Newriver Reit Share Discussion Threads

[chucko1] 22/5/2018 10:37

But the chairman is bound to reflect upon the current state of the market and how NRR may be affected by it. Stores have not just started closing, they have been doing so over a number of years, although with a rather more rapid pace the past months.

And yes, the share price reflects forward expectations. On that note, I have little idea of today’s rise, a substantial one (of 13p) as I write.

[fenners66] 22/5/2018 08:47

The negative should not be in the results - its the the future before there would be an impact.

[salchow] 22/5/2018 07:20

With regard to shares hitting highs a lot of small shares with low dividends have also gone to very high valuations. I would suggest they have the furthest to fall in the case of a correction. Shares like NRR that have already fallen considerably may be less susceptible particularly if dividends are maintained at a good level. There has been no RNS regarding any difficulties and as chucko1 suggests there may be more information in two days time which I would hope would be not as negative as some might expect.

[chucko1] 22/5/2018 00:16

The rest of the market is certainly exuberant, but, and this is a big but, the Pound continues to get sold off against the Dollar and so mega caps like Shell, BP, AZN and Glaxo and HSBC etc. power ahead (large Dollar earners). Miners doing well also.

Let’s see what light Thursday’s news brings. I would very much expect them to address the issue that concerns you as the recent shop closures have been so newsworthy.

[fenners66] 21/5/2018 22:48

vgumbltsb
17 May '18 - 15:51 - 404 of 451

Please can someone tell me why NRR is falling so much on a daily basis and is looking so weak
vgumbltsb
17 May '18 - 16:07 - 405 of 451

and getting weaker and weaker

Just to go back to the original question here - I considered what I thought could be the answer and now we have a backdrop of all time highs on the FTSE - many of my stocks are doing much the same and yet this has got weaker since the question was asked.

Chucko said an overreaction to weak retailer news - but given the rest of the market has become (over) exuberant I would suggest that the is real and present danger in fears of a serious slow down in retail property.

[salchow] 21/5/2018 15:29

fenners - then it is definitely not for you. I certainly wouldn't recommend you buying until the downtrend shows some indication of ending. At the moment it is catch a falling knife territory. The forthcoming update should give some clues to the current situation.

[chucko1] 21/5/2018 15:00

fenners66, I do get your point. But it’s not only about systemic risk (e.g. interest rates). Location, location, location is as much a maxim as that of rising tides etc.

[fenners66] 21/5/2018 13:48

I take your point about using their skill to buy the right property - if they are skilled that may lead to higher occupancy - however if the swathe of closures impacts the commercial property market as I believe it will then I cannot see them holding back the tide.

As we use the expression a rising tide lifts all boats - the reverse is true as well.

[salchow] 21/5/2018 12:39

Fenners - as I say it depends on location. We have lost 3 banks locally and they were all quickly taken up by other occupiers. That must put pressure on the poorer properties but in most cases they are the ones on lower rents in the first place and not the type that would be owned by a large REIT. They get taken on low rents by individuals wanting to give something a go. There is absolutely no slowdown in people trying to set up businesses. My old accountancy practice are run off their feet with new clients.

Locally, I see a problem recently with an old property being vacated that was occupied by the Co-op who have suffered due to Waitrose and Aldi both building new supermarkets nearby. It is of a size where I find it hard to envisage what else it can be used for. This is a problem with larger retail spaces but one has to hope that a public company uses some good judgment to avoid properties like that and to take on those where there they think there will be ongoing demand.

[fenners66] 21/5/2018 10:41

As I said before I can see why the banks would dispose of property through auction - it is just the easiest route to cash , saves time and hassle.

But also means more property on the market not expected to hold out for top $.

The wider point here is that there are going to be more "good" properties on the market at a time when demand is falling - QED lower rents and valuations.

[minerve] 21/5/2018 10:26

21 May 2018

NewRiver REIT plc

("NewRiver" or the "Company")

Response to Press Speculation

NewRiver notes press comment regarding the potential acquisition of Hawthorn Leisure Holdings Limited ("Hawthorn"). NewRiver confirms that it has entered a period of exclusivity with Hawthorn and its major shareholder regarding a potential acquisition of the business. A transaction, if completed, would be funded from NewRiver's existing resources. There can be no certainty that a transaction will be concluded and a further announcement, as appropriate, will be made as soon as practicable.

[salchow] 21/5/2018 09:37

Fenners - I think that organisations such as banks, betting shops, etc with a number of properties to sell will frequently use auctions even in good times. It is undoubtedly easier than appointing local agents in each area to try to sell them individually. Also it attracts the nationwide interest of potential investors.

Withdrawn from sale - I couldn't really say the specific reasons but there are always withdrawals not just recently. After all there is always a reserve price so they could let it go forward to auction even if they started having doubts as to whether their price would be met. On the other hand I have seen very good properties with a simple withdrawn comment.

The whole point with property is that it is down to location and time. Many years ago I paid 35% over the odds for an office property because of competition. The current yield based on the price I paid is now 68%!

[fenners66] 21/5/2018 09:01

Salchow- thanks for editing your earlier post - we are both using the same figures now.

"Selling prior to auction can only be good news"

Precisely .
Part of the discussion - I argued that selling at auction was a last resort - where as speedsgh thought it was the "preferred route"

I left the sold prior to auction stats in deliberately to illustrate that despite having made it as far as the catalogue and obviously received interest 13 were sold prior and 15 were withdrawn.

It illustrates that allowing them to go to auction is a risk the sellers of 13 properties were not prepared to take when there was (in their eyes) a better offer already on the table.

As for withdrawn from sale - can we infer that they had the come to the same conclusion but had not completed ?

Yields at over 10% and unsold is an alert at the state of the market (in those areas)

Only after that analysis for the auction 15-5-2018 did I then turn to their "state of the market" report for the first qtr.
Which basically said all the same things I had already worked out for myself.

[salchow] 21/5/2018 08:42

fenners - can you provide the link to Allsops report - I cannot see it.

The way I look at the figures is that there were 181 properties. 14 were withdrawn prior to sale. Perfectly normal at any time. That leaves 167.

Of that 167 I think 140 were sold either during the auction process, prior to or after leaving just 27 still available (my figures may be the odd one out). Selling prior to auction can only be good news. So that means that 83% of those that were not withdrawn were sold. Only 27 of the 167 were unsold. To me that is a perfectly good outcome.

Those sold during the actual auction process (excluding those sold pre or post auction) totalled I think 117 and of those 90 achieved yields of less than 10%. That is not bad. These are largely secondary properties sometimes in poor locations. That is what I would expect.

[salchow] 21/5/2018 07:55

edited while I check my figures

[fenners66] 19/5/2018 23:02

The number of retailers going under jumped almost 50 per cent in the first three months of this year, it has been revealed.

There were 327 retail failures recorded in the first quarter of 2018, according to data compiled by credit checking agency Creditsafe.

The firm said Toys R Us and Maplin were the two largest firms to go into administration in February, after being hit by weak consumer spending and online rivals.

Most notably it was clear that high street chains like Toys R Us, Maplin and Carpetright struggled to adapt to the changing nature of the market. It seems this challenge is ongoing with the likes of House of Fraser’s parent group reporting a £44 million loss only this month.

Read more:

[speedsgh] 19/5/2018 09:50

Seems like some have had the inside line on this story over the past few days...

New River discovers taste for community pubs with £100m deal -

A company that owns about 300 community pubs across England and Scotland is poised to change hands in a deal worth more than £100 million.

The Times understands that New River Reit, a property investment trust focusing on retail and leisure, is set to double its mainly tenanted and leased pub estate by taking over the privately owned Hawthorn Leisure.

Hawthorn, which is controlled by both its management and Avenue Capital, an American private equity firm, was put up for sale recently via Sapient Corporate Finance with a price tag of more than £115 million. It was formed four years ago to acquire 275 Greene King pubs for £75.6 million. It quickly followed that deal with the purchase of 88 pubs from R&L Properties.

The company has since taken over two small packages of managed pubs from Nectar Taverns and JD Wetherspoon, and has sold off about 100 non-core hostelries.

Its pubs are mostly community locals, such as The Stags Head in Carnoustie, eastern Scotland, and The Wheatsheaf in Newmarket and The Crossways in King’s Lynn, Norfolk.

The emergence of New River as the buyer will come as a surprise, as most experts had been favouring Patron Capital, which teamed up with Heineken last summer to complete a £1.8 billion takeover of Punch Taverns. Admiral Taverns, itself acquired last year by Proprium Capital Partners and C&C Group for £220 million, was also hotly tipped.

New River is understood to be hoping to agree terms on a deal in time to make an announcement alongside its full-year results next Thursday.

It may retain the management team at Hawthorn, led by Gerry Carroll, its chief executive, to help to run the enlarged pub business.

New River, which was founded in 2009, has a £1.3 billion property portfolio that includes shopping centres, convenience stores and about 330 pubs, of which about 200 were acquired from Marston’s in 2013. Two years later it bought another 158 pubs from Punch Taverns.

Shares of New River fell by 5½p, or 2 per cent, to 266½p. None of the parties involved chose to comment on the deal.

[fenners66] 18/5/2018 23:08

I had these on my watchlist for yield for some time as we can see that share price is pushing them higher up the list - but at the moment I'm thinking they are more likely to go lower and the dividend to come under pressure.

[fenners66] 18/5/2018 23:05

Oh I nearly forgot - but 1 of the lots was a Coral betting shop - we are told by the bookies that as a result of FOBT stakes being reduced to £2 there will be 100's of betting shops closing and 20,000 jobs lost.

I do expect Coral / Ladbrokes to close many shops as a result of the GVC takeover regardless.

[fenners66] 18/5/2018 22:55

This issue has sparked my interest so I have had a look at the last commercial auction result from a well known national auctioneer.

Last auction 181 Lots

Of which :

Sold Prior.........13
Withdrawn........15
Sold after ...........9
Still available.....29......16%

Sold ...............115........63%

Of those sold 24 were sold at a yield of >10%
9 were unsold despite a reserve yield of >10%

Only 4 were sold at a yield below 4%


Then I read the synopsis of Qtr 1 ( before the above results)


"High Street

The industrial market’s gains have been at the expense of the high street and its perceived demise. A combination of reduced consumer spending and the shift away from the high street to on-line shopping has been a major contributor although business rates and changing consumer habits have also played a part. In Q1 2018 we have seen the failure of Maplin, Claire’s and Warren Evans as well as New Look and Carpetright entering CVAs with others on the brink of doing the same. This has been further compounded by the woes of the ‘casual dining’ sector that has seen the closure of units by Jamie’s Italian, Byron Burgers, and Prezzo.


The trend has rocked investor confidence in the sector although echoing the theme of this note that core pitches have held up well, as the perception is that whilst the retail market is over supplied the core will continue to offer a retailing experience albeit we are seeing the traditional fundamentals of retailing changing forever.


Our current retail sales reflect this with a prime unit in an affluent London suburb generating 4.8% NIY whereas we cannot achieve a NIY of 10% on a well let block of retail in a very secondary northern town – the gap is widening all the time."

So I had independently surmised the same - the pressure from supply and a change in sentiment - but the above was not my view it was the informed professional (you would expect including positive spin as its in their interest) view of Allsops

[riverman77] 18/5/2018 22:46

"Any better ideas for a 9% yield along with the track record of these guys
?"

Agree it looks attractive in terms yield, and of course you get some inflation protection and capital upside potential unlike the bonds you mention.

RGL has a yield of around 8%, but doesn't have much of a track record and carries more debt. From a pure yield perspective, probably Direct Line and Imperial Brands come closest - both around 7% and pretty secure.

[fenners66] 18/5/2018 22:16

Banks are not property developers and I would not expect them to start a non core activity in trying to sell properties that were also deemed non-core.
Since banks are more used to writing off £Billions on PPI claims , or paying £millions in bonuses I cannot think that they pay a lot of attention to trying to get top $ for any property they sell.
Whereas in the world of smaller businesses commercial property is attempted to be sold via conventional routes before admitting defeat and putting into auction.
This is not fine art , auctions for property are an easy route to some cash.
As for beating reserve , have you ever looked at reserve say for housing ?
Of course they are supposed to beat reserve - that is set at a low figure to generate interest in a perceived bargain.

At the end of the day it's a supply and demand market. When demand falls and supply increases the price falls its that simple.

With 1000's of stores being closed both demand is falling and more properties come on the market - which stores are claiming they are opening new?

Lidl and Aldi - But from what I see they are building new on brownfield sites.

[chucko1] 18/5/2018 22:00

I did the same analysis on the 43 New Look stores slated for closure about 2 months ago. Only one store had any meaningful square footage, and if the footfall argument is valid, I would guess they could retenant even this property without much delay.

In any event, the closed stores would endanger just a fraction of NRR’s overall rent roll.

I have not been paying too much attention today - is it a further 17 stores closing? (On top of the original 43).

[salchow] 18/5/2018 21:32

New Look are one of New Rivers main tenants. I have just had a look through a list of 60 stores they are closing and to my great surprise I am having difficulty in finding more than a handful that are in one of New Rivers properties. Perhaps the management know what they are doing in their choice of locations after all.

I would not be surprised either if they were not affected very much by rent reductions from the ongoing stores bearing in mind they aim for competitive rents in the first instance.

[salchow] 18/5/2018 15:50

Fenners:

"By definition a property is sent to auction because a suitable sale could not be obtained"

That is absolutely ridiculous. The banks automatically put the properties in for auction to obtain the best price with the least hassle. You probably don't attend auctions. These properties are nearly always sold at above the reserve price. The auction market at least for smaller properties has remained strong.