NewRiver Retail, the UK REIT which owns 360 pubs, has said that its public house portfolio benefitted from considerable gain in the preceding year and is now producing steady valuation and income growth.
It said that like-for-like valuation growth for the portfolio was £2m, equating to a 1.7% increase to £161m, driven by like-for-like income growth of 0.7%.
It said it had successfully completed and handed over its first three convenience stores to the Co-Operative, the first of which opened for trade in February 2016. The stores were delivered on time and within budget utilising surplus land adjacent to the existing pubs.
The annual rent for the first Co-Operative store is £73,000 pa on a 15-year lease across 4,173 sq ft NewRiver is on site for the construction of a further five. As at 31 March 2016, it had secured planning approval for 26 convenience store sites.
The company said that value-creating residential development continued to progress well within its pub portfolio with the submission of a total of 30 residential planning applications for the creation of up to 150 units.
Of these, eight consents have been granted to provide up to 28 residential units, a combination of one and two bedroom apartments, as well as detached and semi-detached houses.
During the year, the company completed two pub sales to a tenant and a special purchaser, these include The Railway Hotel in Chorley and the Bridge Inn in Wasdale at an aggregate price of £1.4m.
It said it had also concluded non-core sales of ancillary properties and land which we do not consider to be integral to the ongoing operational and strategic management of the assets.
Of its portfolio of 158 Punch Taverns pubs, the company said: “The Mantle Portfolio comprised an estate of 158 pubs located across England and Wales which was acquired from Punch Taverns for a total consideration of £53.5 million which equates to a net initial yield of 13.61%. Once leveraged the cash-on-cash equity return will be in excess of 20%. The portfolio comprises 340,000sq ft of total internal gross area, 1.8 million sq ft of total site area, 1,730 car parking spaces and has an estimated reinstatement value of £146 million. The quality and stability of the portfolio was reflected in it being 99.4% let and effectively 100% let for the last four years. The revenue arrears are negligible and beer volumes have increased by 2.24% per annum, compound, over the last four years.
“Significant asset management and development opportunities present themselves including unlocking and creating capital growth through the introduction of new and complementary uses, as well as offering existing occupiers longer, more sustainable leases.”
David Lockhart, chief executive at NewRiver Retail, said: “The year under review has been truly transformational, delivering record financial results and significantly increasing all operations across the business. The scale of the business has grown exponentially and is now of a size befitting a FTSE250 Main Market company where we intend to be later this year as we move from AIM. Importantly, NewRiver has again demonstrated its ability to swiftly deploy new equity and debt capital to acquire strategic income producing assets, supporting our progressive quarterly dividend policy. The Company has significant further growth potential and we look forward to the future with great excitement and confidence.”
