NewRiver in Talks for £500m Retail Park Joint Venture

By Tim Burke and Shifali Gorka at Estates Gazette

NewRiver REIT is reigniting a search for a joint venture partner to invest in retail parks, with ambitions to build a new £500m portfolio.

Initial talks with potential partners last year slowed in the wake of the Budget, NewRiver chief executive Allan Lockhart (pictured) told Estates Gazette, but the company is now back in discussion with multiple parties.

“For retail parks, the investment case is compelling and the scale of the opportunity is significant,” Lockhart said, adding that he believes a team-up with a new partner could easily lead to a £500m “high-quality retail park portfolio”.

Any deal would likely be struck via the REIT’s capital partnerships arm, which has assets under management of £1.5bn across 21 shopping centres and 18 retail parks, with 14 partners.

Existing partnerships in that business include those with M&G Real Estate and PIMCO as well as local authorities including Canterbury City Council, Blackpool Council and Sefton Council.

Lockhart emphasised the need for a long-term partner. “Some of our partners in the past have been private equity,” he said, noting such firms’ investment turnarounds of as little as three to five years. “We’d like a partner who’ll be there for five to 10 years with the financial resources to build something of real scale.”

Lockhart said any JV is unlikely to be seeded with existing NewRiver assets. “Sometimes it’s better to start afresh… building something together from scratch,” he added.

In NewRiver’s latest results, for the year to 31 March, the company said that retail park investment in the UK had “surged” by 75% to £3.3bn in 2024, and Lockhart expects stiff competition to continue for the best assets.

The company described retail parks as playing “a crucial role in the evolving landscape of omnichannel retail with features such as free, surface-level parking, large standardised units and convenient access on key arterial routes, making these assets ideal for local fulfilment centres including click and collect, catering to consumers’ preference for flexibility and ease”.

Its retail park portfolio of 13 directly owned assets accounts for a fifth of its total portfolio, with an average value of £17.9m. Across the portfolio, leasing transactions last year completed at a fifth ahead of the valuer’s ERV and by a similar amount versus the previous passing rent. Its vacancy rate sits at just 3%, with a tenant retention rate at 100%.