A major retail landlord with a national portfolio of shopping centres has pointed to the positive impact of business rate relief ahead of a “challenging” year for the industry.
NewRiver, a real estate investment trust, prioritises affordable rents for tenants providing “essential goods and services,” leaving it well-placed to deal with the pressures faced by consumers dealing with the cost-of-living crisis.
The top three occupiers of space in its outlets are B&M, Primark and Poundland, and it is also home to chains including Boots and Superdrug. It owns centres across the UK, including Bexleyheath in London and Burgess Hill in West Sussex, as well as in Hastings and Newtonabbey in Northern Ireland.
Allan Lockhart, its chief executive, told The Standard that some assistance was on the way after a “very challenging time for retail” over the last two-and-a-half years, and ahead of the prospect of a “lengthy but shallow recession”,
“There is a tailwind coming through around business rates, from the government, it’s very helpful that they have got rid of the cap on downward transition, so tenants who are receiving a reduction are going to receive it immediately from April next year.”
He added that the average reduction for NewRiver tenants would be 19%, which was “really helpful” as businesses face wider cost increases.
The company, which is based in Charlotte Street, reported retail underlying funds from operations of £13.6 million in the first half, up from £12.8 million in the same period a year ago. It lifted its payout to investors by over 6% to 3.5p per share. Interim rent collection levels reached 97% up from 90% last year.
“We’ve always focused on rental affordability,” said Lockhart. “What sustains rents in the long run is if tenants can afford those rents and trade properly … We should be resilient next year and the financial impact of a recessionary environment should be relatively minimal.”
NewRiver also intends to redevelop some of its centres in the South East to include less retail space and more residential development, a strategy that works where house prices are higher. It is seeking planning permission to demolish its centre in Grays in Essex, where it has plans for 900 new homes.
Lockhart said such schemes were “much easier in the London area,” because “house prices are at a level that makes the projects viable.”