NewRiver Retail, the UK specialist REIT focused on the retail sector, announces that it has completed the acquisition of a major portfolio of five UK shopping centres from the CPI Retail Active Management (CReAM) fund. The portfolio was acquired in an off-market deal for approximately £53 mln (EUR 63 mln), or a net initial yield of 8.35%.

NewRiver Retail, the UK specialist REIT focused on the retail sector, announces that it has completed the acquisition of a major portfolio of five UK shopping centres from the CPI Retail Active Management (CReAM) fund. The portfolio was acquired in an off-market deal for approximately £53 mln (EUR 63 mln), or a net initial yield of 8.35%.

The acquisition has been financed by a £34.58 mln facility, provided by HSBC, a new banking relationship to NewRiver. The outstanding equity requirement of approximately £19 mln has been provided by the proceeds of the issue of a convertible unsecured loan to Forum and Spearpoint, as announced in October.

With a total approximate lettable area of 518,000 sq ft, the five shopping centres are located across the UK in: Bramley in Leeds, Burgess Hill in West Sussex, Erdington in Birmingham, Fareham in Hampshire and Wallsend in the Newcastle upon Tyne area.

The portfolio offers a weighted average lease expiry profile of 6.74 years and the current rental levels within the portfolio range from £25 to £47.50 Zone A.

Commenting on the acquisition, Allan Lockhart, Executive Property Director of NewRiver, said: 'We are delighted to have been able to complete the acquisition of this major portfolio of five shopping centres off market and at an attractive cost of £53 mln which represents a discount of circa 32%. to the last time this portfolio was traded in the market in 2005 at a price of £78.1 mln and a 42% discount to the portfolio’s peak value of £92 mln in December 2006.'

Lockhart said he was 'highly confident' that the portfolio will exceed NewRiver’s minimum total return target of 15%. given the attractive entry price, the low interest cost and the significant pre-identified active asset management opportunities. 'Following this acquisition, NewRiver will have acquired approximately £150 mln of retail assets in the last 12 months and demonstrates NewRiver’s continuing ability to source attractive deals that compliment the Company’s disciplined and well researched investment strategy.'