NewRiver REIT plc Half Year Results

Allan Lockhart, Chief Executive commented: "During the first half we have continued to deliver the positive operational momentum which has been building consistently over the last 2 years.

Our occupational market today is in the best position it has been for five years. As a result, we have seen active demand for space which has led to our occupancy increasing to almost 98%, the highest level we have recorded since NewRiver was founded in 2009 and a tenant retention rate at lease expiry or break of 98%. Importantly our leasing transactions were positive versus ERV and previous passing rent. Our operations are supported by the strength of our balance sheet position, with an LTV of 29.5%, £138 million of cash available, a newly extended Revolving Credit Facility and no refinancing requirement until 2028.

For some time now, we have deliberately built up our cash position in anticipation of securing the right opportunities to deliver compelling returns and, encouragingly, growth opportunities are now starting to emerge. In the meantime, so that our shareholders receive benefit as we wait to deploy, we have taken the decision to temporarily increase our dividend payout, resulting in a comfortably covered first half dividend of 3.4 pence per share."

Financial Position Strengthened Further

This announcement has been authorised for release by the Board of Directors.

Results presentation

The results presentation will be held at 10.30am today, 23 November 2023, at DL/78, 78 Charlotte Street, London, W1T 4QS.

A live audio webcast of the presentation will be available at:

Chief Executive's Review

Our operational performance in the first half of the financial year has been excellent with our occupancy increasing to 98%, the highest position since NewRiver was founded in 2009, a leasing retention rate of 98% and another reporting period of leasing ERV outperformance and rent secured above the previous passing rent.

Our consistently strong operational performance is reflective of our portfolio positioning, focused on essential goods and services offering consumers value for money, and the quality of our asset management platform. It is also a result of the retail occupational market being in its best position for at least five years.

Whilst UK real estate capital markets continue to be disrupted by increased interest rates, we continue to outperform our MSCI benchmark due to the stability of our rental cashflows, our portfolio yield premium to the 10 year Gilt and the average capital size of our assets being more aligned with the liquidity in the market. Our portfolio delivered a modest like-for-like valuation movement of -2.0% with the negative movement concentrated in our Regeneration asset in Bexleyheath. Importantly, our Core Shopping Centres and Retail Parks delivered valuation growth of 0.7% and 0.2% respectively. As a result of the valuation movement, our EPRA Net Tangible Assets (NTA) per share at the half year was 117 pence versus 121 pence at 31 March 2023.

Our balance sheet remains in great shape with cash increasing during the period to £138.0 million generated by excellent rent collection, tight control on capital and administration expenditure and the disposal of the Napier Joint Venture. As a result, LTV reduced during the period to 29.5%, the lowest rate since 2018. Post period end, we were delighted that NewRiver has retained the confidence of our key banking partners with the refinancing of our £100 million Revolving Credit Facility until November 2026, at a lower annual cost.

Our key focus is to deliver attractive shareholder returns and, given that we have significant available cash and liquidity to deploy, a growing capital partnership business and a core portfolio that has returned to rental growth, we are well positioned to deliver future earnings growth. For some time we have been patient, increasing our cash position in anticipation of opportunities that will deliver double digit IRRs through direct investment and asset management and we are now starting to see those opportunities emerge.

Strong Financial Performance & Fully Covered Dividend

Our UFFO in HY24 was £12.3 million which represents a modest increase from H2 FY23 albeit lower than HY23 due to asset disposals, Covid insurance claim and the release of Covid rent and service charge provisioning during that period. Reduction in net property income from HY23 has been partially offset by a reduction in administration expenses of 4%, a 71% increase in asset management fees and a 28% decrease in net finance costs due to the increase in cash interest earned on our cash holdings. Like-for-like net rental income was stable during the period.

We have declared a half year dividend of 3.4 pence per share, 118% covered by UFFO per share of 4.0 pence. We have flexed upwards from the 3.2 pence per share per our dividend policy by paying out 100% of the cash interest received on our cash holdings during the half because we recognise that our shareholders' patience should be rewarded while we await the compelling investment opportunities we expect to materialise in the near-term. Our intention would be to temporarily top up the dividend at the full year too, subject to deployment progress in H2.

As a result of a stable UFFO, a tight control on capital expenditure and completed disposals, our cash position increased from £111.3 million at 31 March 2023 to £138.0 million at 30 September 2023. Our balance sheet is in great shape with an LTV of 29.5% at the half year, the lowest it has been for five years. Equally important is balance sheet gearing which for us is 43.5%, Net debt to EBITDA is reduced further to 4.4x, one of the lowest in the real estate sector, and interest cover has increased to 5.2x, one of the highest in the real estate sector.

Valuation Outperformance

UK real estate markets continue to be impacted by increased interest rates with all sectors experiencing re-pricing over the past twelve months, especially low yielding sectors. Throughout this period, retail real estate has been one of MSCI's best performing total return sectors due to greater stability in capital values given its existing yield premium and higher contribution from income.

Our portfolio valuation, which recorded a modest -2.0% like-for-like movement, has outperformed MSCI All Retail and MSCI All Property on income and capital returns over the six month period leading to a +140bps and +220bps total return outperformance. Over a twelve month period, this increases to +900bps and +1,330bps. As at 30 September 2023 our portfolio equivalent yield was 8.8%, +200bps higher than MSCI All Retail and +450bps higher than the UK 10-year Gilt. Our portfolio yield premium remains an important factor in insulating our capital return performance from the impact of rising interest rates. Across the portfolio, both equivalent yields and ERVs remained stable.

Pleasingly, our Core Shopping Centre portfolio, representing 40% of our total portfolio, delivered a like-for-like valuation movement for HY24 of +0.7%. Taking account of our consistently higher income returns, we have significantly outperformed MSCI Shopping Centres on a total return basis by +440bps.

Our Retail Park portfolio, representing 25% of our total portfolio, recorded a like-for-like valuation movement of +0.2% and outperformed the MSCI on a total return basis by +150 bps.

The overall portfolio valuation movement was concentrated at our South-East London Shopping Centre and Retail Park in Bexleyheath which forms the largest component of our Regeneration portfolio. It has been impacted by inflation through higher estimated construction and finance costs and, more recently, the slowdown in the housing market.

The Work Out portfolio which only accounts for 11% of our total portfolio recorded a like-for-like valuation movement of only -£1.0 million (-1.5%), a significant improvement on the previous period.

Resilient Operational Performance

Operationally, we saw good performance during the first half in terms of leasing volume and pricing. That, together with our high retention rate when it comes to lease expiry or lease break, has resulted in an increase in our occupancy to 98% (FY23: 97%), the highest level we have recorded since NewRiver was founded in 2009. Rent collection is back to pre-Covid levels and car park and commercialisation net income all improved during the half.

In total we completed 361,800 sq ft of leasing transactions during the period, securing £3.4 million of annualised income. Our long-term leasing transactions which represented 73% of the total rent secured were transacted at rents 3.9% above valuer's ERV. Furthermore, 62% of the annualised long-term rent secured was in our Core Shopping Centre portfolio exceeding valuer's ERV by +7.7% and 25% within the Retail Park portfolio at -1.6% versus valuer's ERV although most transactions were aligned with the valuer's ERV.

Whilst rent secured within our Regeneration portfolio was down -3.8% versus valuer's ERV, it was +14.8% ahead of the previous passing rent and therefore accretive to rental cashflows. It is also reflective of our ongoing strategy to ensure greater lease flexibility to support our vacant possession strategy. The Work Out portfolio leasing activity was on terms -1.4% versus valuer's ERV, however, this only represents a small proportion of the total portfolio long-term rent secured.

For total portfolio leasing events in HY24, the rents achieved had a positive Compound Annual Growth Rate (CAGR) versus the previous passing rent of +0.9% over the average previous lease period of 12.2 years. Over the past three and half years, which totals £17.9 million of annualised rent, this is only -0.2% based on an average previous lease period of 10.3 years. Taking into account the significant disruption the retail sector has faced over the last 10 years from the growth of online retailing and Covid-19, this clearly demonstrates the underlying resilience in our rental cashflows.

Overall, our long-term leasing transactions had a weighted average lease expiry (WALE) of 8.0 years, in-line with FY23, with Retail Parks at 11.2 years and Core Shopping Centres at 6.6 years. In terms of occupier incentives for long-term leasing transactions, the average rent free period was just 3.7 months with many occupiers receiving no rent free period.

The demand for space that we saw in our portfolio during the year remained broadly based with 69% of the space leased to Discount, Value Fashion, Grocery, Home, Books & Stationery, Health & Beauty and F&B.

Well Positioned Portfolio

As at 30 September 2023, our Core Shopping Centre portfolio represented 40% of our total portfolio value and comprised 14 assets located in the centre of local communities providing a range of essential goods and services with an occupancy of 98% and leasing retention rate of 99%. The consistent occupational demand is reflected in the positive leasing performance during the period with long-term deals transacted +7.7% ahead of ERV and +7.8% ahead of the previous passing rent. Over the past three and half years, we have completed £7.0 million of long-term leasing transactions which compared to the previous passing rent, delivered a CAGR of only -0.4% per annum over the average previous lease period of 10.6 years. Our Core Shopping Centres delivered a total return of 5.6%, outperforming the MSCI Shopping Centres Index, which recorded a 1.1% total return, by +440 basis points. Over a twelve month period, the total return outperformance is +1,430bps.

As at 30 September 2023, Retail Parks accounted for 25% of our portfolio, totalling 12 assets with an average lot size of £14.9 million. We have continued to see strong occupational and investor demand for our Retail Parks which are predominately located adjacent to major supermarkets, benefit from free surface car parking and are supportive of retailers' omnichannel strategies. Occupancy stands at 98%, the leasing retention rate is at 100% and whilst leasing transactions were completed marginally below valuer's ERV at -1.6%, the majority of transactions were aligned with valuer's ERV. Over the last three and a half years, we have completed long-term leasing transactions totalling £5.1 million of annualised rent across our Retail Parks which versus the previous passing rent equates to a positive CAGR of +0.7% per annum over the average previous lease period of 12.5 years. Our Retail Parks delivered a total return of 2.9%, outperforming the MSCI Retail Warehouse Index by +150bps, which recorded a 1.4% total return. Over a twelve month period, the total return outperformance is +1,120bps.

We have three Regeneration assets, representing 23% of the total portfolio value, and where we have planning consent for 187 residential units, over 850 residential units at the planning application stage and a further 350 residential units in the masterplan stage for phase one. None of these projects will be built-out by NewRiver as our intention is to deliver value either through sale or by partnering with residential developers, once planning consents are secured. Whilst we advance our regeneration proposals, we have maintained a high occupancy at 98% whilst at the same time building flexibility into the leases to deliver future vacant possession. As such, the leasing deals completed within our Regeneration portfolio were transacted at -3.8% below valuer's ERV. Our Regeneration portfolio underperformed relative to MSCI Shopping Centres by -650bps and this was entirely concentrated in Bexleyheath where the valuer assumed 50bps equivalent yield expansion to reflect a reduction in the residential hope value. Post period end, we have formally submitted our planning application in Grays, Thurrock.

Our Work Out portfolio represents 11% of our portfolio and comprises nine assets which we intend to dispose of or complete turnaround strategies on. Since our FY23 results, we have exchanged on the disposal of one shopping centre, with a further shopping centre under offer. The remaining two sales are to be completed by the end of FY24. We are making good progress on those assets subject to a turnaround strategy, the largest being our Work Out asset in Cardiff City centre where we are close to signing a major letting to a multi entertainment operator. In the interim, occupancy and retention rates for our Work Out assets remain high at 96% and 97% respectively and leasing transactions completed during the period were transacted at a modest -1.4% below valuer's ERV. In respect of capital and total returns, our Work Out portfolio has outperformed the MSCI Shopping Centres Index by +80bps and +180bps respectively.

Growing Capital Partnerships

Capital Partnerships are an important component of our strategy to deliver earnings growth in a capital light way. The mandate with M&G real estate has been expanded since we were appointed in Q4 FY23 to include a further shopping centre and a further retail park. The benefit of that mandate is now seen in our UFFO with asset management fee income up 71% versus HY23.

Currently, we have three key Capital Partnerships: in the public sector with Canterbury City Council; in the private equity sector with BRAVO; and now in the institutional sector with M&G Real Estate. Combined, we asset manage 18 retail parks and five shopping centres with a total value of more than £750 million and annualised rent of over £60 million.

The expansion and breadth of our Capital Partnerships is a clear recognition of the need for a best-in-class platform to extract performance in the highly operational retail sector. We believe that we have a significant opportunity to deliver further earnings growth through our Capital Partnership activities and we are currently actively seeking a new long-term partner to operate in the retail park sector, to enable us to co-invest to generate rental income and asset management fees.

Committed progress to ESG

We take our role as the custodians of assets within the community very seriously and part of that responsibility is helping to protect the long-term sustainability of the environment that our assets sit within, and we are pleased to report good progress in the delivery of our committed ESG Strategy. Key highlights in the first half include a 36% and 25% reduction in gas and electricity consumption respectively across the areas of our portfolio for which we have direct control. We have also continued to use renewable energy across the portfolio and have maintained our zero waste to landfill policy.

Our operational control portfolio is fully compliant with current MEES legislation and, assuming the Government does not defer the 2027 target date for C ratings, we remain on target to achieve compliance in 2027.

Our various ESG activities continue to be recognised by industry benchmarks. Most recently, this includes achieving our 2023 target GRESB score of 72/100 for the "Standing Portfolio" Benchmark. What is pleasing is that GRESB ranked NewRiver 1st out of 1,013 European real estate companies for management which means that NewRiver is performing particularly well at implementing comprehensive risk management, stakeholder engagement and governance (leadership, policies and reporting) processes. Finally we retained our EPRA Gold sBPR award in recognition of excellence in the transparency and comparability of our environmental, social and governance disclosures.

In terms of our social impact, we were pleased to have been recognised by The Sunday Times as one of the UK's best employers.

Board succession planning

The Board and the Nomination Committee recognise the importance of a managed approach to Board succession planning. Cognisant of the tenures of some of our longest serving directors, NewRiver today announces that it has embarked on a search process for a new Chair. Margaret Ford, Non-Executive Chair of the Company, is entering her seventh year as a Non-Executive Director of the Company and has proposed to the Board that she will step down from her role once a successor has been appointed, ensuring a smooth handover of responsibilities. Alastair Miller, the Company's Senior Independent Director, is leading this process with the appointment of an Executive Search firm to undertake the search to find Margaret's successor. It is expected that this process will be completed before the Company's next Annual General Meeting in July 2024. The Company will make a further announcement on the progress of this process in due course.

Outlook

Through the decisive actions we have taken over the last few years and with our clear and focused strategy that is delivering, NewRiver is today in a great position. We have much more to achieve but we are confident in our ability to deliver consistent, attractive returns for our shareholders.

This will be achieved through a laser focus on delivering future rental growth on a consistent basis, the prospects for which are encouraging. How we deploy our available capital will be a key factor in driving future growth and we are determined to do so wisely. Finally, we are excited with the growth potential of our capital partnerships to deliver increasing earnings in a capital light way.

Our long held view of the importance of income returns today serves us well. The portfolio is performing well, supported by a highly experienced and motivated team underpinned by arguably one of the strongest balance sheets in the listed real estate sector and so we are confident, while remaining alert to the wider macro risks, of our prospects as we move into 2024.

Portfolio Review

Highlights

Portfolio Metrics as at 30 September 2023

• Occupancy: 97.7% (FY23: 96.7%)
• Retention Rate: 98% (FY23: 92%)
• Rent Collection: 98% (FY23: 98%)
• Affordable Average Rent: £11.85 per sq ft (FY23: £11.98 per sq ft)
• Gross to Net Rent Ratio: 87% (FY23: 88%)
• Leasing Volume: 361,800 sq ft (HY23: 493,200 sq ft)
• Leasing Activity: +3.9% ahead of valuer ERV (HY23 +3.0%)
• Average CAGR FY21-HY24: -0.2% on 10.3yr average previous lease period
• Total Return of 1.7% outperforming the MSCI All Retail by +140bps over 6 months
• Portfolio NIY of 7.9%, +190bps versus the MSCI All Retail at 6.0%
• Expanding Capital Partnerships across public, private equity and institutional sectors

Our portfolio continues to deliver resilient operational metrics, supported by underlying strength in the retail occupational markets due to the importance of the physical store network and sustained consumer spending. Occupancy continues to improve, increasing by 1.0% to 97.7% (FY23 96.7%), net rental income was slightly down at -0.5% on a like-for-like basis, and rent collection remains at normalised levels at 98% (FY23: 98%).

• Total includes Other representing 1% of total portfolio by value

Overall, we completed on a total of 361,800 sq ft of leasing transactions securing £3.4 million of annualised income. Long-term leasing transactions accounted for 73% of the total rent secured at rents +3.9% above valuer's ERVs and +11.0% against the previous passing rent.

Long-term leasing activity for the period was concentrated within the Core Shopping Centre Portfolio, accounting for 62% of long-term rent secured on the total portfolio, transacting at +7.7% above valuer's ERV and +7.8% above previous passing rent. A further 25% of long-term letting activity was within the Retail Parks Portfolio at -1.6% versus valuer's ERV overall, with the majority of deals aligned, and +24.1% above the previous passing rent. We continue to experience excellent occupational demand across these portfolios given their convenient locations at the heart of their local communities.

Whilst leasing activity within the Regeneration Portfolio were on terms below valuer's ERV at -3.8%, it only accounted for 5% of long-term rent secured and was +14.8% above the previous passing rent. The focus on the Regeneration Portfolio is to realise capital receipts in the short term. Burgess Hill is under offer to an active South coast developer and an outline planning application has been submitted on Grays with a decision expected in early FY25, at which point this significant residential scheme will be marketed for sale. At Bexleyheath, we continue to work collaboratively with the Council to draw up plans for a high density scheme on surplus car parking which offers a significant value-creation opportunity.

Rent secured within our Work Out Portfolio was marginally below valuer's ERV at -1.4% and -4.5% versus the previous passing rent, however, this leasing activity only represents a small proportion of the long-term rent secured. We intend to dispose of or complete turnaround strategies on assets within the Work Out Portfolio, which accounts for only 11% of the total portfolio, with disposals and turnaround strategies on 64% by asset value due to complete in the next few months. We currently have £5.2 million of the Work Out assets under offer/exchanged and £35.1 million where the turnaround strategy is near complete whereafter the assets will be transferred to the Core Portfolio. The remaining assets, which account for only 4% of the total NewRiver portfolio, are well progressed on their turnaround strategy or in active discussions on a disposal.

For total portfolio lease events in HY24, the rents achieved had a positive CAGR versus the previous passing rent of +0.9% over the average previous lease period of 12.2 years. Over the past three and half years, this is only -0.2% based on an average previous lease period of 10.3 years, illustrating the limited annualised rental decline. For Retail Parks the CAGR is positive at +0.7% and given our Retail Parks have limited availability of space, with occupancy at 98%, this should deliver further rental growth going forward.

Overall, our long-term leasing transactions had a weighted average lease expiry (WALE) of 8.0 years, in-line with FY23 at 8.2 years and a significant improvement over the 6.4 years in FY22. In terms of tenant incentives, due to the continued competitive tension in the occupational market, for long-term leasing transactions the average rent free period is just 3.7 months, slightly up on FY23 at 2.8 months, with many occupiers receiving no rent free period.

The demand for space that we saw in our portfolio during the period was broadly based with 69% of the space leased to Discount, Value Fashion, Grocery, Home, Books & Stationery, Health & Beauty and F&B.

Car park and commercialisation net income continues its recovery from the pandemic, increasing +7.3% in HY24 compared to HY23. Overall, net income is now back up to 85% against pre-pandemic levels.

Our portfolio valuation at £553.1 million, represents a capital return outperformance against the MSCI All Property and All Retail indices of +40bps and +20bps respectively with a like-for-like valuation movement of -2.0% for the 6 months to September 2023.

We experienced valuation growth within both the Core Shopping Centre and Retail Parks Portfolios meaning we have now seen within these segments three consecutive reporting periods of stable valuations. The decline was centred on the Regeneration Portfolio which accounted for 98% of the portfolio movement, due to the impact on residential viability at Bexleyheath, our South-East London Shopping Centre and Retail Park, as a result of the wider macro environment.

The majority of assets within the portfolio experienced minimal movement. Out of the 43 assets within the portfolio, only two assets had a valuation movement of greater than £1m, underpinning the underlying resilience of our portfolio.

We continue to have success within Capital Partnerships. Since securing the high-quality mandate from M&G Real Estate in Q4 FY23 to asset manage a large retail portfolio, we have added a significant south-east Shopping Centre and a Retail Park to the appointment including development management services. The portfolio currently comprises 17 retail parks and two shopping centres. Within our BRAVO joint venture, we have completed the final disposals within the Napier Joint Venture with the total sale receipt from Napier 26% higher than the price paid, crystallising the returns contributing to the financial promote.

In Canterbury where we are the asset manager for the City Council on two shopping centres that they own, we have been appointed as development manager in relation to the construction works involved in relocating the Council offices to the shopping centre.

Our key partnerships across the public, private equity and institutional sectors illustrate the importance of specialist retail partners in a highly operational sector and endorsement of the quality of our asset management platform.

Valuation

As at 30 September 2023, our portfolio was valued at £553.1 million (31 March 2023: £593.6 million). Movements in the 6 months to 30 September 2023 were the disposal of two Retail Park assets (£31.3 million) and a -2.0% like-for-like valuation movement. This shows an outperformance relative to the MSCI Monthly All Retail Index which recorded a -2.5% decrease over a like-for-like period.

The Core Shopping Centre Portfolio, which accounts for 40% of the portfolio, delivered capital growth of 0.7% driven by modest equivalent yield compression of -0.1% although our equivalent yield remains high at 9.3% whilst income and ERVs remained stable. Over a like-for-like period the MSCI Shopping Centres Index recorded negative capital growth of -2.4%.

The Retail Park Portfolio, which represents 25% of the portfolio, also saw capital growth at 0.2% driven by +1.7% ERV growth with yields stable, outperforming the MSCI Retail Warehouse benchmark which recorded a negative growth of -1.6%.

The overall portfolio valuation movement was concentrated in the Regeneration portfolio with a movement of -7.9% which accounts for 98% of the overall portfolio movement. This is reflective of the high assumed construction and finance costs impacting the underlying residential value in the near-term at our South-East London Shopping Centre and Retail Park at Bexleyheath.

The Work Out portfolio, which now only accounts for 11% of the portfolio experienced a marginal valuation decline of -1.5% due to a -3.2% ERV movement.

Total includes Other representing a value of £3.8m

The portfolio Net Initial Yield now stands at 7.9%, and has a Net Equivalent Yield of 8.8%, c.200bps higher than the MSCI All Retail benchmark at 6.0% and 6.8% respectively and continues to represent significant headroom above the 10 year Government Gilt rate. The existing yield premium has meant our valuation performance has been far more insulated from the impact of rising interest rates over the past 12 months compared to the wider real estate sector.

As set out in the table below, our portfolio continues to outperform the MSCI All Retail, Shopping Centre and Retail Warehouse benchmarks on a Total, Income and Capital Return for the 6 month period, save for our Shopping Centre capital return which aligned with the market. Over 6 month, 12 month, 3 and 5 year periods Shopping Centres and Retail Parks have continued to outperform their respective MSCI Total Return benchmark.

As at 30 September 2023, our Core Shopping Centre portfolio represented 40% of our total portfolio, and comprised 14 core community shopping centres with an occupancy of 98%. Our Core Shopping Centres are located in the heart of their local communities, accessed via short travel times, and play a key role to the local social and economic prosperity providing a range of essential goods and services to local people.

Selected highlights include:

Newtownabbey, Abbey Centre: At our centre in Belfast, totalling 320,000 sq ft and anchored by Primark, Next and Dunnes, we recently added a new service based anchor to the centre, upsizing Danske Bank to a new flagship store on a 10 year term increasing the rent payable by +59%. In addition, we have recently completed works to create a new external unit for Greggs, having agreed a 10 year lease and as part of the works refurbishing the entrance to improve the access from the surface level car park. The new lettings will produce an additional annualised net income of +£110,000 with total capex to be incurred of £865,000.

Hastings, Priory Meadow: At our dominant south-east Shopping Centre in the heart of Hastings town centre, anchored by Primark and M&S, Black Sheep Coffee have taken one of the last remaining vacancies on a new 20 year lease at £60,000 per annum, aligned with valuer's ERV. Occupiers continue to benefit from a strong trading performance at the scheme as reflected at lease renewal with H&M renewing on terms +11.4% above valuer's ERV and +23.1% above the previous passing rent. Within the period, we have also completed renewals with EE, Schuh and Boots at rents aligned with valuer's ERV.

Skegness, The Hildreds: This is the retail centre of a vibrant seaside town, anchored by Home Bargains and Sports Direct, benefitting from surface level car parking and a mixture of national and independent retailers. Having recently completed the upsize of JD Sports, there have been new lettings to Shoezone, O2 and an independent mobile repair retailer in addition to a renewal with Cardzone. Overall, the lettings are aligned with valuer's ERV and will produce an additional annualised net income of +£22,000.

Bridlington, The Promenades: The only shopping centre within this popular coastal town with a strong offering of discount, food and fashion occupiers, anchored by Poundland, Sports Direct and Heron Foods. We completed a new letting at a previously vacant unit to Shoezone on a new 5 year lease, at a rent +1.2% ahead of valuer's ERV.

Retail Parks

• Portfolio weighting: 25%
• No. assets: 12
• NIY: 6.8% versus MSCI Retail Warehouse NIY of 6.3%
• Average value: £14.9 million
• Key occupiers: B&M, TK Maxx, Halfords, Aldi
• Occupancy: 97.7%
• Retention rate: 100%
• Rent collection: 99%
• Affordable average rent: £11.97 per sq ft / £123,000 per annum
• Gross to Net Rent Ratio: 97%
• Leasing volume: 48,000 sq ft
• Leasing activity: -1.6% below valuer ERV
• Average CAGR FY21-HY24: 0.7% on 12.5yr average previous lease period
• Total Return 2.9% outperforming the MSCI Retail Warehouse by +150 basis points

As at 30 September 2023, Retail Parks accounted for 25% of the total portfolio, totalling 12 assets following the final sales within the Napier Joint Venture. At 98% occupancy and a retention rate of 100% the portfolio has consistently outperformed with several asset management initiatives completed over the past 6 months.

Selected highlights include:

Barrow-in-Furness, Hollywood Retail & Leisure Park: This retail park provides the key retail and leisure offer to the town benefiting from a line-up including Vue cinema, the only cinema within the catchment, along with Aldi, TK Maxx, Currys, Dunelm, McDonald's and KFC. We have strengthened this offer with the introduction of CVS Vets on a 10 year term and Smyths Toys on a 15 year term at rents of £60,000 and £150,000 per annum respectively, both in line with valuer's ERV.

Cardiff, Valegate Retail Park: This 94,000 sq ft discount-led park, adjacent to a high performing M&S and Tesco Extra stores, has shown the continued demand for supermarket anchored retail parks to a variety of occupiers. We have now completed on the 27,000 sq ft letting to Poundland on a 10 year term and 10,000 sq ft letting to Boulders, an indoor climbing centre, on a 15 year term at rents aligned with valuer's ERVs.

Dewsbury, Rishworth Centre: At this 99,000 sq ft retail park anchored by Sainsbury's and Aldi, we have exercised the landlord break on the Poundstretcher unit and have exchanged an agreement for lease with Pure Gym on terms substantially above the previous passing rent. On completion, the park will be fully let with Pure Gym joining Aldi, Shoezone, Iceland, Halfords, Matalan and Pets at Home on the park.

Dumfries, Cuckoo Bridge Retail Park: Demand from existing and new occupiers at this supermarket, DIY and discount anchored park remains strong. We have completed the lease with Food Warehouse for a new 12,500 sq ft foodstore which is open for trade, renewed the lease with Dunelm on a 20,000 sq ft store and we are currently under offer on the last remaining vacancy at the park.

Lisburn, Sprucefield Retail Park: We have successfully received planning permission for three new drive-thru/restaurant units on surplus land adjacent to the retail park and exchanged on agreement for leases with Starbucks and Nando's and are in advanced negotiations with a third operator. Works have started on site with completion due in Summer 2024. This park benefits from its accessibility, located just off the M1 connecting Belfast to Dublin, and broad tenant mix with anchors Sainsbury's and B&Q sitting alongside The Range, Argos, Next and B&M.

Regeneration

• Portfolio weighting: 23%
• No. assets: 3
• NIY: 6.0% versus MSCI Shopping Centre NIY of 7.6%
• Average value: £43.1 million
• Key occupiers: Sainsbury's, M&S, Boots, H&M, WH Smith
• Occupancy: 98.4%
• Retention rate: 100%
• Rent collection: 100%
• Affordable average rent: £12.77 per sq ft / £70,000 per annum
• Leasing volume: 68,100 sq ft
• Leasing activity: -3.8% behind valuer ERV
• Average CAGR FY21-HY24: -0.6% on 9.2yr average previous lease period
• Total Return -5.4% underperforming the MSCI Shopping Centres by -650 basis points

We have three regeneration assets, representing 23% of the total portfolio value where the strategy is to deliver capital growth through redeveloping surplus retail space predominantly for residential.

Grays, Grays Shopping Centre: The centre is located just 35 minutes from central London by train and we have submitted a planning application to redevelop the shopping centre for a high-density residential-led redevelopment of up to 850+ homes.

Bexleyheath, Broadway Shopping Centre: This Greater London asset, comprising a shopping centre and a retail park, presents a significant opportunity to generate capital growth through maintaining the existing dominant retail core whilst delivering new residential development across this 11 acre site. We are continuing to work collaboratively with the Council to draw up plans for the redevelopment of Broadway Square, predominately on surplus car parking.

Burgess Hill, The Martlets: This site, which is located in a prominent and affluent south-east location, currently benefits from a planning consent for a mixed-use development including residential units, a food store, hotel and expansion of the car park. The site is currently under offer to a residential developer.

Work Out

• Portfolio weighting: 11%
• No. assets: 9
• NIY: 8.2% versus MSCI Shopping Centre NIY of 7.6%
• Average value: £7.0 million
• Key occupiers: Poundland, Iceland, Home Bargains, Tesco
• Occupancy: 96.1%
• Retention rate: 97%
• Rent collection: 94%
• Affordable average rent: £8.97 per sq ft / £23,000 per annum
• Gross to Net Rent Ratio: 61%
• Leasing volume: 121,200 sq ft
• Leasing activity: -1.4% below valuer ERV
• Average CAGR FY21-HY24: -0.4% on 6.7yr average previous lease period
• Total Return 2.9% outperforming the MSCI Shopping Centres by +180 basis points

Our Work Out portfolio makes up 11% of our portfolio and comprises nine assets which we intend to dispose of or complete turnaround strategies. Our intention is still to be fully out of the Work Out portfolio by the end of FY24.

The key turnaround strategies include:

Cardiff, Capitol Shopping Centre: We have made significant progress on the wholesale re-positioning of this asset, which accounts for 31% of the total Work Out portfolio, and we are currently in advanced legals on an agreement for lease with a leading national competitive and social leisure operator. On completion, they will occupy over 100,000 sq ft which represents the majority of the centre's floor area, boosting the annualised net income in excess of £1 million per annum and is expected to be the catalyst for the Food & Beverage lettings on the remainder of the centre. The Capitol Shopping Centre sits alongside the Council's major upgrade to the wider area which will improve the infrastructure and public realm, including reinstating a stretch of canal next to the Centre's entrance.

Paisley, The Piazza: This centre has been revitalised by renewed occupier interest, creating a long-term sustainable retail centre. We have introduced JD Sports to the tenant line-up and completed a new letting to Bon Marche in the former M&Co unit. The centre has benefited considerably from the planned redevelopment of the neighbouring shopping centre in the catchment, removing surplus supply and the proposed upsize of Poundland stands to further improve the centre's standing within the town.

Kilmarnock, Burns Mall: We are working collaboratively with the Council on plans to demolish the former BHS to create a surface car park to be let to the Council on a long-term lease and upsize key occupiers within the centre. We are confident that the removal of surplus retail, improvement in public realm and accessibility will revitalise the centre. The works are to be part funded by the Council.

Wallsend, The Forum: This turnaround strategy is near complete with a new medical centre recently completed on surplus car park space, sitting alongside Aldi and Burger King which we developed in 2016. The final stage centres on removing a small element of surplus retail space and making public realm improvements. This will improve the connectivity between the Aldi store, the health centre and the retail centre whilst facilitating potential development opportunities on the surplus car park for residential.

Capital Partnerships

As well as managing assets on our own balance sheet, we also actively manage assets on behalf of our capital partners by leveraging our market leading asset management platform across three sectors: private equity, institutional investors and local authorities.

Capital Partnerships are an important part of our business, delivering earnings growth in a capital light way through asset management fees, a share of rent and the potential to receive financial promotes. We currently asset manage 18 retail parks and five shopping centres across 5 million sq ft with an asset value in excess of £750 million.

The expansion and breadth of our Capital Partnerships is a clear indication of the need for specialist retail partners with a best-in-class asset management platform to enhance performance in the highly operational retail sector.

Our three Capital Partnerships are:

Local Authorities: with Canterbury City Council across two shopping centres in Canterbury. Key highlights:

• We have completed 10 long-term leasing transactions across 55,300 sq ft, securing £1.1 million of rent
• In our role as development manager, we have started on site with Canterbury City Council's new office headquarters. The new offices are being re-purposed from surplus retail accommodation within Whitefriars Shopping Centre, and we expect to hand over the completed offices in July 2024

Private Equity Sector: with BRAVO on one retail park and one shopping centre in Sheffield. Key highlights:

• At The Moor, Sheffield, in addition to improving the income profile, we have generated significant capital receipts on non-core elements of the retail estate. This includes selling a vacant site to Lidl, a low yielding car park, an office long leasehold interest and most recently we have marketed for sale a prime Build to Rent development site
• At Sprucefield Retail Park, Northern Ireland we have received planning consent for three drive-thru units across 9,800 sq ft with terms agreed with operators on each unit. This follows the sale, subject to planning consent, of surplus land to Lidl. In addition, regear terms with Sainsbury's are progressing well

Institutional Sector: with M&G Real Estate across 17 retail parks and two shopping centres. Key highlights:

• Following our appointment in Q4 FY23, the mandate was expanded to include an additional South-East shopping centre and a retail park
• We have completed 8 long-term leasing transactions across 31,200 sq ft, securing £0.8 million of rent

Finance review

During the first half, we have been successful in further improving our already strong financial position, and we ended the period with £138.0 million of cash holdings, Net debt to EBITDA reduced to 4.4x, Interest Cover increased to 5.2x and LTV reduced to 29.5%, its lowest level since March 2018. Demonstrating the strong support we have from our key banking relationships, we were delighted that post balance sheet we extended the maturity of our undrawn £100 million Revolving Credit Facility to November 2026, with two one-year extension options (subject to lender consent) taking maturity to November 2028 at a lower annual cost.

We have been increasing our cash position in anticipation of securing opportunities that will deliver compelling returns and encouragingly in recent months we have seen that such opportunities are now starting to emerge which gives us confidence that our patient and disciplined approach to capital deployment will be rewarded. Given that the majority of our cash holdings are on deposit earning a blended return in excess of 5%, we have taken the decision to temporarily increase our dividend payout in the first half so that our shareholders receive benefit as we wait to deploy. Therefore, 100% of the interest income we received in the first half will be distributed as dividend, resulting in a fully covered first half dividend of 3.4 pence per share. This represents a payout of 85%, compared to our usual payout of 80%, and is comfortably 118% covered by Underlying Funds From Operations ('UFFO'). Our intention would be to temporarily top up the dividend at the full year too, subject to deployment progress in H2.

UFFO for the six months ended 30 September 2023 was £12.3 million, a modest increase when compared to the UFFO reported for the second half of FY23 of £12.2 million. UFFO has reduced when compared to the £13.6 million reported for the first half of FY23, due to £54.1 million of completed disposals over the last 12 months and one-off Covid related credits received in the first half of the prior year. Importantly, UFFO for the six months ended 30 September 2023 includes £1.2 million of asset management fee income, an increase of £0.5 million when compared to the first half of the prior year, reflecting the progress we have made over the last 12 months in our key strategic priority to grow our Capital Partnerships.

Taking account of £31.3 million of disposals completed during the first half and the modest valuation movement of -2.0%, our portfolio was valued on a proportionally consolidated basis at £553.1 million as at 30 September 2023, compared to £593.6 million as at 31 March 2023. The modest portfolio valuation decline is reflected in the reduction in EPRA Net Tangible Assets per share from 121 pence at 31 March 2023 to 117 pence at 30 September 2023. We delivered a total accounting return of -0.7%, compared to -5.7% in the second half of the prior year and +1.0% in the first half of the prior year.

Key performance measures

The Group financial statements are prepared under IFRS, where the Group's interests in joint ventures are shown as a single line item on the income statement and balance sheet. Management reviews the performance of the business principally on a proportionally consolidated basis which includes the Group's share of joint ventures on a line-by-line basis. The Group's financial key performance indicators are presented on this basis.

In addition to information contained in the Group financial statements, Alternative Performance Measures ('APMs'), being financial measures that are not specified under IFRS, are also used by management to assess the Group's performance. These include a number of the financial statistics included on Page 2 of this document. These APMs include a number of European Public Real Estate Association ('EPRA') measures, prepared in accordance with the EPRA Best Practice Recommendations reporting framework, which are summarised in the 'Alternative Performance Measures' section at the end of this document. We report these measures because management considers them to improve the transparency and relevance of our published results as well as the comparability with other listed European real estate companies. Definitions for APMs are included in the glossary and the most directly comparable IFRS measure is also identified. The measures used in the review below are all APMs presented on a proportionally consolidated basis unless otherwise stated.

Underlying Funds From Operations

The following table reconciles IFRS (loss) / profit after taxation to UFFO, which is the Company's measure of underlying operational profits.

Reconciliation of (loss) / profit after taxation to UFFO

• Adjustments to Group and JV & Associates figures to remove non-cash and non-recurring items, principally forward looking element of IFRS 9 £(0.4) million, share-based payment charge £(0.8) million and revaluation of derivatives £0.1 million

Net property income

Analysis of net property income (£m)

On a proportionally consolidated basis, net property income was £23.0 million during the six months to 30 September 2023, compared to £25.7 million for the six months ended 30 September 2022, predominantly due to the impact of £23.0 million of disposals completed in FY23 and the disposal of the Napier Joint Venture at the end of Q1 FY24, which together reduced net property income by £1.9 million.

Rent and service charge provisions benefit reduced by £1.2 million, predominantly due to the release of rent and service charge provisions in the first half of the prior year which was not repeated in the current period. During FY22 and FY23 we had significant success in continuing to collect Covid era rent arrears which had been substantially provided against during the pandemic, resulting in credits to the income statement in FY22 and FY23. Rent collection for Covid era rent arrears was finalised during FY23 and as such, we saw no further benefit from provision releases in the second half of last year, and we have seen no further benefit in the first half of this year. In terms of underlying trend, rent collection for the first half of FY24 was 98%, in-line with collection rates in FY23.

Like-for-like net rental income reduced modestly by £0.1 million or 0.5% during the six months ended 30 September 2023. Encouragingly, our Core Shopping Centres and Retail Parks have contributed to an increase in net rental income of £0.2 million in the period, and the assets in our Regeneration portfolio have also contributed a £0.2 million increase. Like-for-like net rental income in our Work Out portfolio declined by £0.5 million, but as previously disclosed we intend to dispose of or complete turnaround strategies on these assets by the end of FY24.

Asset management fees generated from our Capital Partnerships increased by £0.5 million from £0.7 million in the six months ended 30 September 2022 to £1.2 million in the six months ended 30 September 2023, predominantly due to a full half of income from the asset management mandate signed with M&G Real Estate in Q4 FY23. The scope of this mandate has already expanded, with an additional shopping centre added in April 2023 and an additional retail park in November 2023, increasing the number of assets managed to 17 retail parks and two shopping centres.

Administrative expenses

Against a challenging inflationary backdrop, administrative expenses fell by a further 4% to £5.3 million during the six months ended 30 September 2023, from £5.5 million in the six months ended 30 September 2022. It is also worth noting that in the six months ended 30 September 2021, immediately prior to the launch of our administrative cost reduction initiatives, administrative expenses were £6.0 million and so the current period figure of £5.3 million represents a 12% reduction versus this baseline.

The reduction during the period was a result of our dedication to keeping our administrative expenses at a low level as we continue to target savings each period. Although increasingly challenging due to continued inflationary pressures, our aim is to keep managing and where possible reducing administrative expenses throughout this financial year and beyond.

Other income

Other income recognised during the six months ended 30 September 2023 of £0.4 million compared to £1.4 million during the six months ended 30 September 2022. The income in the prior period related to the settlement of an income disruption insurance claim relating to our car park income during the first Covid lockdown between March and June 2020. We stated in our FY23 results that a more modest claim relating to our commercialisation and turnover rent income during the same Covid period remained ongoing, and during the first half we have settled the commercialisation element of the claim, which contributed £0.4 million in the current period.

Net finance costs

Net finance costs were £5.7 million in the six months ended 30 September 2023, compared to £7.9 million in the six months ended 30 September 2022 due predominantly to interest income. We are currently holding cash reserves of £138.0 million, the majority of which we are holding on deposit generating a return of over 5%, which generated £2.3 million of income during the period, increased from £0.2 million in the six months ended 30 September 2022 due to an increase in cash holdings and interest rates over the last 12 months.

Taxation

Dividends

Pending deployment of the significant cash holdings we currently have available, we have taken the decision to top-up the half year dividend, so that we are paying out 100% rather than 80% of the interest income earned on our cash holdings during the half. This is a temporary flex of the policy only, due to the current size of our cash holdings, which we are confident we will be able to deploy into attractive opportunities to grow the portfolio and UFFO. This increases the dividend by 0.2 pence per share and means that the Board has declared a dividend in respect of the six months ended 30 September 2023 of 3.4 pence per share, which is an 85% payout / 118% cover of UFFO of 4.0 pence per share. The dividend will be paid on 16 January 2024. The ex-dividend date will be 7 December 2023 with an associated record date of 8 December 2023. The dividend will be payable as a REIT Property Income Distribution (PID). Our intention would be to temporarily top up the dividend at the full year too, subject to deployment progress in H2.

Balance sheet

EPRA net tangible assets ('EPRA NTA') include a number of adjustments to the IFRS reported net assets and both measures are presented below on a proportionally consolidated basis.

• See Note 13 for a reconciliation between Properties at valuation and categorisation per Consolidated balance sheet
• Principal value of gross debt, less unamortised fees

Net assets

As at 30 September 2023, IFRS net assets were £367.7 million, reducing from £378.6 million at 31 March 2023 primarily due to the modest 2.0% like-for-like decrease in our portfolio valuation, which reflected an outperformance versus both the MSCI All Property (-2.7%) and All Retail (-2.5)% indices.

EPRA NTA is calculated by adjusting net assets to reflect the potential impact of dilutive ordinary shares, and to remove the fair value of any derivatives, deferred tax and goodwill held on the balance sheet. These adjustments are made with the aim of improving comparability with other European real estate companies. For the same reason noted above when discussing IFRS net assets, EPRA NTA decreased by 2.7% to £368.5 million from £378.9 million at 31 March 2023. EPRA NTA per share decreased to 117 pence from 121 pence at 31 March 2023 for the same reason.

Properties at valuation

Properties at valuation decreased by £40.5 million from £593.6 million as at 31 March 2023 to £553.1 million as at 30 September 2023. The principal reason for the decrease was the £31.3 million disposal of our Napier Joint Venture with BRAVO. The remainder of the decrease reflects the modest portfolio valuation decline explained above of 2.0%.

Debt & financing

Proportionally consolidated

• Weighted average cost of debt and weighted average debt maturity on drawn debt only
• Weighted average debt maturity on total debt. Figures at 31 March 2023 and 30 September 2022 include £125 million undrawn RCF. Figure at 30 September 2023 includes new £100 million undrawn RCF which was agreed post period end

• Including unamortised arrangement fees
• Cash and undrawn RCF. Positions at 31 March 2023 and 30 September 2022 include £125 million undrawn RCF. Position at 30 September 2023 includes new £100 million undrawn RCF which was agreed post period end

Our weighted average cost of debt remains stable at 3.5% and our weighted average debt maturity has reduced from 4.7 years to 4.4 years. Both cost of debt and weighted average debt maturity are now closely aligned to our unsecured corporate bond because this now accounts for £300 million of our £304 million of drawn debt following the repayment of our share (£12 million) of the secured bilateral facility in the Napier Joint Venture on its disposal during the period.

Following the period end, in November 2023 we successfully refinanced the Revolving Credit Facility with all four banks involved in the previous facility (Barclays Bank PLC, HSBC UK Bank plc, National Westminster Bank plc and Santander UK plc) demonstrating their continued support for NewRiver by continuing to support the refinanced facility. The new facility is for £100 million, with a £50 million accordion available subject to lender approval (previous facility £125 million with a £50 million accordion), and the maturity has been extended from August 2024 to November 2026 with options to extend the facility by two additional one-year terms (to November 2028), subject to lender approval. In addition, the annual cost of holding the RCF has also reduced, as a result in a reduction in both the headline margin and quantum. Although the RCF is currently undrawn, maintaining the RCF ensures we continue to benefit from access to valuable additional liquidity and at the same time by reducing the size and margin of the RCF, we have been able to do so at a reduced overall cost.

Financial policies

We have five financial policies in total, including LTV and Interest cover which also appear as debt covenants on our unsecured RCF and our bond. These form a key component of our financial risk management strategy which remains as important as ever given the macro-economic climate. For the period ended 30 September 2023, we were in compliance with all of our financial policies.

• 12 month look-back calculation, consistent with debt covenant
• Calculated with reference to UFFO

We have seen improvements across all four of our debt related financial policies during the period ended 30 September 2023. Following the disposal of our Napier Joint Venture with BRAVO, LTV reduced from 33.9% as at 31 March 2023 to 29.5% as at 30 September 2023, well within our guidance of <40%. Balance sheet gearing also reduced from 49.7% as at 31 March 2023 to 43.5% as at 30 September 2023. Net debt: EBITDA, has continued to improve, reducing by 0.5x to 4.4x from our position of 4.9x as at 31 March 2023. Given the current interest rate environment, we are pleased that our interest cover has increased significantly to 5.2x as at 30 September 2023 from 4.3x as at 31 March 2023, primarily due to the interest received on the cash reserves we are holding on deposit.

The Board has declared a dividend of 3.4 pence per share, which represents 85% of UFFO and so is comfortably fully covered, in-line with our financial policy.

Additional guidelines

Conclusion

We have produced another strong set of financial results in a challenging operating environment, underpinned by the consistency of our portfolio's underlying cashflows. Encouragingly, we have generated growth from our Capital Partnerships which we have earmarked for further growth, and seen continued improvement across all of our key financial metrics.

Pleasingly we have started to see evidence of the type of compelling return investment opportunities we have been anticipating and we are now in a position to deploy capital selectively and decisively when the right opportunities arise, while still maintaining a conservative position.

Looking forward, we remain confident in our ability to deliver our medium term target of a consistent 10% total accounting return.

Will Hobman

Chief Financial Officer

Principal risks and uncertainties

Managing our risks and opportunities

Risk is inherent in all businesses and effective risk management enables us to manage both the threats and the opportunities associated with our strategy and the operation of our business model. The Board has ultimate responsibility for the risk management and internal controls framework of the Company and continually reviews and monitors the principal risks and uncertainties which could have a material effect on the Group's results. The Board considered the principal risks and uncertainties disclosed in the Annual report for the year ended 31 March 2023 and do not consider that they have changed significantly since that date. A summary of the principal risks and uncertainties are set out below. The full disclosure of these risks, including our approach to their mitigation is set out in the Principal risks and uncertainties section of the Annual Report 2023 on pages 88 to 94. Any changes to the Principal risks and uncertainties since the Annual Report are also included below.

External Risks

Directors' Responsibility Statement

The Directors confirm that these condensed consolidated interim financial statements have been prepared with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely:

• An indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated interim set of financial statements; and
• Material related-party transactions in the first six months of the financial year and any material changes in the related-party transactions described in the last Annual Report

On the behalf of the Board

Allan Lockhart Will Hobman

Chief Executive Chief Financial Officer

Independent review report to NewRiver REIT plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed NewRiver REIT plc's condensed consolidated interim financial statements (the "interim financial statements") in the unaudited half year results of NewRiver REIT plc for the 6 month period ended 30 September 2023 (the "period").

The interim financial statements comprise:

• the Condensed Consolidated Balance Sheet as at 30 September 2023;
• the Condensed Consolidated Statement of Comprehensive Income for the period then ended;
• the Condensed Consolidated Cash Flow Statement for the period then ended;
• the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
• the explanatory notes to the interim financial statements

The interim financial statements included in the unaudited half year results of NewRiver REIT plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

We have read the other information contained in the unaudited half year results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

Conclusions relating to going concern

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The unaudited half year results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the unaudited half year results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the unaudited half year results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility is to express a conclusion on the interim financial statements in the unaudited half year results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopers LLP

Chartered Accountants

London

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023

There are no items of other comprehensive income for the current or prior period

(Loss) / earnings per share

*Included in property operating expenses is an expected credit loss charge of £0.8 million (30 September 2022: £0.8 million reversal) relating to debtors.

CONDENSED CONSOLIDATED BALANCE SHEET

As AT 30 SEPTEMBER 2023

The interim financial statements were approved by the Board of Directors on 23 November 2023 and were signed on its behalf by:

Allan Lockhart Will Hobman

Chief Executive Chief Financial Officer

NewRiver REIT plc

Registered number: 10221027

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 September 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Accounting policies

General information

The condensed consolidated interim financial statements ('interim financial statements') including the notes to the interim financial statements are unaudited and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the year ended 31 March 2023 included in this report was derived from the statutory accounts for the year ended 31 March 2023, a copy of which has been delivered to the Registrar of Companies. The auditor's report on these accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis of matter and did not contain a statement under sections 498 (2) or (3) of the Companies Act 2006.

These interim financial statements have been approved for issue by the Board of Directors on 23 November 2023.

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these interim financial statements are set out below. These policies have been consistently applied to all periods presented.

Basis of preparation

These interim financial statements for the 6 month period ended 30 September 2023 have been prepared on the basis of the policies set out in the annual consolidated financial statements for the year ended 31 March 2023 and in accordance with UK adopted IAS 34 and the Disclosure and Transparency Rules sourcebook of the UK's Financial Conduct Authority.

The interim financial statements need to be read in conjunction with the annual consolidated financial statements for the year ended 31 March 2023 which were prepared in accordance with the requirements of the Companies Act 2006 and UK adopted international accounting standards.

The current period financial information presented in this document has been reviewed, not audited.

Going concern

The Group going concern assessment considers the Group principal risks, and is dependent on a number of factors, including cashflow and liquidity, continued access to borrowing facilities and the ability to continue to operate the Group unsecured debt structure within its financial covenants. The Group balance sheet is unsecured, which means that none of its debt is secured against its property assets. This type of financing affords significant operational flexibility and the only debt currently drawn by the Group is the £300 million unsecured corporate bond which matures in March 2028. This bond has financial covenants that the Group is required to comply with including an LTV covenant of less than 65% and a 12 month historical interest cover ratio of more than 1.5x.

The going concern assessment is based on a 12 month outlook from the date of the approval of these financial statements, using the Group Board approved budget, flexed to create a reasonable worst case scenario, which includes the key assumptions listed below.

• Capital values to decline further to a blended valuation decline of -7.0% in FY24 and a blended valuation decline of -4.0% pa throughout the remainder of the forecast horizon, in contrast to the decline noted across the portfolio in HY24 of -2.0%, 98% of which related to the Regeneration portfolio, primarily the impact of cost inflation on valuations, with modest growth noted in Core Shopping Centres and Retail Parks.
• A 15% reduction in net income. This reflects a significant downside to rental agreements re-geared or re-negotiated throughout the pandemic given that 95% of rents relating to FY21 and FY22 have been collected at the time of reporting despite the multiple national lockdowns in place during those periods; FY23 rent collection is 99% and HY24 rent collection is 98% at the time of reporting demonstrating that rent collection rates have normalised back to pre Covid levels.
• No further disposals are assumed throughout the forecast period which have not yet completed at the time of reporting, despite the completion of £77.1 million of disposals during FY22, £23.0 million during FY23, £31.3 million during HY24 and £13.4 million of retail disposals now under offer or exchanged and a further £9.6 million in active discussions or committed to be disposed at the date of approval of these financial statements. Similarly, no assumption is made for the deployment of any surplus capital available as at 30 September 2023 and the growth and returns that would otherwise generate.

Under this scenario, the Group is forecast to maintain sufficient cash and liquidity resources and remain compliant with its financial covenants over the going concern period. Further stress testing was performed on this scenario which demonstrated that the Group's drawn debt covenants could absorb a further valuation decline of 44% or a further 59% reduction in annual net rental income before breaching covenant levels. The Group maintains sufficient cash and liquidity reserves to continue in operation and pay its liabilities as they fall due throughout the going concern assessment period and as such the Directors conclude a going concern basis of preparation is appropriate.

Basis of consolidation

The interim financial statements incorporate the interim financial statements of the Company and its subsidiaries. The interim financial statements account for interests in joint ventures and associates using the equity method of accounting per IFRS 11. The Group's financial performance is not seasonal.

New accounting policies

There have been no new accounting policies adopted in the period.

New standards and amendments

The Group has adopted the following amendments for the first time in the 6 months ended 30 September 2023:

• Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
• Definition of Accounting Estimates (Amendments to IAS 8)
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
• Insurance contracts - (Amendments to IFRS 17)

Adopting these amendments has not impacted amounts recognised in prior periods or are expected to have a material impact in future periods based on the Group's current strategy.

Standards and amendments issued but not yet effective

A number of new amendments relevant to the Group have been issued but are not yet effective for the current accounting period. These were disclosed in the 31 March 2023 audited financial statements and there has been no significant update as at the date of this report. No material impact is expected upon the adoption of these standards and amendments.

Critical accounting judgements and estimates

The preparation of interim financial statements requires management to make estimates and judgements affecting the reported amounts of assets and liabilities, of revenues and expenses, and of gains and losses. The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period, are discussed below. Estimates and judgements are continually evaluated and are based on historical experience as adjusted for current market conditions and other factors. There have been no changes since the year-end.

Significant judgements

REIT Status

NewRiver is a Real Estate Investment Trust (REIT) and does not pay tax on its property income or gains on property sales, provided that at least 90% of the Group's property income is distributed as a dividend to shareholders, which becomes taxable in their hands. In addition, the Group has to meet certain conditions such as ensuring the property rental business represents more than 75% of total profits and assets. Any potential or proposed changes to the REIT legislation are monitored and discussed with HMRC. It is the Directors' judgement that the Group continues to meet the REIT conditions.

Sources of estimation uncertainty

Investment property

The Group's investment properties are stated at fair value. The assumptions and estimates used to value the properties are detailed in note 13. Small changes in the key estimates, such as the estimated rental value, can have a significant impact on the valuation of the investment properties, and therefore a significant impact on the condensed consolidated balance sheet and key performance measures such as Net Tangible Assets per share.

Segmental reporting

The Group operates as one segment, the retail business. The retail investments comprise shopping centres, retail parks and high street stores. The performance and position of the retail business is set out in the condensed consolidated statement of comprehensive income and condensed consolidated balance sheet. All the Group's operations are in the UK and therefore no geographical segments have been identified.

Revenue

Six Months ended

*Included within property rental and related income is car park income of £3.0 million (30 September 2022: £2.7 million) which falls under the scope of IFRS 15. The remainder of the income is covered by IFRS 16.

Property operating expenses

Six Months ended

* Depreciation is inclusive of £0.1 million right of use asset depreciation (30 September 2022: £0.1 million).

** Head office relocation costs mainly relate to an impairment charge relating to property, plant and equipment.

Net administrative expenses ratio is calculated as follows:

Six Months ended

*This balance includes an expected credit loss of £0.4 million (30 September 2022: £0.8 million reversal), which excludes the £0.4 million (30 September 2022: £nil) forward looking element of the calculation and insurance expected credit loss of £nil (30 September 2022: £nil) but includes the expected credit loss held in joint ventures and associates of £nil (30 September 2022: £nil).

Other income

Six Months ended

The Group recognised £0.4 million (30 September 2022: £1.4 million) for Covid-19 income disruption following agreement with the insurer.

Loss on disposal of a joint venture

Six months to 30 September 2023

Included in the carrying value on disposal were investment properties of £32.2 million, cash of £1.3 million and third party debt of £(12.0) million.

£m

The total cash consideration for the sale was £64.0 million which included £62.6 million (NewRiver share: £31.3 million) consideration for the value of the JV properties.

The total cash consideration was distributed as follows:

• £24.0 million used to repay the Napier Joint Venture bank loans;
• £3.0 million used to repay the shareholder loan owed to NewRiver (recognised as part of the Investment in Joint Venture carrying amount)

After the deduction of the above amounts and the settlement of various costs associated with the disposal, £18.0 million was received by NewRiver. Net proceeds of £21.0 million recognised by NewRiver include the £3.0 million repayment of the shareholder loan.

Six months to 30 September 2022

There were no disposals in the six months ended 30 September 2022.

Profit / (loss) on disposal of investment properties

Six Months ended

*Cost of disposal in the current period relates to investment property sales in the prior period.

Finance income and finance costs

Six Months ended

Performance measures

A reconciliation of the performance measures to the nearest IFRS measure is below:

Six Months ended

* Forward looking element of IFRS 9 relates to a provision against debtor balances in relation to invoices in advance for future rental income. These balances are not due in the current period and therefore no income has been recognised in relation to these debtors.

Number of shares

Six Months ended

The below table reconciles the differences between the calculation of basic and EPRA NTA.

EPRA NTA per share and basic NTA per share:

Dividends

The dividends paid in the period are set out below:

The Group's investment properties have been valued at fair value on 30 September 2023 by independent valuers, Colliers International Valuation UK LLP and Knight Frank LLP, on the basis of fair value in accordance with the Current Practice Statements contained in The Royal Institution of Chartered Surveyors Valuation - Professional Standards, (the 'Red Book'). The valuations are performed by appropriately qualified valuers who have relevant and recent experience in the sector.

The Group is exposed to changes in the residual value of properties at the end of current lease agreements. The residual value risk borne by the Group is mitigated by active management of its property portfolio with the objective of optimising tenant mix in order to:

• achieve the longest weighted average lease term possible;
• minimise vacancy rates across all properties; and
• minimise the turnover of tenants with high quality credit ratings.

The fair value at 30 September represents the highest and best use.

Sensitivities of measurement of significant inputs

We consider +/-10% for ERV and +/-100bps for NEY to capture the increased uncertainty in these key valuation assumptions and deem it to be a reasonably possible scenario.

The investments are a portfolio of retail assets in the UK. The valuation was determined using an income capitalisation method, which involves applying a yield to rental income streams. Inputs include yield, current rent and ERV. Development properties are valued using a residual method, which involves valuing the completed investment property using an investment method and deducting estimated costs to complete, then applying an appropriate discount rate.

The inputs to the valuation include:

• Rental value - total rental value per annum
• Estimated development costs

There were no changes to valuation techniques during the period. Valuation reports are based on both information provided by the Group, e.g. current rents and lease terms which is derived from the Group's financial and property management systems and is subject to the Group's overall control environment, and assumptions applied by the valuers, e.g. ERVs and yields. These assumptions are based on market observation and the valuers' professional judgement, which includes a consideration of climate change and a range of other external factors.

30 September 2023: Sensitivity impact on valuations of a 10% change in estimated rental value and absolute yield of 100 bps.

31 March 2023: Sensitivity impact on valuations of a 10% change in estimated rental value and absolute yield of 100 bps.

Reconciliation to net valuation movement in consolidated statement of comprehensive income

Investments in joint ventures

As at 30 September 2023 the Group has one joint venture (31 March 2023: two).

The Group is the appointed asset manager on behalf of these joint ventures and receives asset management fees, development management fees and performance-related bonuses.

On 27 June 2023, the Group disposed of NewRiver Retail (Napier) Limited which owned Kittybrewster Retail Park in Aberdeen and Glendoe and Telford Retail Parks in Inverness. Refer to note 8.

NewRiver Retail Investments LP has a 31 December year end as did NewRiver Retail (Napier) Limited. The aggregate amounts recognised in the consolidated balance sheet and consolidated statement of comprehensive income at 30 September and 31 March are as follows:

The table above provides summarised financial information for the joint ventures. The information disclosed reflects the amounts presented in the financial statements of the joint ventures.

The Group's share of contingent liabilities in the joint ventures is £nil (31 March 2023: £nil).

Investments in associates

The Group has one direct investment in an associate entity in which it has a 10% stake, Sealand S.à.r.l, which owns 100% of NewRiver Retail (Hamilton) Limited and NewRiver (Sprucefield) Limited at 30 September 2023.

*During the prior year, the Group received £2.3 million back from associates in the form of shareholder loan repayments and repayment of initial capital invested.

The Group's share of contingent liabilities in the joint ventures is £nil (31 March 2023: £nil).

*Included in service charge receivables is £nil of Value Added Taxation (31 March 2023: £nil), £1.4 million of service charge debtors (31 March 2023: £1.2 million) and £0.2m of accrued income (31 March 2023: £nil).

Trade receivables are shown after deducting a loss allowance of £2.9 million (31 March 2023: £3.0 million), other receivables are shown after deducting a loss allowance of £0.2 million (31 March 2023: £0.3 million). The provision for doubtful debts is calculated as an expected credit loss on trade receivables in accordance with IFRS 9. The charge to the consolidated statement of comprehensive income in relation to doubtful debts made against tenant debtors was £0.9 million (31 March 2023: £0.2 million release) and the release to the consolidated statement of comprehensive income in relation to other receivables was £0.1 million (31 March 2023: £0.3 million charge). The Group has calculated the expected credit loss by applying a forward-looking outlook to historical default rates.

The Group monitors rent collection and the ability of tenants to pay rent receivables in order to anticipate and minimise the impact of default by tenants. All outstanding rent receivables are regularly monitored. In order to measure the expected credit losses, trade receivables from tenants have been grouped on a basis of shared credit risk characteristics and an assumption around the tenants ability to pay their receivable, based on conversations held and our knowledge of their credit history. The expected credit loss rates are based on historical payment profiles of tenant debtors and corresponding historical credit losses.

The restricted monetary asset relates to cash balances which the Group cannot readily access. They do not meet the definition of cash and cash equivalents and consequently are presented separately from cash in the consolidated balance sheet.

Trade and other payables

* Service charge liabilities includes accruals of £1.9 million (31 March 2023: £1.9 million), service charge creditors and other creditors of £3.5 million (31 March 2023: £4.8 million), Value added taxation of £0.1 million (31 March 2023: £1.0 million) and deferred income of £2.1 million (31 March 2023: £2.1 million).

Borrowings

The fair value of the Group's corporate bond has been estimated on the basis of quoted market prices, representing Level 1 fair value measurement as defined by IFRS 13 Fair Value Measurement. At 30 September 2023 the fair value was £259.0 million (31 March 2023: £256.8 million).

During the period the Group drew down £nil (31 March 2023: £nil) of the revolving credit facility.

Share capital and reserves

Share capital

All shares issued and authorised are fully paid up.

Shares held in Employee Benefit Trust (EBT)

As part of the scheme of arrangement and group reorganisation, the Company established an EBT which is registered in Jersey. The EBT, at its discretion, may transfer shares held by it to directors and employees of the Company and its subsidiaries. The maximum number of ordinary shares that may be held by the EBT may not exceed 5% of the Company's issued share capital. It is intended that the EBT will not hold more ordinary shares than are required in order to satisfy share options granted under employee share incentive plans.

There are currently 264,223 ordinary shares held by EBT (31 March 2023: 1,446,712).

Financial instruments and risk management

The Group's activities expose it to a variety of financial risks in relation to the financial instruments it uses: market risk including cash flow interest rate risk, credit risk and liquidity risk. The financial risks relate to the following financial instruments: trade receivables, cash and cash equivalents, trade and other payables and borrowings.

Financial instruments

Contingencies and commitments

The Group has no material contingent liabilities (31 March 2023: None). The Group was contractually committed to £0.9 million of capital expenditure to construct or develop investment property as at 30 September 2023 (31 March 2023: £1.8 million). In the prior year, the Group also committed to a 5 year lease which has commenced on 1 April 2022 with rent per annum of £0.3 million

Under the terms of the sale agreement to dispose of Hawthorn dated 20 August 2021, the Group gave certain warranties, including tax, relating to Hawthorn. A breach of warranty will only give rise to a successful claim in damages if the buyer can show that the warranty was breached and that the effect of the breach is to reduce the value of Hawthorn at the date of disposal. Any tax claim must be made within 6 years of completion, all other warranties expired within a year of completion. No such claims have been received.

Related party transactions

During the period the Company paid £0.5 million (30 September 2022: £0.7 million) in professional legal fees to CMS Cameron McKenna Nabarro Olswang LLP for property services at commercial market rates. Allan Lockhart, CEO of NewRiver, has a personal relationship with one of the Partners at CMS who along with other Partners provides these legal services.

The Group has loans with a joint venture of £nil (31 March 2023: £3.0 million) and loans with associates of £3.2 million (31 March 2023: £3.2 million). During the period, the Group received £nil (31 March 2023: £2.3 million) back from associates in the form of shareholder loan repayments and repayment of initial capital invested.

Total fees charged were:

As at 30 September 2023, an amount of £0.1 million (31 March 2023: £0.3 million) was due to the Group relating to management fees.

During the period, the Group recognised £0.2 million of interest from joint ventures and associates (31 March 2023: £0.3 million) and as at 30 September 2023 the amount owing to the Group was £0.2 million (31 March 2023: £0.2 million).

Post balance sheet events

On 16 November 2023, the Group announced that it had refinanced its Revolving Credit Facility ("facility") into a new £100 million facility, with a £50 million accordion available subject to lender approval. Maturity has been extended from August 2024 to November 2026 with two one-year extension options also available (subject to lender approval) which would extend the maturity further to November 2028.

ALTERNATIVE PERFORMANCE MEASURES (APMs) (Unaudited)

In addition to information contained in the Group financial statements, Alternative Performance Measures ('APMs'), being financial measures which are not specified under IFRS, are also used by management to assess the Group's performance. These include a number of measures contained in the 'Financial Statistics' table at the beginning of this document. These APMs include a number of European Public Real Estate Association ('EPRA') measures, prepared in accordance with the EPRA Best Practice Recommendations reporting framework. We report these because management considers them to improve the transparency and relevance of our published results as well as the comparability with other listed European real estate companies.

Reconciliation of EPRA Earnings to Underlying Funds From Operations (UFFO)

EPRA NRV per share: 128p; EPRA NTA per share: 117p; EPRA NDV per share: 129p

Definition

Purpose

EPRA LTV: 33.9%

Definition

EPRA LTV is the ratio of gross debt, net payables less cash and cash equivalents to the aggregate value of properties. LTV is expressed on a proportionally condensed consolidated basis.

Purpose

EPRA NIY: 7.4%, EPRA 'topped-up' NIY: 7.8%

Definition

Purpose

A comparable measure for portfolio valuations to assist investors in comparing portfolios.

EPRA Vacancy rate: 2.2%

Definition

Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio, excluding pub and development assets.

Purpose

A 'pure' (%) measure of investment property space that is vacant, based on ERV.

The EPRA vacancy rate is based on the ratio of the estimated market rent for vacant properties versus total estimated market rent, for the whole portfolio excluding properties under development and any units that are not classified as retail. There are no significant distorting factors influencing the EPRA vacancy rate.

EPRA Cost Ratio (including direct vacancy costs): 38.7%

EPRA Cost Ratio (excluding direct vacancy costs): 35.5%

Definition

Purpose

A key measure to enable meaningful measurement of the changes in a company's operating costs.

In the current and prior period, employee costs in relation to staff time on development projects have been capitalised into the base cost of relevant development assets. The prior period costs have been restated to include head office relocation costs of £0.5 million.

Property related capital expenditure and tenant incentives (additional disclosure)

Glossary

Balance sheet gearing: Is the balance sheet net debt divided by IFRS net assets.

Book value: Is the amount at which assets and liabilities are reported in the financial statements.

EPRA: Is the European Public Real Estate Association.

EPRA earnings: Is the IFRS profit after taxation excluding investment property revaluations, fair value adjustments on derivatives, gains/losses on disposals and deferred tax.

EPRA NTA per share: Is EPRA NTA divided by the diluted number of shares at the period end.

Footfall: Is the annualised number of visitors entering our shopping centre assets.

Gross Asset Value (GAV): Is Gross Asset Value, the total value of all real estate investments owned by the Company

Head lease: Is a lease under which the Group holds an investment property.

IFRS: UK-adopted International Accounting Standards

Income return: Is the income derived from a property as a percentage of the property value.

Interest cover: Interest cover is tested at corporate level and is calculated by comparing actual net property income received versus net cash interest payable on a 12 month look-back basis.

Long-term leasing deals: Are leasing deals with a fixed term certain of at least one year.

Loan to Value (LTV): Is the ratio of gross debt less cash, short-term deposits and liquid investments to the aggregate value of properties and investments. LTV is expressed on a proportionally consolidated basis.

MSCI: MSCI Inc produces independent benchmarks of property returns and NewRiver portfolio returns.

Net rental income: Is the rental income receivable in the period after payment of net property outgoings. Net rental income will differ from annualised net rents and passing rent due to the effects of income from rent reviews, net property outgoings and accounting adjustments for fixed and minimum contracted rent reviews and lease incentives.

NewRiver share: Represents the Group's ownership on a proportionally consolidated basis.

Passing rent: Is the gross rent payable under leases terms.

Pre-let: A lease signed with an occupier prior to the completion of a development.

Pre-sale: A sale exchanged with a purchaser prior to completion of a development.

Proportionally consolidated: The aggregation of the financial results of the Reported Group and the Group's Share of net assets within its joint venture and associates.

Retail occupancy rate: Is the estimated rental value of let units expressed as a percentage of the total estimated rental value of the portfolio, excluding development properties.

Underlying Funds From Operations (UFFO): is a measure of the Company's operational profits, which includes other income and excludes one off or non-cash adjustments, such as portfolio valuation movements, profits or losses on the disposal of investment properties, fair value movements on derivatives and share-based payment expense.

Yield on cost: Passing rents expressed as a percentage of the total development cost of a property.