The statement also said that in October 2018, NewRiver disposed of 22 community pubs let on 15-year leases to Marston’s for £14.8m, representing a net initial yield (ratio of net rental income and gross purchases price of a property) of 5.6% in December 2018.
It then recycled part of the proceeds into the acquisition of 76 community pubs from Star Pubs & bars for £12m, representing a net initial yield of 17.1%.
In November, NewRiver disposed of a supermarket in East Ham, Greater London, for £7.7m (NewRiver share of £3.8m), representing a net initial yield of 4.9%.
In December 2018 and January 2019, it disposed of four Co-op convenience stores for £4.8m, a net initial yield of 5%.
Integration
The company also revealed the Hawthorn Leisure integration would be complete by the end of this month (January). NewRiver acquired the 298-strong portfolio of Hawthorn sites in May 2018 for £106.8m.
The integration means funds from operations will then benefit from £2m of the £3m synergies identified at the time of acquisition including the £1.7m through supply contract renegotiations and a further £300,000 unlocked in this third quarter. The remaining £1m to following in the 2020 financial year.
Hawthorn’s portfolio is trading well, with like-for-like earnings before interest, taxation, depreciation and amortisation (EBITDA) per pub up 0.8% in the third quarter.
It was also up by 4.3% in the two weeks to 31 December 2018, while beer volumes were up by 10.2% in the same period.
In addition there was the opening of the first community pub in a NewRiver shopping centre, with the launch of the Keg & Kitchen, at The Ridings shopping centre in Wakefield, West Yorkshire, operated by Hawthorn Leisure.
Solid quarter
NewRiver chief executive Allan Lockhart said: “NewRiver has had a solid third quarter as evidenced by the robust operating metrics across our retail and pub portfolio.
“Pleasingly, we completed the construction of our largest pre-let retail development to date at Canvey Island Retail Park in Essex and continued our programme of capital recycling on terms 2% ahead of March 2018 valuations.
“The integration of Hawthorne Leisure is on track to complete later this month, and we have made excellent progress towards realising the £3m of synergies identified at the time of acquisition, as well as leveraging Hawthorn Leisure’s pub operating expertise across our wider retail portfolio.
“NewRiver’s portfolio of wet-led community pubs now accounts for more than 20% of our total assets, adding further diversification to our income stream.
“Looking ahead, we expect the retail sector to continue to face headwinds in the near term, particularly in the development store and mid-market fashion sub-sectors, which we have consistently avoided.
“We are confident our focus on the resilient sub-sectors of food and grocery, discounters, value fashion and beauty, and community pubs is the right strategy as evidenced by the solid Christmas trading performance recently reported by our key occupiers.”