Newriver Reit Share Discussion Threads

[chucko1] 23/12/2021 16:03

If you look over at the REITs in the US, they generally specialise. You can hardly fault a prison REIT for being in prisons or praise a tower REIT for being in cell towers.

With NRR, you knew you were buying retail and development potential. The latter has yet to play out. The pandemic messed up the timings which is always a problem (and for many businesses).

[hugepants] 23/12/2021 15:50

They mis-stepped in one obvious way surely. Diversification, or lack thereof. They chose retail, mainly shopping centres. The trend was down well before covid.

[chucko1] 23/12/2021 15:29

I am not saying they deserve credit for any recovery, but neither do I think they have misstepped in any material way, despite the loss of value.

If the outcome is unpleasant for some shareholders, tough - they ought to have managed their overall risk better. Analogously, who is blaming IAG for its loss of value? Or TEG? Possible to construct an argument at the margins, but it's missing the big picture.

[m_kerr] 23/12/2021 14:22

you are correct valuers have no idea how to value shopping centres - the reason for that is there are no transactions to compare with, other than those that allow for redevelopment. there's no transactional evidence because buyers have effectively withdrawn from the sector, which is seen as in structural / terminal decline.

on the credit rating, agencies are assessing the likelihood of whether NRR will generate enough cash to service £10m or so interest on a £300m bond. well you'd certainly hope they'd be able to do that from deploying £800m or so of capital. in order to meet that, they'd have to make a 1.25% return on their capital, so it's not a high bar to clear. it's like buying a house, losing 25% on the sale price, then the bank being perfectly content given you paid the interest and paid off the capital.

it's important to stress i'm not saying forward returns will not be attractive from here on in (remember the shares are down 53% since pre pandemic, NAV having halved in the last couple of years), merely that management cannot take any credit for this given the precipitous decline in NAV and destruction of shareholder value they have driven through their strategy.

[chucko1] 23/12/2021 13:48

I am not sure that Fitch share the view on management - the credit rating remains affirmed since the March 2018 launch of the NRRLN 3 1/2 2028s even through the pandemic.

For that matter, I do not think they have made any material mistakes given the selected property asset class. Where retail is concerned, we have seen that the valuers have had almost no idea how to value them, so absent further pandemic setbacks, I expect to make substantial returns from investing in this stock. Barclays disagree with me, but then they were neutral on Carillion.

On then question of incentives etc. - that is an argument used by all. Some may find it distasteful, but the alternative is worse.

[m_kerr] 23/12/2021 13:31

what matters is the overall IRR, not promoting the successfull investments and glossing over the detractors. management here are highly promotional, they don't tell it as it is, which is ultimately what sharehoders need to know. shareholders have lost about 70%+ and are stuck with many shopping centres for which there aren't buyers.

[flyfisher] 23/12/2021 13:28

The market is full of this sort of thing. I would prefer much more institutional intervention to clear out the inept, liars and conmen.

We all could probably name a handful of culprits.

Whilst i am no expert in NRR'S affairs, any asset based business which has halved its nav in a couple of years, should be seeking a new board.

Sadly, shareholders seem complacent.

[chucko1] 23/12/2021 13:22

"The truth of the matter" - is that this story still has a long way to run.

On the IRRs - Hawthorne was an asset they effectively had to stop themselves out of - I could not care less about the IRR on that. The reduction in LTV was key and will rive better achieved sales prices on the following sales.

More importantly, although I am interested in the IRRs of the elective sales, more solid verification of stability and a recovery will come over a longer period of time and the sales prices on comparable assets by other vendors will help to validate this.

For these risks, a 35% discount to asset values is really generous.

[nickrl] 23/12/2021 13:14

marksp2011 they recalibrate the bonus scheme to make sure its sure bet and have the cheek to justify their action by saying we need to retain good talent!!

[marksp2011] 23/12/2021 12:59

You are right flyfisher

I wrote to the Chairman and asked what the incentive was that had taken the share price from over £3 to 60p and how that was deemed to be a success that warranted a bonus.

No answer

[flyfisher] 23/12/2021 12:11

Correct m kerr.

The truth of the matter is that nav has halved over a few years, after which a Deferred Bonus Plan has vested.

A bonus for halving the nav !

[m_kerr] 23/12/2021 10:34

they like talking about IRR when it goes well, what about the hawthorn leisure IRR?

[chucko1] 23/12/2021 10:27

In the Bravo JV, they are acting as advisor and earning a fee. As only 10% of the exposure is their own, they do need to be seen as providing sound advice, aside the fit of the exposure to their own portfolio. How they weigh the two is not clear, although probably very rarely in conflict especially given the young age of the JV.

[nickrl] 23/12/2021 09:36

With NRR only having 10% say in Bravo JV they've presumably have little control over Poole decision but it does demonstrate that there are keen investors out there and this must surely drag the NAV's up on this sub sector for all owners.

Wonder who the purchaser is?

[mindthestash] 23/12/2021 09:20

Selling the central traditional shopping centres to redevelopers = good long term strategy

Poole retail park (retail sheds ) is the sort of place we should be buying with the dosh from above

[fidra] 23/12/2021 09:13

We did only have a 10% stake in it tho .so likely reason for sale .

Decent return tho.

[marksp2011] 23/12/2021 07:16

That was a decent retail park, busy and very well positioned. It is a shame they sold it IMPO.

[marksp2011] 23/12/2021 07:15

OK Fenners
i will take that as a "yes" then.
Now I understand the context of your many, many posts.

Everyone is free to post as an anonymous poster on a free public BB. In the same way, viewers can decide what is worth reading.

[fidra] 22/12/2021 20:34

We are also forgetting they made a good % return per annum on the investment in terms of rent .

That’s what property investment is all about .a rising* return and a profit on sale .

[fenners66] 22/12/2021 14:09

marksp2011
22 Dec '21 - 10:23 - 3840 of 3842

I come on to the ADVFN BB's to discuss companies , their markets and their prospects. That is my interpretation of what these boards are for.

What anyone else says they do / or not do with their money is not relevant to that.

[nickrl] 22/12/2021 13:40

Given HMSO and its JV partner Canada Pension Plan Investment Board have just let Silverburn shopping centre (Glasgow) go for £160m below the £300m they paid for it in 2009 this seems a reasonable outcome. Presumably as long as no tenants walk away from their obligations up to a certain point in time (why didn't NRR say when that is) they will get most of the £5.5m back.

[chucko1] 22/12/2021 11:56

I do find a number of the posts above remarkable, and rather encouraging for us risk-takers!

No one has commented upon the probability that the ESCROW being paid, and to what extent. Understand why the funds have been placed there and the other contextual statement made by NRR in that regard. If you cannot take it at face value, that is fine, although likely an error of judgement.

Whatever view you take, they are selling very much above the value implied by the share price. Don't you understand that that is what this is all about?? Whether it is at NAV flat or plus/minus a bit hardly matters by comparison. For this small - but not insignificant - part of the portfolio, NAV flat represents a 53% implied uplift.

If you don't want it, I will take it. On so many occasions, I have read similar garbage expressed about other REITs - look what happened to just about all of them. They did what they said on the tin.

[marksp2011] 22/12/2021 10:23

Thanks Fenners

"Are you someone with no shareholding who chooses to take on the mission of telling everyone that they are wrong and have made a mistake investing?"

Would you mind answering that? I would like to understand the context of your posts

Thanks

[flyfisher] 22/12/2021 10:23

Yes fenners, they seem to use headline sales price to calculate a gain on book.
As the net sales price cannot yet be assured, the truth is that they don't know whether it is at a premium or loss to book.

Book value £37m
Headline sale price £38.8
Net sale price excluding escrow amount £33.3m

So it has been sold for anything between a 10% loss and 4.9% premium, to book.

'' highlights the significant value we can create through our Regeneration expertise.''

Expertise, really !