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Fresh acquisition for NewRiver

NewRiver Retail has raised £75m to buy out one of its joint ventures
December 4, 2014

NewRiver Retail (NRR) has raised £75m through an accelerated bookbuild at 275p a share aimed at institutions and some existing shareholders, and the placing has not been structured as an open offer. The proceeds will be used to buy the 90 per cent held by joint venture partner LVS Luxembourg - a subsidiary of PIMCO Bravo Fund - in the NewRiver Retail Property Unit Trust, at a cost of £71m.

IC TIP: Buy at 295p

The joint venture was originally formed in 2012, and comprises five shopping centres and a single high-street store, which together have a net lettable area of around 1m sq ft across 200 tenancies, with an outstanding average lease of 7.2 years.

NewRiver's existing 10 per cent share has performed well, and the acquisition will allow NewRiver to generate greater value through a number of development initiatives, as well as leasing out remaining voids.

The acquisition represents a net initial yield of 7.75 per cent, and NewRiver will take on £43m of debt secured against the portfolio. Recurring pre-tax profits on the five assets was £6.3m in the year to December 2013, which implies a return on equity of around 8 per cent for NewRiver.