inputs as they are determined by market conditions.
The existence of an increase in more than one unobservable input
could be to magnify the impact on the valuation, see note 13 for
sensitivity analysis.
The estimated fair value may differ from the price at which the
Group's assets could be sold. Actual realisation of net assets
could differ from the valuation used in these financial statements,
and the difference could be significant.
3. Segmental reporting
The Group operates as one segment, the retail business. The
retail investments comprise shopping centres, retail parks and high
street stores. The performance and position of the retail business
is set out in the condensed consolidated statement of comprehensive
income and condensed consolidated balance sheet. All the Group's
operations are in the UK and therefore no geographical segments
have been identified.
4. Revenue
Six Months ended
==================================================== ==========================
30 September 30 September
2023 2022
GBPm GBPm
==================================================== ============ ============
Property rental and related income* 26.6 28.5
Amortisation of tenant incentives and letting costs (0.6) (0.7)
Surrender premiums and commissions - 0.1
==================================================== ============ ============
Rental related income 26.0 27.9
==================================================== ============ ============
Asset management fees 1.2 0.7
Service charge income 6.0 6.9
==================================================== ============ ============
Revenue 33.2 35.5
==================================================== ============ ============
*Included within property rental and related income is car park
income of GBP3.0 million (30 September 2022: GBP2.7 million) which
falls under the scope of IFRS 15. The remainder of the income is
covered by IFRS 16.
Asset management fees and service charge income which represents
the flow through costs of the day-to-day maintenance of shopping
centres fall under the scope of IFRS 15.
5. Property operating expenses
Six Months ended
========================================= ==========================
30 September 30 September
2023 2022
GBPm GBPm
========================================= ============ ============
Service charge expense 8.0 9.7
Rates on vacant units 0.9 1.4
Expected credit loss charge / (reversal) 0.8 (0.8)
Other property operating expenses 2.0 1.5
========================================= ============ ============
Property operating expenses 11.7 11.8
========================================= ============ ============
6. Administrative expenses
Six Months ended
=============================== ==========================
30 September 30 September
2023 2022
GBPm GBPm
=============================== ============ ============
Wages and salaries 2.5 2.3
Social security costs 0.4 0.6
Other pension costs 0.1 0.1
=============================== ============ ============
Staff costs 3.0 3.0
Depreciation* 0.2 0.1
Share-based payments 0.8 0.6
Other administrative expenses 2.0 2.4
Head office relocation costs** - 0.5
Administrative expenses 6.0 6.6
=============================== ============ ============
* Depreciation is inclusive of GBP0.1 million right of use asset
depreciation (30 September 2022: GBP0.1 million).
** Head office relocation costs mainly relate to an impairment
charge relating to property, plant and equipment.
Net administrative expenses ratio is calculated as follows:
Six Months ended
================================================================= ==========================
30 September 30 September
2023 2022
GBPm GBPm
================================================================= ============ ============
Administrative expenses 6.0 6.6
Adjust for:
Asset management fees (1.2) (0.7)
Share of joint ventures' and associates expenses 0.1 -
Share based payments (0.8) (0.6)
Head office relocation costs - (0.5)
Group's share of net administrative expenses 4.1 4.8
================================================================= ============ ============
Property rental and related income* 26.2 29.3
Other income (note 7) 0.4 1.4
Share of joint ventures' and associates' property income 1.1 2.0
================================================================= ============ ============
Property rental, other income and related income 27.7 32.7
Net administrative expenses as a % of property income (including
share of joint ventures and associates) 14.8% 14.7%
================================================================= ============ ============
*This balance includes an expected credit loss of GBP0.4 million
(30 September 2022: GBP0.8 million reversal), which excludes the
GBP0.4 million (30 September 2022: GBPnil) forward looking element
of the calculation and insurance expected credit loss of GBPnil (30
September 2022: GBPnil) but includes the expected credit loss held
in joint ventures and associates of GBPnil (30 September 2022:
GBPnil).
7. Other income
Six Months ended
=================== ==========================
30 September 30 September
2023 2022
GBPm GBPm
=================== ============ ============
Insurance proceeds 0.4 1.4
Total other income 0.4 1.4
=================== ============ ============
The Group recognised GBP0.4 million (30 September 2022: GBP1.4
million) for Covid-19 income disruption following agreement with
the insurer.
8. Loss on disposal of a joint venture
Six months to 30 September 2023
On 27 June 2023, the Group disposed its 50% share in the
'Napier' joint venture which owned Kittybrewster Retail Park in
Aberdeen and Glendoe and Telford Retail Parks in Inverness.
Included in the carrying value on disposal were investment
properties of GBP32.2 million, cash of GBP1.3 million and third
party debt of GBP(12.0) million.
GBPm
====================================================== =======
Carrying value at 31 March 2023 23.6
Movement in the period 31 March 2023 to 27 June 2023 (0.3)
Carrying value at 27 June 2023 23.3
====================================================== =======
Net cash proceeds 21.0
Loss on disposal of a joint venture (2.3)
====================================================== =======
The total cash consideration for the sale was GBP64.0 million
which included GBP62.6 million (NewRiver share: GBP31.3 million)
consideration for the value of the JV properties.
The total cash consideration was distributed as follows:
- GBP24.0 million used to repay the Napier Joint Venture bank
loans;
- GBP3.0 million used to repay the shareholder loan owed to
NewRiver (recognised as part of the Investment in Joint Venture
carrying amount)
After the deduction of the above amounts and the settlement of
various costs associated with the disposal, GBP18.0 million was
received by NewRiver. Net proceeds of GBP21.0 million recognised by
NewRiver include the GBP3.0 million repayment of the shareholder
loan.
Six months to 30 September 2022
There were no disposals in the six months ended 30 September
2022.
9. Profit / (loss) on disposal of investment properties
Six Months ended
===================================================== ==========================
30 September 30 September
2023 2022
GBPm GBPm
===================================================== ============ ============
Gross disposal proceeds - -
Carrying value - -
Cost of disposal* 0.1 (0.6)
===================================================== ============ ============
Profit / (loss) on disposal of investment properties 0.1 (0.6)
===================================================== ============ ============
*Cost of disposal in the current period relates to investment
property sales in the prior period.
10. Finance income and finance costs
Six Months ended
===================================================== ==========================
30 September 30 September
2023 2022
GBPm GBPm
===================================================== ============ ============
Income from loans with joint ventures and associates (0.1) (0.1)
Income from treasury deposits (2.2) (0.1)
Finance income (2.3) (0.2)
===================================================== ============ ============
Interest on borrowings 6.3 6.4
Finance cost on lease liabilities 1.3 1.3
Finance costs 7.6 7.7
===================================================== ============ ============
11. Performance measures
A reconciliation of the performance measures to the nearest IFRS
measure is below:
Six Months ended
============================================================= ==========================
30 September 30 September
2023 2022
GBPm GBPm
============================================================= ============ ============
(Loss) / profit for the period after taxation (2.6) 4.1
Adjustments
Net valuation movement 11.6 10.3
(Profit) / loss on disposal of investment properties (0.1) 0.6
Loss on disposal of joint venture 2.3 -
Group's share of joint ventures' and associates' adjustments
Revaluation of investment properties - (1.9)
Revaluation of derivatives (0.1) (0.6)
EPRA earnings 11.1 12.5
Share-based payment charge 0.8 0.6
Forward looking element of IFRS 9* 0.4 -
Head office relocation costs - 0.5
Underlying Funds From Operations (UFFO) 12.3 13.6
============================================================= ============ ============
* Forward looking element of IFRS 9 relates to a provision
against debtor balances in relation to invoices in advance for
future rental income. These balances are not due in the current
period and therefore no income has been recognised in relation to
these debtors.
Number of shares
Six Months ended
=============================================================== ==========================
30 September 30 September
2023 2022
Number of shares No. m No. m
=============================================================== ============ ============
Weighted average number of ordinary shares for the purposes of
Basic EPS, UFFO and EPRA 311.3 309.0
Effect of dilutive potential ordinary shares:
Performance share plan 1.0 1.0
Deferred bonus shares 1.0 0.4
=============================================================== ============ ============
Weighted average number of ordinary shares for the purposes of
Diluted EPS 313.3 310.4
=============================================================== ============ ============
Six Months ended
================= ==========================
30 September 30 September
2023 2022
================= ============ ============
IFRS Basic EPS (0.8) 1.3
IFRS Diluted EPS (0.8) 1.3
EPRA EPS 3.6 4.0
UFFO EPS 4.0 4.4
================= ============ ============
The below table reconciles the differences between the
calculation of basic and EPRA NTA.
EPRA NTA per share and basic NTA per share:
30 September 2023 31 March 2023
===================== =========================
Pence
Shares per Shares Pence
GBPm m share GBPm m per share
===================================== ===== ====== ====== ===== ====== ==========
Net assets 367.7 313.7 117p 378.6 310.7 122p
Unexercised employee awards - 2.0 - 2.0
===================================== ===== ====== ====== ===== ====== ==========
Diluted net assets 367.7 315.7 117p 378.6 312.7 121p
Group's share of associates deferred
tax liability 0.9 - 0.9 -
Group's share of joint venture /
associates fair value derivatives (0.1) - (0.6) -
===================================== ===== ====== ====== ===== ====== ==========
EPRA Net Tangible Assets 368.5 315.7 117p 378.9 312.7 121p
===================================== ===== ====== ====== ===== ====== ==========
12. Dividends
The dividends paid in the period are set out below:
Pence
Payment date PID Non-PID per share GBPm
================================ === ======= ========== ====
Six months to 30 September 2022
Ordinary dividends
2 September 2022 3.3 - 3.3 10.1
10.1
================================ === ======= ========== ====
Six months to 30 September 2023
Ordinary dividends
4 August 2023 3.2 - 3.2 9.8
================================ === ======= ========== ====
3.2 - 3.2 9.8
================================ === ======= ========== ====
Property Income Distribution (PID) dividends
Profits distributed out of tax-exempt profits are PID dividends.
PID dividends are paid after deduction of withholding tax
(currently at 20%), which NewRiver pays directly to HMRC on behalf
of the shareholder.
Non-PID dividends
Any non-PID element of dividends will be treated in exactly the
same way as dividends from other UK, non-REIT companies.
13. Investment properties
30 September 31 March
2023 2023
GBPm GBPm
=========================================================== ============ ========
Fair value brought forward as at 1 April 2023/1 April 2022 551.5 609.1
Capital expenditure 2.9 2.9
Lease incentives, letting and legal costs 0.3 (0.1)
Disposals - (22.3)
Net valuation movement (11.5) (38.1)
=========================================================== ============ ========
Fair value carried forward 543.2 551.5
=========================================================== ============ ========
Right of use asset (investment property) 75.7 75.8
=========================================================== ============ ========
Fair value carried forward 618.9 627.3
=========================================================== ============ ========
The Group's investment properties have been valued at fair value
on 30 September 2023 by independent valuers, Colliers International
Valuation UK LLP and Knight Frank LLP, on the basis of fair value
in accordance with the Current Practice Statements contained in The
Royal Institution of Chartered Surveyors Valuation - Professional
Standards, (the 'Red Book'). The valuations are performed by
appropriately qualified valuers who have relevant and recent
experience in the sector.
The Group is exposed to changes in the residual value of
properties at the end of current lease agreements. The residual
value risk borne by the Group is mitigated by active management of
its property portfolio with the objective of optimising tenant mix
in order to:
- achieve the longest weighted average lease term possible;
- minimise vacancy rates across all properties; and
- minimise the turnover of tenants with high quality credit ratings.
The Group also grants lease incentives to encourage high quality
tenants to remain in properties for longer lease terms. In the case
of anchor tenants, this also attracts other tenants to the property
thereby contributing to overall occupancy levels.
The fair value at 30 September represents the highest and best
use.
The properties are categorised as Level 3 in the IFRS 13 fair
value hierarchy. There were no transfers of property between Levels
1, 2 and 3. Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date. Level 2 inputs are inputs other
than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly. Level 3
inputs are unobservable inputs for the asset or liability.
Sensitivities of measurement of significant inputs
As set out within significant accounting estimates and
judgements in note 2, the Group's property portfolio valuation is
open to judgements and is inherently subjective by nature. As a
result, the sensitivity analysis below illustrates the impact of
changes in key unobservable inputs on the fair value of the Group's
properties.
We consider +/-10% for ERV and +/-100bps for NEY to capture the
increased uncertainty in these key valuation assumptions and deem
it to be a reasonably possible scenario.
The investments are a portfolio of retail assets in the UK. The
valuation was determined using an income capitalisation method,
which involves applying a yield to rental income streams. Inputs
include yield, current rent and ERV. Development properties are
valued using a residual method, which involves valuing the
completed investment property using an investment method and
deducting estimated costs to complete, then applying an appropriate
discount rate.
The inputs to the valuation include:
- Rental value - total rental value per annum
- Equivalent yield - the net weighted average income return a
property will produce based upon the timing of the income
received
- Estimated development costs
There were no changes to valuation techniques during the period.
Valuation reports are based on both information provided by the
Group, e.g. current rents and lease terms which is derived from the
Group's financial and property management systems and is subject to
the Group's overall control environment, and assumptions applied by
the valuers, e.g. ERVs and yields. These assumptions are based on
market observation and the valuers' professional judgement, which
includes a consideration of climate change and a range of other
external factors.
30 September 2023: Sensitivity impact on valuations of a 10%
change in estimated rental value and absolute yield of 100 bps.
Impact on valuations Impact on valuations
of a 10% change of 100 bps change
in ERV in yield
================================ ========== ====================== ======================
Retail
asset GBPm GBPm GBPm GBPm
valuation Increase Decrease Increase Decrease
Asset Type GBPm 10% 10% 1.0% 1.0%
================================ ========== ========== ========== ========== ==========
Shopping Centres - Core 216.6 18.1 (16.0) (20.2) 26.6
Shopping Centres - Regeneration 129.2 12.2 (11.5) (15.3) 20.7
Shopping Centres - Work Out 62.6 6.7 (6.5) (6.7) 8.1
Retail parks 131.0 10.3 (10.0) (14.6) 19.5
High street and other 3.8 0.6 (0.5) (0.4) 0.7
================================ ========== ========== ========== ========== ==========
543.2 47.9 (44.5) (57.2) 75.6
================================ ========== ========== ========== ========== ==========
31 March 2023: Sensitivity impact on valuations of a 10% change
in estimated rental value and absolute yield of 100 bps.
Impact on valuations Impact on valuations
of a 10% change of 100 bps change
in ERV in yield
================================ ========== ====================== ======================
Retail
asset GBPm GBPm GBPm GBPm
valuation Increase Decrease Increase Decrease
Asset Type GBPm 10% 10% 1.0% 1.0%
================================ ========== ========== ========== ========== ==========
Shopping Centres - Core 214.8 18.2 (16.7) (21.7) 27.6
Shopping Centres - Regeneration 140.1 13.5 (13.0) (18.9) 26.0
Shopping Centres - Work Out 63.3 6.5 (5.8) (5.8) 7.4
Retail parks 128.6 9.7 (9.6) (14.2) 18.9
High street and other 4.7 0.6 (0.6) (0.6) 0.7
================================ ========== ========== ========== ========== ==========
551.5 48.5 (45.7) (61.2) 80.6
================================ ========== ========== ========== ========== ==========
Reconciliation to net valuation movement in consolidated
statement of comprehensive income
30 September 31 March
2023 2023
Net valuation movement in investment properties GBPm GBPm
================================================================== ============ ========
Net valuation movement in investment properties (11.5) (38.1)
Net valuation movement in right of use asset (0.1) (0.1)
================================================================== ============ ========
Net valuation movement in consolidated statement of comprehensive
income (11.6) (38.2)
================================================================== ============ ========
Reconciliation to properties at valuation in the portfolio
30 September 31 March
2023 2023
Note GBPm GBPm
================================== ==== ============ ========
Investment property 13 543.2 551.5
Properties held in joint ventures 14 - 32.2
Properties held in associates 15 9.9 9.9
================================== ==== ============ ========
Properties at valuation 553.1 593.6
================================== ==== ============ ========
14. Investments in joint ventures
As at 30 September 2023 the Group has one joint venture (31
March 2023: two).
30 September 31 March
2023 2023
GBPm GBPm
==================================================================== ============ ========
Opening balance 23.8 24.0
Disposals (23.3) -
Group's share of profit after taxation excluding valuation movement 0.5 2.4
Net valuation movement - 0.6
Dividends (0.9) (3.2)
==================================================================== ============ ========
Investment in joint venture 0.1 23.8
==================================================================== ============ ========
30 September 31 March
2023 2023
Name Country of incorporation % Holding % Holding
========================================== ========================= ============= ===========
NewRiver Retail Investments LP (NRI
LP) Guernsey 50 50
NewRiver Retail (Napier) Limited (Napier) UK - 50
========================================== ========================= ============= ===========
The Group is the appointed asset manager on behalf of these
joint ventures and receives asset management fees, development
management fees and performance-related bonuses.
On 27 June 2023, the Group disposed of NewRiver Retail (Napier)
Limited which owned Kittybrewster Retail Park in Aberdeen and
Glendoe and Telford Retail Parks in Inverness. Refer to note 8.
NewRiver Retail Investments LP has a 31 December year end as did
NewRiver Retail (Napier) Limited. The aggregate amounts recognised
in the consolidated balance sheet and consolidated statement of
comprehensive income at 30 September and 31 March are as
follows:
30 September 2023 31 March 2023
================================= =================== ===============
Group's Group's
Total share Total share
Consolidated balance sheet GBPm GBPm GBPm GBPm
================================= ======== ========= ====== =======
Non-current assets - - 64.4 32.2
Current assets 0.3 0.1 5.5 2.8
Current liabilities - - (1.4) (0.7)
Liabilities due in more than one
year - - (26.9) (13.5)
================================= ======== ========= ====== =======
Net assets 0.3 0.1 41.6 20.8
================================= ======== ========= ====== =======
Loan to joint venture - - - 3.0
================================= ======== ========= ====== =======
Net assets adjusted for loan to
joint venture 0.3 0.1 41.6 23.8
================================= ======== ========= ====== =======
The table above provides summarised financial information for
the joint ventures. The information disclosed reflects the amounts
presented in the financial statements of the joint ventures.
The Group's share of contingent liabilities in the joint
ventures is GBPnil (31 March 2023: GBPnil).
Six months ended Six months ended
30 September 2023 30 September 2022
======================================== ==================== ====================
Group's Group's
Consolidated statement of comprehensive Total share Total share
income GBPm GBPm GBPm GBPm
======================================== ======== ========== ======== ==========
Revenue 1.4 0.7 3.3 1.7
Property operating expenses - - (0.2) (0.1)
======================================== ======== ========== ======== ==========
Net property income 1.4 0.7 3.1 1.6
Administration expenses (0.1) (0.1) - -
Net finance costs (0.1) (0.1) 0.6 0.3
======================================== ======== ========== ======== ==========
Group's share of joint ventures'
profit before valuation movements 1.2 0.5 3.7 1.9
Net valuation movement - - 3.0 1.5
Profit on disposal of investment
property - - 0.1 -
======================================== ======== ========== ======== ==========
Profit after taxation 1.2 0.5 6.8 3.4
Add back net valuation movement - - (3.0) (1.5)
======================================== ======== ========== ======== ==========
Group's share of joint ventures'
profit before valuation movements 1.2 0.5 3.8 1.9
======================================== ======== ========== ======== ==========
15. Investments in associates
The Group has one direct investment in an associate entity in
which it has a 10% stake, Sealand S.à.r.l, which owns 100% of
NewRiver Retail (Hamilton) Limited and NewRiver (Sprucefield)
Limited at 30 September 2023.
30 September 31 March
2023 2023
GBPm GBPm
Opening balance 5.5 7.9
Return of investment in associates* - (2.3)
Dividends - (0.4)
Group's share of profit after taxation excluding valuation movement 0.1 0.1
Net valuation movement - 0.2
==================================================================== ============ ========
Investment in associates 5.6 5.5
==================================================================== ============ ========
*During the prior year, the Group received GBP2.3 million back
from associates in the form of shareholder loan repayments and
repayment of initial capital invested.
30 September 31 March
2023 2023
Country
Name of incorporation % Holding % Holding
============================================== ================== ============= ===========
NewRiver Retail (Hamilton) Limited (Hamilton) UK 10 10
NewRiver (Sprucefield) Limited (Sprucefield) UK 10 10
============================================== ================== ============= ===========
The Group is the appointed asset manager on behalf of Sealand
S.à.r.l and receives asset management fees, development management
fees and performance-related bonuses.
The aggregate amounts recognised in the consolidated balance
sheet and consolidated statement of comprehensive income are as
follows:
30 September 2023 31 March 2023
============================================ =================== ===============
Group's Group's
Total share Total share
Consolidated balance sheet GBPm GBPm GBPm GBPm
============================================ ======== ========= ====== =======
Non-current assets 99.5 9.9 99.3 9.9
Current assets 9.4 1.0 8.2 0.8
Current liabilities (17.0) (1.7) (16.1) (1.6)
Liabilities due in more than one year (67.9) (6.8) (67.8) (6.8)
============================================ ======== ========= ====== =======
Net assets 24.0 2.4 23.6 2.3
============================================ ======== ========= ====== =======
Loans to associates - 3.2 - 3.2
============================================ ======== ========= ====== =======
Net assets adjusted for loans to associates 24.0 5.6 23.6 5.5
============================================ ======== ========= ====== =======
The Group's share of contingent liabilities in the joint
ventures is GBPnil (31 March 2023: GBPnil).
Six months ended Six months ended
30 September 2023 30 September 2022
=========================================== ==================== ====================
Group's Group's
Consolidated statement of comprehensive Total share Total share
income GBPm GBPm GBPm GBPm
=========================================== ======== ========== ======== ==========
Revenue 4.8 0.5 4.8 0.5
Property operating expenses (0.5) (0.1) (1.1) (0.1)
=========================================== ======== ========== ======== ==========
Net property income 4.3 0.4 3.7 0.4
Administration expenses (0.1) - (0.1) -
Net finance costs (2.3) (0.2) (0.9) (0.1)
=========================================== ======== ========== ======== ==========
1.9 0.2 2.7 0.3
Net valuation movement (0.1) - 4.0 0.4
Profit on disposal of investment property - - 0.3 -
Taxation (0.5) (0.1) (0.7) (0.1)
=========================================== ======== ========== ======== ==========
Profit after taxation 1.3 0.1 6.3 0.6
=========================================== ======== ========== ======== ==========
Add back net valuation movement 0.1 - (4.0) (0.4)
=========================================== ======== ========== ======== ==========
Group's share of associates' profit before
valuation movements 1.4 0.1 2.3 0.2
=========================================== ======== ========== ======== ==========
16. Trade and other receivables
30 September 31 March
2023 2023
GBPm GBPm
Trade receivables 0.4 2.6
Restricted monetary assets 4.3 4.8
Service charge receivables* 1.6 1.2
Other receivables 0.8 3.8
Prepayments 0.7 0.7
Accrued income 2.5 1.9
============================ ============ ========
10.3 15.0
============================ ============ ========
*Included in service charge receivables is GBPnil of Value Added
Taxation (31 March 2023: GBPnil), GBP1.4 million of service charge
debtors (31 March 2023: GBP1.2 million) and GBP0.2m of accrued
income (31 March 2023: GBPnil).
Trade receivables are shown after deducting a loss allowance of
GBP2.9 million (31 March 2023: GBP3.0 million), other receivables
are shown after deducting a loss allowance of GBP0.2 million (31
March 2023: GBP0.3 million). The provision for doubtful debts is
calculated as an expected credit loss on trade receivables in
accordance with IFRS 9. The charge to the consolidated statement of
comprehensive income in relation to doubtful debts made against
tenant debtors was GBP0.9 million (31 March 2023: GBP0.2 million
release) and the release to the consolidated statement of
comprehensive income in relation to other receivables was GBP0.1
million (31 March 2023: GBP0.3 million charge). The Group has
calculated the expected credit loss by applying a forward-looking
outlook to historical default rates.
The Group monitors rent collection and the ability of tenants to
pay rent receivables in order to anticipate and minimise the impact
of default by tenants. All outstanding rent receivables are
regularly monitored. In order to measure the expected credit
losses, trade receivables from tenants have been grouped on a basis
of shared credit risk characteristics and an assumption around the
tenants ability to pay their receivable, based on conversations
held and our knowledge of their credit history. The expected credit
loss rates are based on historical payment profiles of tenant
debtors and corresponding historical credit losses.
30 September 31 March
2023 2023
GBPm GBPm
======================================================================== ============ ========
Opening loss allowance relating to trade receivables at 1 April 3.0 5.2
Increase / (decrease) in loss allowance recognised in the consolidated
statement of comprehensive income during the period / year in relation
to tenant debtors 0.9 (0.2)
Loss allowance utilisation (1.0) (2.0)
======================================================================== ============ ========
Closing loss allowance relating to trade receivables at 30 September/31
March 2.9 3.0
======================================================================== ============ ========
The restricted monetary asset relates to cash balances which the
Group cannot readily access. They do not meet the definition of
cash and cash equivalents and consequently are presented separately
from cash in the consolidated balance sheet.
17. Trade and other payables
30 September 31 March
2023 2023
GBPm GBPm
============================ ============ ========
Trade payables 2.0 2.6
Service charge liabilities* 7.6 9.8
Other payables 2.5 1.8
Accruals 13.5 9.0
Value Added Taxation 0.8 0.3
Rent received in advance 5.5 6.0
============================ ============ ========
31.9 29.5
============================ ============ ========
* Service charge liabilities includes accruals of GBP1.9 million
(31 March 2023: GBP1.9 million), service charge creditors and other
creditors of GBP3.5 million (31 March 2023: GBP4.8 million), Value
added taxation of GBP0.1 million (31 March 2023: GBP1.0 million)
and deferred income of GBP2.1 million (31 March 2023: GBP2.1
million).
18. Borrowings
30 September 31 March
2023 2023
Maturity of drawn bank borrowings : GBPm GBPm
==================================== ============ ========
Between four and five years 300.0 300.0
Less unamortised fees / discount (2.8) (3.3)
==================================== ============ ========
297.2 296.7
==================================== ============ ========
The fair value of the Group's corporate bond has been estimated
on the basis of quoted market prices, representing Level 1 fair
value measurement as defined by IFRS 13 Fair Value Measurement. At
30 September 2023 the fair value was GBP259.0 million (31 March
2023: GBP256.8 million).
Unamortised
facility
Facility fees /
Facility drawn discount
Unsecured borrowings: Maturity date GBPm GBPm GBPm GBPm
========================== ============== ======== ======== =========== =====
Revolving credit facility August 2024 125.0 - (0.4) (0.4)
Corporate bond March 2028 300.0 300.0 (2.4) 297.6
========================== ============== ======== ======== =========== =====
425.0 300.0 (2.8) 297.2
========================================= ======== ======== =========== =====
During the period the Group drew down GBPnil (31 March 2023:
GBPnil) of the revolving credit facility.
19. Share capital and reserves
Share capital
Held by Shares
Number Total EBT in issue
of shares Price No of No of No of
issued per share shares shares shares
Ordinary shares GBPm's pence (m) (m) (m)
=================================== ========== ========== ======= ======= =========
1 April 2022 310.3 2.1 308.2
Scrip dividends issued 1.0 0.86 311.3 2.1 309.2
Shares issued under employee share
schemes 0.6 - 311.3 1.5 309.8
Scrip dividends issued 0.6 0.78 311.9 1.5 310.4
Shares issued under employee share
schemes 0.1 - 311.9 1.4 310.5
=================================== ========== ========== ======= ======= =========
31 March 2023 311.9 1.4 310.5
Scrip dividends issued 1.0 0.89 312.9 1.4 311.5
Shares issued under employee share
schemes 1.1 - 312.9 0.3 312.6
30 September 2023 312.9 0.3 312.6
=================================== ========== ========== ======= ======= =========
All shares issued and authorised are fully paid up.
Shares held in Employee Benefit Trust (EBT)
As part of the scheme of arrangement and group reorganisation,
the Company established an EBT which is registered in Jersey. The
EBT, at its discretion, may transfer shares held by it to directors
and employees of the Company and its subsidiaries. The maximum
number of ordinary shares that may be held by the EBT may not
exceed 5% of the Company's issued share capital. It is intended
that the EBT will not hold more ordinary shares than are required
in order to satisfy share options granted under employee share
incentive plans.
There are currently 264,223 ordinary shares held by EBT (31
March 2023: 1,446,712).
20. Financial instruments and risk management
The Group's activities expose it to a variety of financial risks
in relation to the financial instruments it uses: market risk
including cash flow interest rate risk, credit risk and liquidity
risk. The financial risks relate to the following financial
instruments: trade receivables, cash and cash equivalents, trade
and other payables and borrowings.
Risk management parameters are established by the Board on a
project-by-project basis. Reports are provided to the Board
quarterly and also when authorised changes are required.
Financial instruments
30 September 31 March
2023 2023
GBPm GBPm
=============================================== ============ ========
Financial assets
Financial assets at amortised cost
Trade and other receivables 7.1 13.4
Cash and cash equivalents 137.3 108.6
================================================ ============ ========
Total financial assets and maximum exposure to
credit risk 144.4 122.0
================================================ ============ ========
Financial liabilities
At amortised cost
Borrowings (297.2) (296.7)
Lease liabilities (76.5) (76.7)
Payables and accruals (23.4) (20.0)
================================================ ============ ========
(397.1) (393.4)
=============================================== ============ ========
(252.7) (271.4)
=============================================== ============ ========
The fair value of the financial assets and liabilities at
amortised cost are considered to be the same as their carrying
value, with the exception of certain fixed rate borrowings, see
note 18 for further details. None of the financial instruments
above are held at fair value.
21. Contingencies and commitments
The Group has no material contingent liabilities (31 March 2023:
None). The Group was contractually committed to GBP0.9 million of
capital expenditure to construct or develop investment property as
at 30 September 2023 (31 March 2023: GBP1.8 million). In the prior
year, the Group also committed to a 5 year lease which has
commenced on 1 April 2022 with rent per annum of GBP0.3 million
Under the terms of the sale agreement to dispose of Hawthorn
dated 20 August 2021, the Group gave certain warranties, including
tax, relating to Hawthorn. A breach of warranty will only give rise
to a successful claim in damages if the buyer can show that the
warranty was breached and that the effect of the breach is to
reduce the value of Hawthorn at the date of disposal. Any tax claim
must be made within 6 years of completion, all other warranties
expired within a year of completion. No such claims have been
received.
22. Related party transactions
Transactions between the Company and its subsidiaries have been
eliminated on consolidation and are not disclosed in this note.
During the period the Company paid GBP0.5 million (30 September
2022: GBP0.7 million) in professional legal fees to CMS Cameron
McKenna Nabarro Olswang LLP for property services at commercial
market rates. Allan Lockhart, CEO of NewRiver, has a personal
relationship with one of the Partners at CMS who along with other
Partners provides these legal services.
The Group has loans with a joint venture of GBPnil (31 March
2023: GBP3.0 million) and loans with associates of GBP3.2 million
(31 March 2023: GBP3.2 million). During the period, the Group
received GBPnil (31 March 2023: GBP2.3 million) back from
associates in the form of shareholder loan repayments and repayment
of initial capital invested.
Management fees are charged to joint ventures and associates for
asset management, investment advisory, project management and
accounting services.
Total fees charged were:
30 September 30 September
2023 2022
GBPm GBPm
=================================== ============ ============
NewRiver Retail (Napier) Limited - 0.1
NewRiver Retail (Hamilton) Limited 0.1 0.1
NewRiver (Sprucefield) Limited 0.1 0.1
=================================== ============ ============
As at 30 September 2023, an amount of GBP0.1 million (31 March
2023: GBP0.3 million) was due to the Group relating to management
fees.
During the period, the Group recognised GBP0.2 million of
interest from joint ventures and associates (31 March 2023: GBP0.3
million) and as at 30 September 2023 the amount owing to the Group
was GBP0.2 million (31 March 2023: GBP0.2 million).
23. Post balance sheet events
On 16 November 2023, the Group announced that it had refinanced
its Revolving Credit Facility ("facility") into a new GBP100
million facility, with a GBP50 million accordion available subject
to lender approval. Maturity has been extended from August 2024 to
November 2026 with two one-year extension options also available
(subject to lender approval) which would extend the maturity
further to November 2028.
There were no other significant events occurring after the
reporting period, but before the financial statements were
authorised for issue.
ALTERNATIVE PERFORMANCE MEASURES (APMs) (Unaudited)
In addition to information contained in the Group financial
statements, Alternative Performance Measures ('APMs'), being
financial measures which are not specified under IFRS, are also
used by management to assess the Group's performance. These include
a number of measures contained in the 'Financial Statistics' table
at the beginning of this document. These APMs include a number of
European Public Real Estate Association ('EPRA') measures, prepared
in accordance with the EPRA Best Practice Recommendations reporting
framework. We report these because management considers them to
improve the transparency and relevance of our published results as
well as the comparability with other listed European real estate
companies.
The table below identifies the APMs used in this statement and
provides the nearest IFRS measure where applicable, and where in
this statement an explanation and reconciliation can be found.
APM Nearest IFRS measure Explanation and reconciliation
====================================== ====================================== ======================================
Underlying Funds From Operations (Loss) / Profit for the period after 'Underlying Funds From Operations'
('UFFO') and UFFO per share taxation section of the 'Finance Review'
EPRA Net Tangible Assets ('NTA') and Net Assets 'Balance sheet' section of the
EPRA NTA per share 'Finance Review'
Dividend cover N/A 'Financial Policies' section of the
'Finance Review'
Admin cost ratio N/A Note 6 of the Financial Statements
Interest cover N/A Note 3 of the 'Financial Statistics'
table
EPRA EPS IFRS Basic EPS Note 11 of the Financial Statements
EPRA NIY N/A 'EPRA performance measures' section of
this document
EPRA 'topped-up' NIY N/A 'EPRA performance measures' section of
this document
EPRA Vacancy Rate N/A 'EPRA performance measures' section of
this document
Total Accounting Return N/A Note 4 of the 'Financial Statistics'
table
Weighted average cost of debt N/A Note 9 of the 'Financial Statistics'
table
Weighted average debt maturity N/A Note 9 of the 'Financial Statistics'
table
Loan to Value N/A Note 10 of the 'Financial Statistics'
table
====================================== ====================================== ======================================
EPRA PERFORMANCE MEASURES
The information in this section is unaudited and does not form
part of the consolidated primary statements of the company or the
notes thereto.
Introduction
Below we disclose financial performance measures in accordance
with the European Public Real Estate Association ('EPRA') Best
Practice Recommendations which are aimed at improving the
transparency, consistency and relevance of reporting across
European Real Estate companies.
This section sets out the rationale for each performance measure
as well as how it is measured. A summary of the performance
measures is included in the following tables
HY24 HY23
================================================= ========= =====
EPRA Earnings Per Share (EPS) 3.6p 4.0p
EPRA Cost Ratio (including direct vacancy costs) 38.7% 37.2%
EPRA Cost Ratio (excluding direct vacancy costs) 35.5% 32.4%
================================================= ========= =====
September March
2023 2023
================================================= ========= =====
EPRA NRV per share 128p 134p
EPRA NTA per share 117p 121p
EPRA NDV per share 129p 135p
EPRA LTV 33.9% 37.0%
EPRA NIY 7.4% 7.6%
EPRA 'topped-up' NIY 7.8% 8.0%
EPRA Vacancy Rate 2.2% 3.4%
================================================= ========= =====
EPRA Earnings Per Share: 3.6p
Definition
Earnings from operational activities
P urpose
A key measure of a company's underlying operating results and an
indication of the extent to which current dividend payments are
supported by earnings
HY24 HY23
(GBPm) (GBPm)
========================================================== ======== ========
Earnings per IFRS income statement (2.6) 4.1
Adjustments to calculate EPRA Earnings, exclude :
Changes in value of investment properties, development
properties held for investment and other interests 11.6 10.3
Profits or losses on disposal of investment properties,
development properties held for investment and other
interests 2.2 0.6
Changes in fair value of financial instruments and - -
associated close-out costs
Acquisition costs on share deals and non-controlling - -
joint venture interests
Deferred tax in respect of EPRA adjustments - -
Adjustments to above in respect of joint ventures (unless
already included under proportional consolidation) (0.1) (2.5)
========================================================== ======== ========
EPRA Earnings 11.1 12.5
========================================================== ======== ========
Basic number of shares 311.3m 309.0m
========================================================== ======== ========
EPRA Earnings per Share (EPS) 3.6p 4.0p
========================================================== ======== ========
Reconciliation of EPRA Earnings to Underlying Funds From
Operations (UFFO)
HY24 HY23
(GBPm) (GBPm)
======================================== ======= ========
EPRA Earnings 11.1 12.5
Share-based payment charge 0.8 0.6
Forward-looking element of IFRS 9 0.4 -
Head office relocation costs - 0.5
Underlying Funds From Operations (UFFO) 12.3 13.6
======================================== ======= ========
Basic number of shares 311.3m 309.0m
======================================== ======= ========
UFFO per share 4.0p 4.4p
======================================== ======= ========
EPRA NRV per share: 128p; EPRA NTA per share: 117p; EPRA NDV per
share: 129p
Definition
Net Asset Value adjusted to include properties and other
investment interests at fair value and to exclude certain items not
expected to crystallise in a long-term investment property business
model.
Purpose
Makes adjustments to IFRS NAV to provide stakeholders with the
most relevant information on the fair value of the assets and
liabilities within a true real estate investment company with a
long-term investment strategy.
EPRA NRV EPRA NTA EPRA NDV
30 September 2023 (GBPm) (GBPm) (GBPm)
========================================= ======== ======== ========
IFRS Equity attributable to shareholders 367.7 367.7 367.7
Fair value of financial instruments (0.1) (0.1) -
Deferred tax in relation to fair value
gains of Investment Property 0.9 0.9 -
Fair value of debt - - 41.0
Purchasers' costs 36.8 - -
========================================= ======== ======== ========
EPRA NRV / NTA / NDV 405.3 368.5 408.7
========================================= ======== ======== ========
Fully diluted number of shares 315.7m 315.7m 315.7m
========================================= ======== ======== ========
EPRA NRV / NTA / NDV per share 128p 117p 129p
========================================= ======== ======== ========
EPRA NRV EPRA NTA EPRA NDV
31 March 2023 (GBPm) (GBPm) (GBPm)
========================================= ======== ======== ========
IFRS Equity attributable to shareholders 378.6 378.6 378.6
Fair value of financial instruments (0.6) (0.6) -
Deferred tax in relation to fair value
gains of Investment Property 0.9 0.9 -
Fair value of debt - - 43.2
Purchasers' costs 40.2 - -
EPRA NRV / NTA / NDV 419.1 378.9 421.8
========================================= ======== ======== ========
Fully diluted number of shares 312.7m 312.7m 312.7m
========================================= ======== ======== ========
EPRA NRV / NTA / NDV per share 134p 121p 135p
========================================= ======== ======== ========
EPRA LTV: 33.9%
Definition
EPRA LTV is the ratio of gross debt, net payables less cash and
cash equivalents to the aggregate value of properties. LTV is
expressed on a proportionally condensed consolidated basis.
Purpose
EPRA LTV introduces a consistent and comparable metric for the
real estate sector, with the aim to assess the gearing of the
shareholder equity within a real estate investment company.
Share of Share of
Group Joint Ventures Associates Total
30 September 2023 (GBPm) (GBPm) (GBPm) (GBPm)
======================================= ======= =============== =========== =======
Borrowings from financial institutions - - (4.0) (4.0)
Corporate bond (300.0) - - (300.0)
Net payables (21.6) 0.1 (0.2) (21.7)
Cash and cash equivalents 137.3 - 0.7 138.0
Net Debt (A) (184.3) 0.1 (3.5) (187.7)
======================================= ======= =============== =========== =======
Investment property at fair value 543.2 - 9.9 553.1
Total Property Value (B) 543.2 - 9.9 553.1
======================================= ======= =============== =========== =======
LTV (A/B) 33.9% 33.9%
======================================= ======= =============== =========== =======
Share of Share of
Group Joint Ventures Associates Total
31 March 2023 (GBPm) (GBPm) (GBPm) (GBPm)
======================================= ======= =============== =========== =======
Borrowings from financial institutions - (12.0) (4.0) (16.0)
Corporate bond (300.0) - - (300.0)
Net payables (14.5) (0.2) (0.3) (15.0)
Cash and cash equivalents 108.6 2.1 0.6 111.3
======================================= ======= =============== =========== =======
Net Debt (A) (205.9) (10.1) (3.7) (219.7)
======================================= ======= =============== =========== =======
Investment property at fair value 551.5 32.2 9.9 593.6
Total Property Value (B) 551.5 32.2 9.9 593.6
======================================= ======= =============== =========== =======
LTV (A/B) 37.3% 37.0%
======================================= ======= =============== =========== =======
EPRA NIY: 7.4%, EPRA 'topped-up' NIY: 7.8%
Definition
The basic EPRA NIY calculates the annualised rental income based
on the cash rents passing at the balance sheet date, less
non-recoverable property operating expenses, divided by the market
value of the property, increased with (estimated) purchasers'
costs.
In respect of the 'topped-up' NIY, an adjustment to the EPRA NIY
in respect of the expiration of rent-free periods (or other
unexpired lease incentives such as discounted rent periods and step
rents).
Purpose
A comparable measure for portfolio valuations to assist
investors in comparing portfolios.
30 September 31 March
2023 2023
(GBPm) (GBPm)
====================================================== ==== ============= ========
Properties at valuation - wholly owned 543.2 551.5
Properties at valuation - share of Joint Ventures
& Associates 9.9 42.1
Less : Developments (10.1) (10.2)
============================================================ ============= ========
Completed property portfolio 543.0 583.4
Allowance for estimated purchasers' costs and capital
expenditure 42.2 44.9
============================================================ ============= ========
Grossed up completed property portfolio valuation B 585.2 628.3
====================================================== ==== ============= ========
Annualised cash passing rental income 53.9 59.6
Property outgoings (10.5) (11.9)
============================================================ ============= ========
Annualised net rents A 43.4 47.7
Add: Notional rent expiration of rent free periods
or other lease incentives 2.2 2.4
============================================================ ============= ========
Topped-up net annualised rent C 45.6 50.1
====================================================== ==== ============= ========
EPRA NIY A/B 7.4% 7.6%
====================================================== ==== ============= ========
EPRA 'topped-up' NIY C/B 7.8% 8.0%
====================================================== ==== ============= ========
EPRA Vacancy rate: 2.2%
Definition
Estimated Market Rental Value (ERV) of vacant space divided by
ERV of the whole portfolio, excluding pub and development
assets.
Purpose
A 'pure' (%) measure of investment property space that is
vacant, based on ERV.
30 September 31 March
2023 2023
(GBPm) (GBPm)
=============================================== ==== ============= ========
Estimated Rental Value of vacant retail space A 1.1 1.8
Estimated Rental Value of the retail portfolio B 50.5 53.0
=============================================== ==== ============= ========
EPRA Vacancy Rate A/B 2.2% 3.4%
=============================================== ==== ============= ========
The EPRA vacancy rate is based on the ratio of the estimated
market rent for vacant properties versus total estimated market
rent, for the whole portfolio excluding properties under
development and any units that are not classified as retail. There
are no significant distorting factors influencing the EPRA vacancy
rate.
EPRA Cost Ratio (including direct vacancy costs): 38.7%
EPRA Cost Ratio (excluding direct vacancy costs): 35.5%
Definition
Administrative & operating costs (including & excluding
costs of direct vacancy) divided by gross rental income.
Purpose
A key measure to enable meaningful measurement of the changes in
a company's operating costs.
HY24 HY23
(GBPm) (GBPm)
===================================================== ==== ======= ========
Administrative/operating expenses per IFRS 9.6 8.8
Net service charge costs/fees 2.0 2.8
Management fees less actual/estimated profit element (1.2) (0.7)
Share of Joint Ventures and associates expenses
(net of other income) 0.2 0.2
Exclude (if part of the above):
Ground rent costs 0.2 0.4
EPRA Costs (including direct vacancy costs) A 10.8 11.5
Direct vacancy costs (0.9) (1.5)
=========================================================== ======= ========
EPRA Costs (excluding direct vacancy costs) B 9.9 10.0
Gross Rental Income less ground rents - per IFRS 26.8 28.9
Add: share of Joint Ventures and associates (Gross
Rental Income less ground rents) 1.1 2.0
=========================================================== ======= ========
Gross Rental Income C 27.9 30.9
===================================================== ==== ======= ========
EPRA Cost Ratio (including direct vacancy costs) A/C 38.7% 37.2%
===================================================== ==== ======= ========
EPRA Cost Ratio (excluding direct vacancy costs) B/C 35.5% 32.4%
===================================================== ==== ======= ========
In the current and prior period, employee costs in relation to
staff time on development projects have been capitalised into the
base cost of relevant development assets. The prior period costs
have been restated to include head office relocation costs of
GBP0.5 million.
Reconciliation of EPRA Costs (including direct vacancy costs) to
Net Administrative expenses per IFRS
HY24 HY23
(GBPm) (GBPm)
=================================================== ==== ======== ========
EPRA Costs (including direct vacancy costs) A 10.7 11.5
Exclude
Ground rent costs (0.2) (0.4)
Head office relocation costs - (0.5)
Share of Joint Ventures and associates property
expenses (net of other income) (0.1) (0.2)
Other operating income/recharges intended to cover - -
overhead expenses less any related profits
Net service charge costs (2.0) (2.8)
Operating expenses (excluding service charge cost) (3.7) (2.1)
Tenant incentives (0.1) (0.1)
Letting & legal costs (0.5) (0.6)
========================================================= ======== ========
Group's share of net administrative expenses as
per IFRS D 4.1 4.8
=================================================== ==== ======== ========
EPRA Gross Rental Income C 27.9 30.9
Ground rent costs (0.2) (0.4)
Expected credit (loss) / reversal (0.4) 0.8
Other income 0.4 1.4
========================================================= ======== ========
Property rental, other income and related income
as per IFRS E 27.7 32.7
=================================================== ==== ======== ========
Administrative cost ratio as per IFRS D/E 14.8% 14.7%
=================================================== ==== ======== ========
Property related capital expenditure and tenant incentives
(additional disclosure)
Six months ended Year ended
30 September 2023 31 March 2023
=========================================== ===========================
JVs & Group's JVs & Group's
Group Associates share Group Associates share
GBPm GBPm GBPm GBPm GBPm GBPm
=========================================== ===== =========== ======= ===== =========== =======
Acquisitions - - - - - -
Development 0.1 - 0.1 0.3 - 0.3
Investment properties
Incremental lettable space 2.3 - 2.3 1.9 - 1.9
Non incremental lettable space 0.8 - 0.8 0.8 0.8 1.6
Other material non-allocated types
of expenditure - - - - - -
Capitalised interest - - - - - -
=========================================== ===== =========== ======= ===== =========== =======
Total property related capital expenditure 3.2 - 3.2 3.0 0.8 3.8
=========================================== ===== =========== ======= ===== =========== =======
Conversion from accrual to cash basis (0.3) - (0.3) 0.8 (0.3) 0.5
=========================================== ===== =========== ======= ===== =========== =======
Total property related capital expenditure
on cash basis 2.9 - 2.9 3.8 0.5 4.3
=========================================== ===== =========== ======= ===== =========== =======
Glossary
Admin cost ratio: Is the Group's share of net administrative
expenses (including its share of JV administrative expenses)
divided by the Group's share of property income (including its
share of JV property income).
Associate: Is an entity in which the Group holds an interest and
is significantly influenced by the Group.
Average debt maturity: Is measured in years when each tranche of
gross debt is multiplied by the remaining period to its maturity
and the result is divided by total gross debt in issue at the
period end. Average debt maturity is expressed on a proportionally
consolidated basis.
Balance sheet gearing: Is the balance sheet net debt divided by
IFRS net assets.
BRAVO: Is BRAVO Strategies III LLC, with which NewRiver formed a
capital partnership in May 2019 to acquire and manage a portfolio
of retail assets in the UK.
Book value: Is the amount at which assets and liabilities are
reported in the financial statements.
Cost of debt: Is the loan interest and derivative costs at the
period end, divided by total debt in issue at the period end. Cost
of debt is expressed on a proportionally consolidated basis.
CVA: Is a Company Voluntary Arrangement, a legally binding
agreement that allows a company to settle debts by paying only a
proportion of the amount that it owes to creditors (such as
contracted rent) or to come to some other arrangement with its
creditors over the payment of its debts.
Dividend cover: Is Underlying Funds From Operations per share
divided by dividend per share declared in the period.
EPRA: Is the European Public Real Estate Association.
EPRA earnings: Is the IFRS profit after taxation excluding
investment property revaluations, fair value adjustments on
derivatives, gains/losses on disposals and deferred tax.
EPRA earnings per share: Is EPRA earnings divided by the
weighted average basic number of shares in issue during the
period.
EPRA Net Tangible Assets (EPRA NTA): Are the balance sheet net
assets excluding the mark to market on effective cash flow hedges
and related debt adjustments, deferred taxation on revaluations,
goodwill, and diluting for the effect of those shares potentially
issuable under employee share schemes.
EPRA NTA per share: Is EPRA NTA divided by the diluted number of
shares at the period end.
EPRA LTV: Is the ratio of gross debt, net payables less cash and
cash equivalents to the aggregate value of properties. LTV is
expressed on a proportionally consolidated basis.
ERV growth: Is the change in ERV over a period on our investment
portfolio expressed as a percentage of the ERV at the start of the
period. ERV growth is calculated monthly and compounded for the
period subject to measurement, as calculated by MSCI Real
Estate.
Estimated Rental Value (ERV): Is the external valuers' opinion
as to the open market rent which, on the date of valuation, could
reasonably be expected to be obtained on a new letting or rent
review of a property.
Footfall: Is the annualised number of visitors entering our
shopping centre assets.
Gross Asset Value (GAV): Is Gross Asset Value, the total value
of all real estate investments owned by the Company
Group: Is NewRiver REIT plc, the Company and its subsidiaries
and its share of joint ventures (accounted for on an equity
basis).
Head lease: Is a lease under which the Group holds an investment
property.
IFRS: UK-adopted International Accounting Standards
Income return: Is the income derived from a property as a
percentage of the property value.
Interest cover: Interest cover is tested at corporate level and
is calculated by comparing actual net property income received
versus net cash interest payable on a 12 month look-back basis.
Joint venture: Is an entity in which the Group holds an interest
on a long-term basis and is jointly controlled by the Group and one
or more ventures under a contractual arrangement whereby decisions
on financial and operating policies essential to the operation,
performance and financial position of the venture require each
joint venture partner's consent.
Leasing events: Are long-term and temporary new lettings, lease
renewals and lease variations within investment and joint venture
properties.
Like-for-like ERV growth: Is the change in ERV over a period on
the standing investment properties expressed as a percentage of the
ERV at the start of the period.
Like-for-like footfall: Is the movement in footfall against the
same period in the prior period, on properties owned throughout
both comparable periods, aggregated at 100% share.
Like-for-like net income: Is the change in net income on
properties owned throughout the current and previous periods under
review. This growth rate includes revenue recognition and lease
accounting adjustments but excludes properties held for development
in either period, properties with guaranteed rent reviews and asset
management determinations.
Long-term leasing deals: Are leasing deals with a fixed term
certain of at least one year.
Loan to Value (LTV): Is the ratio of gross debt less cash,
short-term deposits and liquid investments to the aggregate value
of properties and investments. LTV is expressed on a proportionally
consolidated basis.
Mark to market: Is the difference between the book value of an
asset or liability and its market value.
MSCI: MSCI Inc produces independent benchmarks of property
returns and NewRiver portfolio returns.
Net Equivalent Yield (NEY): Is the net weighted average income
return a property will produce based upon the timing of the income
received. In accordance with usual practice, the equivalent yields
(as determined by the external valuers) assume rent received
annually in arrears and on values before deducting prospective
purchaser's costs.
Net Initial Yield (NIY): Is the current annualised rent, net of
costs, expressed as a percentage of capital value, after adding
notional purchaser's costs.
Net rental income: Is the rental income receivable in the period
after payment of net property outgoings. Net rental income will
differ from annualised net rents and passing rent due to the
effects of income from rent reviews, net property outgoings and
accounting adjustments for fixed and minimum contracted rent
reviews and lease incentives.
NewRiver share: Represents the Group's ownership on a
proportionally consolidated basis.
Passing rent: Is the gross rent payable under leases terms.
Pre-let: A lease signed with an occupier prior to the completion
of a development.
Pre-sale: A sale exchanged with a purchaser prior to completion
of a development.
Property Income Distribution (PID): As a REIT the Group is
obliged to distribute 90% of the tax-exempt profits. These
dividends, which are referred to as PIDs, are subject to
withholding tax at the basic rate of income tax. Certain classes of
shareholders may qualify to receive the dividend gross. See our
website (www.nrr.co.uk) for details. The Group can also make other
normal (non-PID) dividend payments which are taxed in the usual
way.
Proportionally consolidated: The aggregation of the financial
results of the Reported Group and the Group's Share of net assets
within its joint venture and associates.
Real Estate Investment Trust (REIT): Is a listed property
company which qualifies for and has elected into a tax regime,
which exempts qualifying UK property rental income and gains on
investment property disposals from corporation tax.
Rental value growth: Is the increase in the current rental
value, as determined by the Company's valuers, over the 12-month
period on a like-for-like basis.
Retail occupancy rate: Is the estimated rental value of let
units expressed as a percentage of the total estimated rental value
of the portfolio, excluding development properties.
Risk-controlled development pipeline: Is the combination of all
development projects that the Company is currently pursuing or
assessing for feasibility. Our risk-controlled approach means that
we will not commit to a new development unless we have pre-let or
pre-sold at least 70% by area.
Tenant (or lease) incentives: Are any incentives offered to
occupiers to enter into a lease. Typically the incentive will be an
initial rent-free period, or a cash contribution to fit-out or
similar costs. Under accounting rules, the value of lease
incentives given to tenants is amortised through the Income
Statement on a straight-line basis to the lease expiry.
Total Accounting Return (TAR): Is the increase or decrease in
EPRA NTA per share plus dividends paid in the period, expressed as
a percentage of EPRA NTA per share at the beginning of the
period.
Total Property Return (TPR): Is calculated as the change in
capital value, less any capital expenditure incurred, plus net
income, expressed as a percentage of capital employed over the
period, as calculated by MSCI Real Estate (formerly IPD). Total
property returns are calculated monthly and indexed to provide a
return over the relevant period.
Topped-Up Net Initial Yield: Net initial yield adjusted to
include notional rent in respect of let properties which are
subject to a rent free period at the valuation date.
Underlying Funds From Operations (UFFO): is a measure of the
Company's operational profits, which includes other income and
excludes one off or non-cash adjustments, such as portfolio
valuation movements, profits or losses on the disposal of
investment properties, fair value movements on derivatives and
share-based payment expense.
Weighted average lease expiry (WALE): Is the average lease term
remaining to first tenant break, or expiry, across the portfolio
weighted by rental income. This is also disclosed assuming all
tenant break clauses are exercised at the earliest date, as stated.
Excludes short-term licences and residential leases.
Yield on cost: Passing rents expressed as a percentage of the
total development cost of a property.
Yield Shift: Is a movement (usually expressed in basis points)
in the equivalent yield of a property asset.
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END
IR NKBBPNBDBODB
(END) Dow Jones Newswires
November 23, 2023 02:00 ET (07:00 GMT)
Newriver Reit (LSE:NRR)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Newriver Reit (LSE:NRR)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
