NewRiver Retail CEO Puts Cash in U.K. Malls as Confidence Rises

NewRiver Retail's Templars Square Cowley Site | Source: NewRiver Retail

LONDON, United Kingdom — NewRiver Retail Ltd. invested in a 24th U.K. shopping center, convinced the property will generate reliable income even in hard times, its chief executive officer said. The real-estate owner’s shares are outpacing competitors.

“This is the most confident we have felt in our four-year history,” CEO David Lockhart said in an interview following the 50 million-pound ($76 million) acquisition this month of Hillstreet Shopping Centre in Middlesborough, England, about 250 miles north of London.

NewRiver focuses on medium-sized shopping centers, and has bought empty units and revived ailing malls. The London-based company had 440 million pounds of assets under management on March 31, including malls and other retail sites. Tenants include budget clothing chain Primark, grocer Tesco and pharmacy chain Boots.

“During the difficult years of economic crisis, we knew the non-discretionary shops sectors would perform well and that’s precisely what’s happened,” said Lockhart. “We have stores where the U.K. family spends its money week-in week- out.”

The company’s shares climbed 36 percent to 242.50 pence in the 12 months before today. Intu Properties Plc, the U.K.’s largest mall owner, advanced 4.5 percent in the period, while real-estate investor Hammerson Plc climbed 14 percent and British Land Co. rose 12 percent.

‘Recessionary Realities’

“NewRiver Retail has tended to select centers where the tenant composition is already very substantially adjusted to local and recessionary realities: heavily weighted to basic food/supermarkets and discount retailers,” Peel Hunt analysts including James Carswell said in a note.

The company has 38 percent of its assets in the more affluent southeast, according to its website. Yields are higher elsewhere in the country, said Lockhart. NewRiver generates property yields as high as 9.7 percent, according to the CEO.

The company raised 67 million pounds in an oversubscribed share sale last month and used part of the cash for the Hillstreet center, in which it has a 50 percent stake.

“NewRiver’s management are running it very well,” Carswell said in a phone interview. He recommends buying the shares and has a target price of 257 pence.

Lockhart said that U.K. retail is much more resilient than people think. “The consensus seems to be things are beginning to pick up,” he said.

Retail sales including fuel rose 0.2 percent last month from May, when they gained 2.1 percent. It was the first consecutive monthly increase since July 2012, according to the Office for National Statistics.

By: Alex Pashley;Editors: Robert Valpuesta, Jeffrey St.Onge.