UK REIT NewRiver has seen its portfolio shed over 12% of its value in the full year ending March 31 this year, driven by a 70 bps yield expansion and the impact Covid-19.
The firm, which specializes in retail and leisure assets in the UK, said regional shopping centres and high street assets dropped over 17% of their value, with London shopping centres holding up, with a decline of just 5%.
‘We are reporting these results against an extraordinary market backdrop, as COVID-19 continues to cause significant disruption for occupiers in our key markets,’ said CEO Allan Lockhart.
‘Our portfolio is focused on essential retail and convenience, and has proved resilient through the last three months as over one third of our tenants continued to trade.
'As a consequence of previous portfolio reshaping, we have limited exposure to department stores, mid-market fashion and casual dining.’
In the coming year the firm plans to accelerate changes to its portfolio ‘to create assets that are best in class and relevant to the changing nature of retail’.
‘The structural changes in UK retail that were already underway have been accelerated by Covid-19,’ Lockhart said.
‘It is clear that much existing retail space in the UK needs to be repurposed and we have been at the forefront of creating this change through developing mixed-use schemes in town centres.’
As such, NewRiver has already undertaken an ‘alternative use value review’ across its entire retail portfolio factoring in demolition costs, construction costs and a development profit to calculate the value of the next best alternative use for its retail assets.
‘Due to our assets being predominantly located in town centres, the vast majority of the alternative use potential relates to residential development,’ NewRiver said.
The company, which suspended dividend payments for the time being, has reported an IFRS loss after tax of -£121 mln over the year, down from £36.9 mln a year earlier.
It has collected just 52% of quarterly payments due June 1, with another 23% due to be collected through alternative payments agreed with retailers.
