NewRiver Retail Limited, the UK REIT specializing in value-creating retail property investment and active asset management, announces that it has completed the acquisition of the Hillstreet Shopping Centre in Middlesbrough.
NewRiver and LVS II Lux IV S.a.r.l. have each taken a 50% equity stake in this acquisition and the partnership will benefit from projected high yielding income returns which are expected to deliver a double digit annual recurring return on equity.
The acquisition supports the Company's stated intention to efficiently deploy the proceeds of its recently oversubscribed £67 million equity fundraise and the center is NewRiver's largest single asset acquisition to date.
The center is a covered, single level shopping complex comprising 224,000 ft² (approx. 20,810 m²) of retail accommodation and a 753 space car park. NewRiver has acquired the center from a UK institution for a total consideration of £49.4 million (approx. €57.25 million), reflecting an attractive net initial yield of 9.6%.
The Hillstreet Shopping Centre offers an attractive weighted average lease expiry of approximately nine years and is anchored by leading European and national retailers Primark, Debenhams and Marks & Spencer with other key tenants including Sports Direct, Home Bargains, Superdrug and Argos. This popular north east shopping center enjoys annual footfall of approximately 12.6 million ensuring high occupancy, currently at 98%.
In line with NewRiver's proven business strategy, the Company has identified extensive asset management opportunities to unlock additional value including potential improvement of the entrances, increased commercialization initiatives and potential reconfiguration of units within the center. The company is funding its share of the purchase out of cash resources from the placing proceeds and the joint venture has agreed a new debt facility from a leading UK lending bank.
David Lockhart, Chief Executive of NewRiver Retail, said: "The Hillstreet centre is our largest acquisition to date and demonstrates NewRiver's ability to deploy the proceeds of the recent fundraise effectively and efficiently. We are also delighted to have the support of our joint venture partner LVS, to help facilitate our expansion. The acquisition enhances our diverse retailer portfolio and provides significant opportunity to unlock additional value in the Centre underpinned by a robust cashflow.
"The landmark acquisition is a testament to our ability to source and complete high yielding, income generating opportunities in order to drive long term shareholder value. The retail sector is pivotal to the UK economy and provides significant opportunities for NewRiver to continue its strong growth."
Source: NewRiver Retail