7th Apr 2014 09:07
LONDON (Alliance News) - NewRiver Retail Ltd Monday said it has signed a deal to develop and lease a significant chunk of the pub sites portfolio that its BRAVO II joint venture bought last November.
In a statement, the retail property real estate investment trust said the deal covers 54 new convenience stores, which will be developed in a phased programme over two years and leased to The Co-Operative Group.
The rental income agreed varies between GBP15.00 a square foot and GBP17.50 a square foot. There is a standard lease length of 15 years with no break option and a retail price index-linked rentail increase, it said.
"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," it said in a statement.
"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," it added.
Under the deal, NewRiver could receive up to GBP2.7 million in incentive payments if vaious tranches of the redeveloped stores are completed on time.
NewRiver last November bought 202 pubs from Marston's for GBP90 million, with the primary intention of converting land and buildings to alternative use, principally into convenience stores. Marston's agreed to lease back the entire portfolio for a minimum term of up to four years for a total annual rent of GBP12.2 million, reflecting a net initial yield of 12.8%.
The company said the deal is conditional, but didn't give any details.
NewRiver Retail shares were up 2.1% at 290 pence Monday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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