NewRiver and Ellandi’s one-word merger manifesto

Ellandi’s summer strategy day began with a bang, as NewRiver REIT bought the renowned retail and regeneration asset and development manager to create a listed player with £2bn of assets under management. NewRiver chief executive Allan Lockhart and his team went the extra mile in closing the deal in time for today, says Ellandi co-founder and owner Mark Robinson, who joins the executive committee alongside fellow co-founder and owner Morgan Garfield. He hastens to add that it was unrelated to the general election. “We have a summer strategy day every year, and we put that in the diary before Mr Sunak got rained on,” he says. “We had been talking for a while, and we said that it was really important to us that this deal is done by [today], because we want to be able to paint an exciting and inspiring vision for the business together on this day. “I’ll be really frank, it wasn’t particularly easy for Allan and Edith [Monfries, chief operating and people officer at NewRiver] and their deal team to get it done in time, but it was a really lovely sign of respect that they got it done, to allow us to be able to stand in front of [the business], joined by Allan and his senior team to say, ‘This is the business together’. It’s a people business, and respecting that is really meaningful.” Together, the enlarged business will have a portfolio of 44 shopping centres and 29 retail parks, with an existing fee income stream of £8.2m. Ellandi brings 16 shopping centre asset management mandates, totalling more than 6.3m sq ft, with 10 different partners. “Nobody better in regeneration” For NewRiver, the acquisition added scale and diversification to its capital partnership business, on top of introducing experience in managing destination shopping centres and regeneration projects. It also aligns with its strategy to generate earnings growth in a capital-light way. “I have known Mark and Morgan for 20 years, we have been great admirers of Ellandi as they built up their business,” says Lockhart. Robinson will become head of regeneration at the REIT, while Garfield will be head of capital partnerships. “For us, Ellandi is a really good fit. It delivers extra scale, additional capability, and experience, particularly in destination shopping centres, and of course, there’s nobody better in the regeneration world than Mark. So there was a really good rationale, and the two businesses have very similar shared values, culture and commitment to the sector. “From a NewRiver perspective, we felt it was a good time, and that coincided with Mark and Morgan thinking about the future of their business.” Robinson draws from author and professional speaker Simon Sinek, who coined the term “worthy rivals” for business competitors that can motivate each other to improve themselves. “We have always got on well with NewRiver and supported each other at events,” he says. “Both businesses are very engaged with the wider industry. Allan chairs the BPF retail board, which Morgan’s on; I chair the High Streets Task Force and Emma [Mackenzie, head of asset management at NewRiver] is on that. “So, it’s in our DNA to be leading in this market and bring the two businesses together, when they’ve got capital and looking for growth, and we’ve got growth that designs capital. It makes all the sense in the world.” Losing the Ellandi name is a bittersweet moment for Robinson, but he says the values imbued in the brand are mirrored in NewRiver’s. He adds that the REIT’s credentials – which include EPRA Gold status and the Sunday Times’ Best Places to Work – are “as aligned to our B Corp values as we could possibly get”. The two businesses will merge over the coming months, with the Ellandi team set to move into NewRiver’s offices. “We are going to take our time and make sure that integration is done in the right way,” says Lockhart. Readying for a “wall of money” Robinson predicts “a sea change in how investible retail-led projects and regeneration” will be. “The world has turned for retail,” he adds. “Occupiers understand the value of their space much better now, so investors can understand that and relate to them better.” He adds: “There is a wall of money that wants to invest in resilient retail in the UK and also wants to bank regeneration, once there is some clarity around that. Being able to do that as part of a FTSE business enhances the ambition that we’ve always had.” In the past few years, Ellandi pivoted towards bigger destination assets and more complex regeneration projects. “Our investment partners were saying, ‘We love you, but as these projects get bigger and more complex, we need to see some capital commitment’,” says Robinson. “We were able to grow a business previously on a capital-light basis, but we could only take it so far.” Lockhart underlined a shared belief with Robinson and Garfield in the increasing importance of asset-backed specialist operating platforms. “They will only become more important in the future and therefore more valuable, because the best way for investors to invest into UK retail real estate is through a platform like NewRiver,” he says. The insight the business will have in terms of customers, retailers and what’s going on in the capital markets will be “unrivalled”, adds Lockhart. “The data that flows from that will allow us to make much better decisions going forward, and that means we are able to demonstrate that we’ve got the capability of outperforming the market, and that’s what we think will be very attractive to future investment partners,” he says. Manifesto for growth Speaking hours before the polls closed, Robinson says the business is positioned particularly well to leverage from the likely next government’s focus on regeneration. “If Labour wins, its growth agenda is based around housing and regeneration. Being a well-positioned, respected FTSE business, with a balance sheet and track record for partnering well, is going to place us very well to help that growth happen,” he says. “My personal passion piece is not growth for growth’s sake. Success for me looks like making change happen in communities across the UK that we wouldn’t otherwise have been able to do – we would have got there in 10 years, but we are going to get there in maybe 10 months instead, which is very exciting.” NewRiver has taken on Ellandi while talks are ongoing to take over listed shopping centre rival Capital & Regional. Lockhart declines to comment on those negotiations, but says that one of the REIT’s key objectives is “to create a very strong future for our combined teams where they can develop their careers, gain more experience and take on more responsibility”. “If we were a political party, our one-word manifesto would be ‘growth’,” says Robinson. “That’s what it’s all about. We have been super impressed by the ambition that Allan and his board have shown. It’s an exciting time to be coming together.”