Commercial landlord Newriver Reit, a specialist listed investment trust, has focused on buying distressed property assets, primarily at smaller retail and leisure venues. The company with property valued in March at over £1bn is currently market capitalised at around £200m. It owns 33 smaller shopping centres, 25 retail warehouses, 14 high street units and over 700 public houses and is listed on the London Stock Exchange.
The company says it has collected 60 per cent of its retail rent due on the last quarter-day, back in June, a better collection record than many other retail landlords. It also expects to collect more overdue rent through deferrals and negotiated rescheduled payment plans, which will amount to a further 20 per cent.
A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate on the mutual fund model, where numerous investors stake their capital. This makes it possible for individual investors to earn dividends and capital growth from real estate investments, without having to invest directly in commercial property, and manage it themselves.
Newriver owns smaller shopping centres focusing on convenience and discount stores; shops which have generally traded better than some of the large stones through Covid. Hence, their shops have maintained a comparatively strong level of rent collection during lockdown.
By contrast Intu, owner of the Trafford Centre, went into administration in June, Hammerson, owner of the Bullring shopping centre in Birmingham currently going through a major restructuring, says it has collected just 34 per cent of its rent due for the last quarter, and Capital & Counties, owner of a large Covent Garden property estate in the West End, collected only 30 per cent.
New River has avoided some of the worst of the pandemic because it has focused on lower profile retail areas and has avoided the hard-hit large department stores, fashion and restaurant chains. Its tenants mainly include the smaller local convenience grocery and discount shops, value clothing retailers, coffee and takeaway outlets, banks, health and beauty outlets and budget gym operators.
Footfall in these local locations, to a large extent, continued through lockdown, and since the lifting of lockdown shopper numbers have risen sharply. The company told The Times newspaper that in early August footfall was up 132 per cent on lockdown, but it is still 32 per cent below the same period last year.
Meanwhile, London based Workspace PLC, the £1bn market capitalised provider of small workshops and offices, had cut its rents cuts rents by 50% to help struggling tenants through coronavirus crisis when lockdown started: “We appreciate that for many customers this will only be the start of a very challenging time”, Workplace PLC said at the time.
The flexible workshop and office space provider said the restrictions on movement has had a material effect on its business, with a large number of requests from customers for rent relief. Tenants in its business centres were heavily affected by lockdown and got the rent reduction for the duration of the restrictions.
Graham Clemett, Workspace’s chief executive, said at the time of lockdown:
“This is a very challenging time for all businesses, with many suffering immediate and significant reductions in income and adverse cashflow.
“While the government is providing a number of options to help businesses through this period, we have also been exploring ways of supporting our customers.
“We appreciate that for many customers this will only be the start of a very challenging time, and it is right that we share that burden with customers.”
Workspace maintained the rent reductions though until the end of June for three quarters of its tenants and is still providing help for some.
Despite corporate insolvencies having fallen by a third last month because businesses are continuing to receive government support, experts are warning of a tough time ahead for most businesses, especially those in the retail space. Official figures show there were 955 insolvencies in England and Wales in July, down 34 per cent on the same month last year.
The financial support and the fact that the courts are working on a reduced schedule means that there is far less enforcement action that usual, but the economy could be heading for a cliff edge on insolvencies once the support comes to and end.