NewRiver REIT has reported impressive financial outcomes for the fiscal year 2026, demonstrating significant progress in its strategic objectives. The company's results highlight a notable increase in earnings, consistent dividend growth, and a successful repositioning of its investment portfolio. These achievements are largely attributed to the effective integration of the Capital & Regional acquisition, which has bolstered NewRiver's operational capabilities and financial health. The firm's management emphasizes that these results are not merely short-term gains but rather an indication of a more focused and robust portfolio, primed for sustained income-driven expansion.
During the recent earnings call, CEO Allan detailed the company's strong performance, noting that the fiscal year marked a pivotal period for expanding NewRiver's operational scale and enhancing its portfolio composition. Underlying funds from operations (UFFO) surged to GBP 37.2 million, while dividends per share increased to GBP 0.067. The company also achieved a leading total accounting return of 9.4%, a testament to its strategic direction. Allan underscored that this success stems from a deliberate effort to create a portfolio focused on income-led growth, with the Capital & Regional integration playing a crucial role in this transformation.
The integration of Capital & Regional assets was completed smoothly, without causing any operational disruptions. This acquisition significantly altered NewRiver's portfolio, increasing its exposure to London retail to 43% of the total balance sheet. CFO Will Hobman confirmed that all post-acquisition activities, including integrating assets into NewRiver's platforms and systems, were finalized. The company also realized GBP 6.2 million in administrative cost synergies ahead of schedule. Furthermore, NewRiver demonstrated prudent financial management by refinancing the Mall facility, which is set to mature in January 2027, and executed a GBP 110 million asset sale at book value, alongside a GBP 36 million share buyback to facilitate Growthpoint's exit.
NewRiver's operational strength was further evidenced by robust leasing activity across its properties. Rents agreed during the year were 37.3% higher than previous passing rents and 8.5% above estimated rental values, showcasing the company's strong pricing power. Over the past four years, NewRiver has completed leasing for more than 3.6 million square feet, consistently exceeding both ERV and prior rental rates. The tenant mix is strategically diversified, focusing on essential and high-frequency visit categories such as groceries, food-to-go, services, health, and well-being, thereby mitigating tenant concentration risks. The occupational cost ratio declined to 7.8%, reflecting reduced business rates for tenants and increased consumer spending.
The company has significantly repositioned its portfolio over the last three years, expanding its value by over GBP 200 million and increasing London retail exposure from 12% to 43%. Currently, 75% of the portfolio is concentrated in key high-conviction areas: London retail, major UK cities, and retail parks. Management has defined 96% of its portfolio as 'core,' prioritizing locations with strong leasing liquidity and rental growth potential. NewRiver remains optimistic about these focus areas, anticipating continued rental income growth. The balance sheet has also been strengthened through refinancing, with loan-to-value (LTV) reducing to 40% from 42%, aligning with guidance. A new GBP 240 million unsecured facility was secured, improving liquidity and extending the maturity profile, while Fitch reaffirmed NewRiver's investment-grade credit ratings.
Looking forward, NewRiver anticipates continued dividend growth, primarily driven by rental increases over the next three years. The UFFO per share rose to GBP 0.083, supporting the company's dividend policy, with the FY 2026 dividend increasing by 3% to GBP 0.067 per share. The capital partnerships business also showed significant growth, managing over GBP 2 billion in assets and approximately GBP 200 million in rent roll, contributing to capital-light earnings growth. NewRiver aims for an annual total accounting return of 9% to 11% through FY 2029, underpinned by disciplined capital management, strong leasing performance, and a progressive dividend policy.
