Newriver Reit Share Discussion Threads

[galatea99] 20/9/2019 06:08

"The Great British sell-off: Three UK stocks on “astonishing” valuations
19 September 2019

Tony Yarrow of the TB Wise Multi-Asset Income fund names three stocks that have become victims of an “overly pessimistic market”.

"Investors should stop trying to predict the outcome of Brexit and instead focus on the extreme valuation opportunity on stocks in the UK market, according to Wise’s Tony Yarrow (pictured).

The manager of the TB Wise Multi-Asset Income fund noted that sterling has continued to fall in the three or so years since the UK’s referendum on membership of the EU, putting pressure on an economy that relies to a large extent on imports.

“But just how cheap some of these assets have become is astonishing,” he added. “Many have fallen in value by 50 to 75 per cent from their pre-Brexit levels.”

“The disconnect between the valuations of ‘cyclical’ assets and the rest of the market worldwide is already at an historical extreme, but it is at its most striking in the UK.”

Yarrow added that, while his investment mandate allows him to avoid the UK, he remains overweight because of the “growing disconnect between our estimates of the value of assets and prevailing market valuations”.

Here the manager names three stocks that have become victims of an “overly pessimistic market”

"First up is New River REIT, which owns retail parks and about 600 pubs. It offers a third-party management service to new owners and has signed three management contracts in the last few months. About 96 per cent of the company’s floor space is let.

The managers of this trust are well aware of the threat from online retail, so are careful to identify successful retailers that can offer convenience, value or service to their customers. Yarrow added that the threat from online retail is one of the factors that makes the company look so undervalued.

“Retail assets have become so cheap now – well below the cost of rebuilding – that new investors are being attracted into the sector,” the manager said.

“The valuation of NewRiver REIT can be explained partly by the current antipathy towards UK assets, and to retail property in particular, and partly by the fact that Woodford Investment Management, until recently a holder of 20 per cent of the company’s issued shares, is said to be selling.”

New River is down 40 per cent since its September 2017 peak."

[warranty] 19/9/2019 20:55

Not all retail Specto, Next isn’t sinking!!

[spectoacc] 19/9/2019 19:35

Just the sort of thing NRR does well. Let's hope they can run faster than the tide of sinking retail! (Apologies for mixed metaphor).

[marksp2011] 19/9/2019 16:40

Thanks for the post

[galatea99] 19/9/2019 11:49

Article on Newriver redevelopment in Wakefield, focused on a cinema and a food court, rather than conventional shop units.

"The introduction of a 11,650 sq ft state-of-the-art cinema within three traditional retail units, forms part of NewRiver’s continued active and innovative asset management strategy. It is the result of advanced new projection technology, which requires less ceiling height than standard cinema builds.

David Charlton, Asset Manager at NewRiver at NewRiver, said, “This is a new way to look at repurposing the oversupply of retail space in our towns and cities. It demonstrates how we are committed to finding new innovative asset management opportunities in its centres, through our active asset management style."

[spectoacc] 18/9/2019 07:23

@fenners - "A lost profit is better than a loss". But time-wise, might have been better spent on the winners :)

Read in paper yesterday that 1 in 5 shopping centre sales are to local authorities. Probably a bubble that has further to run but public sector rarely proves a good buyer of private assets.

[fenners66] 17/9/2019 22:42

SpectoAcc >"Edit 2 - @fenners66, you've called NRR correctly for some time - but you've not made a penny :)"

Absolutely true.
Add CLLN IRV and DEBS to that and I have had a load of short opps.
I have nothing against shorting but have not done any for a very long time.
Still was happy to share my thoughts on those companies anyway.

My longs and Buy and holds have done ok....

[zccax77] 17/9/2019 21:40

The way things are going if INTU goes kaput then I expect the share price of NRR and HMSO to tank as well in the medium term. I consider the failure of INTU a major credit event. Though it may still be acquired by someone.

[spectoacc] 17/9/2019 17:03

Indeed - Europe too, remember seeing an article about houses in a part of Italy for £1, just trying to get people to return to villages. And the sun shines there.

The whole "shortage of housing" cry is a chimera - a shortage where the jobs are, maybe, but plenty of empty/worthless property around. Some sections of retail are heading that way.

(Should also point out that some of the resi examples are due to false prices/mortgage fraud "back in the day". But still true that prices are well down over even decades in some places).

[spectoacc] 17/9/2019 13:29

Wonder how much pain the banks will have taken before that point is reached.

Some of it will have no alternative use of course. Don't forget there's towns in the North East where property is down c.50% over the past 10 or 15 years - and that's resi (parts of Middlesbrough springs to mind).

Edit: entirely randomly:


Edit 2 - @fenners66, you've called NRR correctly for some time - but you've not made a penny :)

[hpcg] 17/9/2019 13:26

Looking at Bangor it has a population under 20k, half of which are students, and is massively over provisioned with retail. Frankly I would be knocking that down and putting in student accommodation over the whole block. If that or some similar redevelopment isn't the plan then I fear for the purchaser! The retail estate in this country will shrink where coherent surplus locations can be taken out.

[zccax77] 17/9/2019 12:58

Thanks guys for the useful posts and the education. Just posted this from another thread to canvas views and get discussion.

[fenners66] 17/9/2019 12:20

Landlords will have the problem fill voids at some rent to gain revenue and avoid rates - but run the risk of the next tenant kicking off asking why they are not getting the same deal...

[marksp2011] 17/9/2019 11:42

The estate listing is very interesting. Obvious they can't let and have been filling voids hence the tiny and all inclusive rents on some of the units. Looks more like a money pit than an investment :)

[nickrl] 17/9/2019 11:34

xccax77 not wishing to move off this threads real focus too much but looking at the Bangors centre useful information provided on the auctioneers website

hxxps://auctions.allsop.co.uk/lot-overview/city-centre-freehold-shopping-centre-investment-in-bangor/c190709-059#tenancy

its pretty evident that the reversionary income stream is going to reduce significantly over the next two years when you see what the recent leases are achieving per sqft. So it aint going to be yielding 30% too much longer and more like 15-20%, or worse if voids increase, within a couple of years.

[zho] 17/9/2019 10:31

>>unlikely that we will have a problem with convents>>

I hope not. There's one up the road from me.

[cc2014] 17/9/2019 10:30

NRR wrote down it's assets at financial year end back in May by 11%. Extract here:

IFRS net assets £796.1 million (March 2018: £892.4 million); IFRS loss after tax -£36.9 million (FY18: profit of £45.7 million) due to non-cash valuation decline of £89.5 million; IFRS basic EPS -12.1 pence (FY18: 16.0 pence).


So, it seems to me RGL are catching up rather than leading. The read across was to RGL and should not be implied the other way around.

If RGL are writing down retail by 15% and NRR overall was 11% that seems about right given NRR's pub exposure.

[wskill] 17/9/2019 10:28

The problem has been Woodford not the quality of the assets unlikely that we will have a problem with convents ,but you never know if we have I would guess it will be the whole market that crashed not just NRR.

[hpcg] 17/9/2019 10:24

Let's all be a little cautious on the valedictories I would suggest. Buying 'bottoms' is spectacularly difficult and personally a) I didn't buy at the bottom, b) I didn't buy after the bottom, and c) at least for me my first purchase is still just about under water, though not if the distribution is counted. While it is just below what I consider a risk adjusted fair value there are definitely circumstances that could take the price lower again.

[eeza] 17/9/2019 10:20

And then there's the pub business.

[rcturner2] 17/9/2019 10:19

More to the point is what that does to the LTV and the banking covenants? That is the main risk here.

[fenners66] 17/9/2019 10:12

Well I first put these on the watch list at about 350.
Then got very bearish on their prospects and have posted that here over the last few years.
There is a whole market out there for taking risks and I judge some to be better than here...

However as I had said, well done to those who are in profit having bought lower - sure in hindsight I would be happy to be in that position too .

But when a quoted REIT has to write down retail assets - smaller retail outlets more likely to be higher yielding and have some similarities to those owned here - by 15% then yes I still believe in the read across.

As for "what will it cost" you can play around with the semantics - but how much would a 15% write down equate to in NAV here then ?

[marksp2011] 17/9/2019 09:53

Fenners

And there were 86630 restaurant businesses in UK in 2017. A fair slew of thiose will be multi-outlet.

It is a silly post. Retail assets are what................? Located where?
If Regional needed to revalue their retail portfolio down 15% it would suggest they had made a bad investment wouldn't it?

If you don't want to buy then don't :)

[chucko1] 17/9/2019 09:34

Fenners66, you take so long “considering”, while others are taking risk. You give the impression that risk is a bad thing! Some of us have learned to manage the discomfort of risk. And made a bob or two along the way.