NewRiver Retail Limited, the UK REIT specialising in value-creating retail property investment and active asset management, has signed a conditional agreement to lease a significant element of the public house portfolio acquired for £90 million by NewRiver on 28 November 2013 to The Co-operative Group Limited.
Highlights
- Conditional agreement to lease 54 new convenience stores (“C-Store”) from public house estate
- Phased development programme over two years creating almost 200,000 sq ft of new retail space
- Rental income agreed varies from £15.00 per sq ft to £17.50 per sq ft
- Institutional quality standard lease length of 15 years with no break option and RPI-linked rental increase
- Incentivised completion programme realising up to £2.7 million in additional proceeds
- Efficient delivery of NewRiver’s stated plan to identify viable demand from major food store operators for C-Store portfolios
Majority to be new build projects
Under the Agreement, NewRiver has agreed to lease a portfolio of 54 new C-Store across the UK to The Co-operative Group. The majority will be new-build projects constructed on surplus land adjacent to the existing public houses. The remaining part of the Portfolio will be conventional conversions from public house use to C-Stores, or redeveloped as standalone convenience retail stores.
NewRiver will undertake all planning, development and contract requirements to deliver the end product to The Co-operative Group. It is expected that the majority of the completed assets will be delivered within two years.
In total, NewRiver is developing almost 200,000 sq ft of new C-Store space for The Co-operative Group. Finished unit sizes, each with appropriate car parking, will range from 3,000 sq ft to 4,500 sq ft which allow for stores to be open seven days a week.
Importantly, as the majority of the Portfolio will utilise surplus land (car parking, under-utilised garden space) a number of the public houses will continue to operate in their original format, maintaining a high yielding rental income.
In November 2013, NewRiver announced its £90 million acquisition of a portfolio of 202 public houses from Marston’s with the primary intention of conversion of land and buildings to alternative use, principally into convenience stores. At completion Marston’s agreed through a leaseback arrangement to lease the entire portfolio for a minimum term of up to four years for a total annual rent of £12,235,000, reflecting a net initial yield of 12.8%.