Hill Dickinson has advised NewRiver Retail, one of the UK’s leading REITs and the UK’s third largest owner of shopping centres, on the leasing of 54 public houses (pubs) to The Co-Operative Group for its convenience stores format. The pubs were part of the public house portfolio which was acquired last year by NewRiver Retail in their joint venture partnership with a fund managed by Pacific Investment Management Company.
Advised by Tim Richards, Abby Dry and Alan Pugh in Hill Dickinson’s property and construction team, the deal sees a conditional agreement on the leasing of 54 new convenience stores from the public house portfolio, the development of which will be carried out by NewRiver Retail in a phased programme over two years.
The Co-Operative Group has signed a 15 year lease with no break options and RPI-linked rental increase. The rental income agreed varies from £15 per sq ft to £17.50 per sq ft.
The deal will see NewRiver develop almost 200,000 sq ft of new convenience stores, undertaking all planning, development and contract requirements to deliver the end product to The Co-Operative Group. It is expected that the majority of the completed assets will be delivered within two years. Finished unit sizes, each with appropriate car parking, will range from 3,000 sq ft to 4,500 sq ft which allow for stores to be open seven days a week.
On the deal, Abby Dry, Partner, Hill Dickinson, commented: “We are delighted to have advised NewRiver Retail on another high profile deal. NewRiver Retail has been a client of Hill Dickinson for almost 5 years, since their inception, and it is fantastic for us to be a part of the company’s acquisition and growth strategy. We are pleased to be able to continue to demonstrate our expertise in dealing with complex leasing agreements in this latest deal with The Co-Operative.”
The deal follows the announcement in November last year that NewRiver Retail had acquired the £90m portfolio of 202 public houses from Marton’s with the primary intention of conversion of land and buildings to alternative use, principally into convenience stores. Hill Dickinson advised NewRiver Retail on this deal.
On the deal, Allan Lockhart, Property Director at NewRiver Retail, said: “We are delighted to complete this unique and innovative portfolio leasing agreement with The Co- operative Group in less than five months since NewRiver acquired the 202 pub portfolio from Marstons Plc. NewRiver has efficiently delivered on its stated intention to identify viable demand from major food store operators to expand their convenience store portfolios.
The agreement is a prime example of how NewRiver’s successful strategy of strong retailer relationships, active asset management and risk-controlled development generates significant value through the creation of institutional investment class assets.
“From acquisition through to today's announcement, NewRiver has received our usual high quality legal advice from Abby Dry and Tim Richards of Hill Dickinson whilst ensuring a smooth and fast transaction with the Co-operative Group”
This latest deal comes on the back of three other high profile transactions which Hill Dickinson advised NewRiver Retail on last year, including; the acquisition of the Hill Street Centre in Middlesbrough, the St. Elli Centre in Llanelli, Carmarthenshire, and Gloucester Green in Oxford from insurance group Axa for a total sum of £34.3 million and the acquisition of The Beacon Centre in North Shields, as part of a portfolio of three shopping centres for a total consideration of £23 million.
Hill Dickinson has advised NewRiver Retail on £200m of acquisitions in the last six months of 2013 including the acquisition of the Portfolio of 202 pubs from Marston’s. Hill Dickinson have also been retained to advise on further leasing opportunities, planning and construction for the pub portfolio.
