NewRiver makes €150m of UK acquisitions

UK REIT NewRiver Retail has exchanged contracts to acquire an off-market portfolio of 202 public houses from brewer-pub owner Marston's for £90 mln (€108 mln).

NewRiver said that it intends to convert the majority of the assets to retail accommodation, having already received strong interest from the UK's major convenience store operators and supermarket groups.

'NewRiver believes it will be able to pre-let significant tranches of the portfolio to the major supermarket groups before conversion,' the company said in a statement.

As part of the agreed terms of the acquisition, Marston's has entered into a minimum four-year term leaseback agreement (extendable to five years) during which time it will continue to manage and operate the portfolio as public houses. Marston's will pay annual rent of £12 mln, reflecting a net initial yield of 12.8% on the purchase price.

In a separate transaction, the Aim-listed REIT said it has exchanged conditional contracts to acquire the St. Elli centre in Llanelli, Carmarthenshire, and Gloucester Green in Oxford for a total sum of £34.3 mln, equating to a net initial yield of 7.78% from insurance group Axa.

The acquisition is being funded through the company's joint venture with the Bravo II partnership, a fund advised by Pacific Investment Management Company. Both parties are taking a 50% equity stake in the acquisition.

St. Elli shopping centre, a covered 160,000 sq ft centre at the heart of Welsh market town Llanelli, has been acquired on a predominantly freehold basis for £29.2 mln, reflecting a net initial yield of 7.5%. The centre is anchored by a 70,000 sq ft Asda supermarket. The centre benefits from a high occupancy rate of 98% and offers 450 car park spaces.

The acquisition is in line with the company's stated intention to deploy the proceeds of its oversubscribed £67 mln equity fundraise, completed in July 2013.

Allan Lockhart, property director of NewRiver Retail, said: 'Both assets will provide NewRiver with sustainable and attractive cash on equity returns with excellent prospects for capital returns through pre identified asset and development management initiatives.'