NewRiver, the UK neighbourhood focused real estate investment trust, has bought well-known retail and regeneration asset and development manager Ellandi Management.
The acquisition brings Ellandi's 34-strong team together with NewRiver's 45 to create a business with £2 billion of assets under management, and comes at a busy time for NewRiver, which is in ongoing talks about a takeover of UK local shopping centres investor Capital & Regional.
In a statement NewRiver said the tie-up brought its capital partnership business additional scale and diversification, as well as introducing the "complementary experience of managing destination shopping centres and regeneration projects". It said the acquisition was consistent with its strategy to deliver earnings growth in a capital-light way.
To see a recent interview with NewRiver chief Allan Lockhart at the Mipim conference in Cannes on the market and business strategy click here.
The two co-founders and owners of Ellandi, Morgan Garfield and Mark Robinson, will join NewRiver as head of capital partnerships and head of regeneration, respectively. Garfield and Robinson will also join NewRiver’s Executive Committee.
The Ellandi business brings with it a portfolio of 16 shopping centre asset management mandates, covering over 6.3 million square feet, with 10 different partners. Ellandi also brings experience working with public sector owners to deliver regeneration, with current projects including the regeneration of Blackpool Town Centre and Strand Shopping Centre in Bootle.
During the year ended 30 April 2024, Ellandi’s fee income was £5.7 million and earnings before interest, taxes, depreciation and amortisation was £1.1 million. The acquisition has been made for an initial cash consideration of £5 million, with additional cash consideration of up to £4 million subject to EBITDA performance, including realising savings through shared services, over a three-year earn out period.
The combined capital partnership business will have assets under management of £1.5 billion across a portfolio of 21 shopping centres and 18 retail parks, with 13 different partners. Including NewRiver’s wholly owned portfolio of retail assets, this increases to total assets under management of £2 billion across a portfolio of 44 shopping centres and 29 retail parks and an existing fee income stream of £8.2 million.
Speaking CoStar News NewRiver chief executive Allan Lockhart said: "I have known Mark and Morgan for 20-odd years and have watched with great interest. We are very committed to growing our capital markets business and this allows us to accelerate the growth of our capital partnerships. In regeneration Mark is a leading operator around regeneration and levelling up. It is a really good fit."
A key factor, Lockhart and Robinson said, was Ellandi was being approached more and more about co-investing with partners.
Robinson explained: "We are proud of the business, of growing a capital light business. With NewRiver we have shared DNA in creating retail-led places and we have both realised the world is turning. Post-COVID retail is in a better place, rental growth is coming through and the question is how do we take things to the next level. Potential investors would say to us we would love to do something but need to see some capital commitment."
In terms of the timing of the announcement on the day of a General Election, Lockhart said: "Whoever wins will have a strong commitment to levelling up, and we think our combination makes us very well positioned. The geographic spread, the scale of the business, will be unrivalled. It is a very powerful platform."
Robinson added: "The data points mean we have a huge understanding of occupier wants and needs. There can be better, more grown up conversations and that can only lead to good things."
Lockhart said in a statement: “The acquisition of Ellandi supports our ambitions to expand our capital partnerships business and grow its fee income. We have watched the impressive growth of Ellandi over the last 16 years, despite limited capital resources, which has been in no small part due to the entrepreneurial energy and expertise of Morgan, Mark and their team.
"We believe there will be considerable opportunities in the retail real estate market to accelerate the growth of our business from this point. By bringing together two high-quality teams with complementary skills and experience in asset management and regeneration, together with the balance sheet resources we have available, we are well positioned to participate in these opportunities, both on the balance sheet and through capital partnerships.”
Robinson added: “Morgan and I are extremely proud of what the team at Ellandi have achieved to date in delivering sustainable change to the UK’s retail places and believe this transaction creates an exciting opportunity to combine two market leading retail asset management businesses with shared growth ambitions. Together we will bring unrivalled insights into UK consumer and retailer trends through the extensive data of our enlarged footprint. NewRiver is passionate about retail and recognises the important role it plays at the heart of communities, as well as having a similar culture and shared values. I look forward to our business becoming part of the NewRiver team and applying our combined expertise in the sector.”