NewRiver sells entire residential part of Burgess Hill project

NewRiver exchanged conditional contracts for the pre-sale of the entire residential part of its mixed-use development at the Burgess Hill town centre, it confirmed on Monday.

The FTSE 100 real estate developer said residential investment company Delph Property Group had agreed to purchase all 142 residential units for £34m.

It said the residential pre-sale, together with the pre-lets already secured on the retail and leisure elements of the development, significantly de-risked the project, which had estimated construction costs of £47m.

Under the terms of the pre-sale agreement, 10% of the total consideration was placed in escrow at exchange, and a further 20% would be placed in escrow ahead of the start of construction.

The balance would be remitted to NewRiver on completion in 2020.

“We are excited to be involved in the Burgess Hill regeneration story with NewRiver as it continues to show our firm financial commitment to residential acquisitions throughout the UK,” said Delph Property head of acquisitions Nicholas Belkin.

At the same time, NewRiver also exchanged on the agreement for lease with the Mid Sussex District Council, for a new head of lease on the shopping centre at Burgess Hill, which the company described as “another important milestone” for the redevelopment.

As a result, the company said it now expected to begin its phased programme of works “imminently”.

“The pre-sale of the entire residential component of our Burgess Hill redevelopment to a high quality residential specialist investor significantly de-risks the project and, in-line with our risk-controlled approach, puts us in a strong position to begin construction,” said NewRiver property director Allan Lockhart.

“Having recently received planning consent for our major mixed-use regeneration in Cowley, Oxford, we are seeing real momentum in our risk-controlled development pipeline, which we are confident will be a significant driver of long term returns for our shareholders.”

NewRiver acquired the 123,000 square foot Martlets Shopping Centre in Burgess Hill for £12m in 2010, which represented a net initial yield of 8.5%.

The company described Burgess Hill as an “affluent catchment area” located within the so-called ‘Gatwick Diamond’, 20 minutes from London Gatwick Airport and 50 minutes from central London by rail.

It received full, detailed planning consent for the mixed-use redevelopment of the town centre in March of last year, with the 465,000 square foot redevelopment of the shopping centre said to form a “key element” of the company’s 1.9 million square foot risk-controlled development pipeline.

As well as the 142 residential units, NewRiver said the redevelopment would provide a 10-screen multiplex cinema, a 63-bed hotel, an “improved” retail offer and new restaurant and leisure provisions, as well as additional car parking, an “improved public realm” and a new purpose-built library for the council.

The retail and leisure element of the scheme was already 50% pre-let, with NewRiver claiming to have secured “high quality and long-dated” income from Cineworld, Nandos, Next, Travelodge and Wildwood.