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NRR Newriver Reit Plc

78.50
0.40 (0.51%)
12 Jul 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Newriver Reit Plc LSE:NRR London Ordinary Share GB00BD7XPJ64 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.40 0.51% 78.50 78.20 78.30 78.30 77.30 77.30 342,736 16:35:05
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Real Estate Investment Trust 73.6M -16.8M -0.0537 -14.58 244.14M
Newriver Reit Plc is listed in the Real Estate Investment Trust sector of the London Stock Exchange with ticker NRR. The last closing price for Newriver Reit was 78.10p. Over the last year, Newriver Reit shares have traded in a share price range of 67.70p to 88.40p.

Newriver Reit currently has 312,603,487 shares in issue. The market capitalisation of Newriver Reit is £244.14 million. Newriver Reit has a price to earnings ratio (PE ratio) of -14.58.

Newriver Reit Share Discussion Threads

Showing 3426 to 3448 of 4350 messages
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DateSubjectAuthorDiscuss
20/9/2020
18:52
So far as the NAV is concerned, NRR started at 37% which is not especially high. Over all US REITs, the average is 31%, but that includes some at near-zero owing to a far wider range of structures.

Now 47% for NRR and a further 21% fall in average asset values takes it to 60% LTV. However, if they succeed in selling 10% of their portfolio this year (reasonably close to current book value), then this 60% LTV becomes 51%. Repeat next year at a 10% discount to book, and the LTV becomes 42%. At this stage, (end 2021), a 2 for 5 equity raise in more benign conditions restores the LTV to 32%.

Does NRR get this far? - this is horrible in terms of wild events, but the finances for most REITs are far better than those experienced by REITs in 2007 etc. The required equity dilutions in that era were severe since the starting LTVs were more like 65%. Lenders had been falling over themselves to offer leverage and even monsters like RBS were being priced out of the market. Come the crash, you had to raise equity at any price as lenders could lend not a penny more in most circumstances.

This is not even considering a waiver for covenant breaches, which is pretty likely in any event. For nearly all REITs over a few decades, survival is the be-all and end-all. Price volatility even for the best (see PHP as a prime example) is extreme.

chucko1
20/9/2020
18:25
So Fenner, that would be quite a discrepancy between the anticipations of the management and the eventual reality. 52% minimum versus 96% maximum.

You regard it [management statements] as "B/S". I really cannot see the evidence for this at this stage. But each to their own with a view on the integrity of management.

But I do recall you making very similar comments regarding the oft-criticised management of PLUS, when they were not as clear as they could have been regarding the P&L breakdown. Except those who knew the company recognised the exaggeration of the importance of this issue (it was not important at all), whereupon PLUS has almost tripled (including dividends) in the meantime. A great risk-reward for true risk-takers as opposed to back-seat drivers.

On NRR itself, of course it is cheap now - assessing the degree of risk when it is being hit monthly by large events not within its control will prove too much for many. I see that as a far larger component of its overall risk as opposed to a poor (or worse) management.

chucko1
20/9/2020
18:22
Manouk2....tell your friend that this is the most insightful and intelligently written article I have read on this website for a long time...I agree with almost everything he has said...the big problem as he says is further significant declines in asset values with big increases in LTV resulting in covenant pressures ..good news is I think lenders will waive these covenants in the short term .
I would add that I would sell more assets and announce a share buy back to flush out shorters and put a floor under current share price.

candid investor
20/9/2020
18:02
Debeege....I went on the Hawthorne Leisure website and saw them all available there...even as you say they are coming up for lease renewal then presumably it means that the current tenants are moving out or am I missing something ?
candid investor
20/9/2020
15:37
Reading the accounts published June 20 the reduction of EPRA NAV per share
201p
261p
-23%

so yes a 22% valuation fall has been done before.

Whilst loan to value went from 37% to 47% in the same period.

Referring to
"Already collected or agreed re-gears with 84% of Q1 rents and 80% of Q2 rents"

Is just falling for the spin B/S
I have the annual accounts open right now - so by way of example at that time

"Total collected or alternative payments agreed 75%"
sounds similar to the 80% figures mentioned....

But actually - Collected was just 52% !
4% already having been written off.

fenners66
20/9/2020
13:26
Thanks for sharing. Haven't time to go through it line by line but some good (& not so good) stuff in there. Quick points:

1. S/he's down 10% already
2. CAL certainly isn't a peer (or pier!)
3. Re NRR achieving March valuation with disposals - what are they selling? Is it what they can sell, ie the good stuff?
4. The pubs comment has been rapidly and painfully superceded. A page in the paper today on why 900,000 jobs are now at risk in the hospitality trade [with a plea for renewed furlough over the two week Oct total lockdown, VAT cut extending into next year, and - bizarrely - a cut to beer duty. Getting more people into pubs is the opposite of the govnt's policy right now!]
5. A 22% valuations fall is mentioned as being needed for any covenant breach - I'd suggest that can occur inside 2 quarters.
6. Not sure relevance of B&M entering FTSE100. Next is well up the FTSE100 & they're getting 50% average rent reduction on renewal (they claim).


Don't get me wrong, not anti-NRR, not down here, and credit to your friend for mentioning some downsides too. I just don't think s/he has included enough of them :)

spectoacc
20/9/2020
11:39
a friend sent me this well written analysis:



Thought I’d let you know I’m buying into NRR again. The discount is too big to ignore. I believe the market is mis-pricing the risk/return due to:
• Headlines of physical retail decline and demise of other retail-focused REITs (see Hammerson, Intu)
• Covid 2nd lockdown of non-essential retail (unlikely – but watching hospitalisations and deaths carefully – not just cases)
• Lack of clarity on true occupier ability to pay due to the moratorium on eviction proceedings
• Suspending of the dividend
• Brexit uncertainty

Portfolio valuation
1. NAV / share 201p. Current share price 51p (75% discount to NAV from 31 Mar-20 – which reported in June and already accounted for Covid to some extent)
2. LTV 47% and the issue of debt-level now an issue that needs to be resolved by management which they are addressing with disposals of £100m this year (already achieved £52m by Aug-20 at Mar-20 valuations)
3. I expect future valuation decline to be relatively modest through the rest of the financial year given:
a) Disposals already achieved in line with Mar-20 valuations (see above)
b) Tenant mix is focused on convenience and value/discounters who have fared well during lockdown and vs general online migration. E.g. One of their biggest tenants - B&M - has now been admitted to the FTSE 100
c) Retail park valuations (19% of the portfolio) are holding up in a post-Covid world (e.g. RDI disposal of 6 retail parks at 3% below Feb-20 pre-lockdown book valuations)
d) Pubs (23% of the portfolio) are open and were on an upwards like-for-like EBITDA trajectory before Covid
e) Shopping centres (51% of the portfolio) are the most vulnerable to valuation decline but are underpinned by alternative use valuations as residential (8% below existing use) should provide some further support. The business is already underway gaining planning permissions on many of these sites
f) NEY across the portfolio is already much higher than other property asset classes at 8.9% and rents are low compared to piers meaning there is less vulnerability to further yield drift which has affected other retail (e.g. LandSec retail down 20.5% vs. NewRiver down 12.3% over same valuation period to Mar-20).
g) Lettings conducted so far in FY21 are in line with Mar-20 valuation (Aug-20 operational update)
h) Savills monthly yield tracker for retail is showing just a c25bps blended yield drift for their mix of portfolio (shopping centres, retail parks and pubs) since April 2020
i) Average lot size of retail parks (£13m) and shopping centres (£20m) low compared to piers providing great access to liquidity. Pubs more liquid again (average value c£350k)
4. NewRiver has better metrics than piers (e.g. Capital & Regional LTV 57% and has breached covenants on a number of asset-specific debt, much less liquid assets but trading at same 75% discount to NAV)
5. Debt covenants are at 60% and 65% on a group-wide basis which would require a further 22% decline in valuations across the entire portfolio and no disposals to breach
6. As yields are high they collect a lot of cash for the portfolio value so interest coverage ratios will hold up easily
7. UK is already amongst the highest levels of online shopping penetration in the western world so the pressure of future shift is less acute from here than other countries
1. Online only really works for high-margin / high-value goods given the cost of operating a delivery network. NRR isn’t particularly exposed to online migration

Rental income
1. Already collected or agreed re-gears with 84% of Q1 rents and 80% of Q2 rents
2. Lots of the remainder are big names taking advantage of the current government protection to conserve cash when they don’t actually need to
a) E.g. Boots, Superdrug, Sports Direct, etc. in the press
b) Just 1.2% of tenant rental income is currently subject to administrations or active CVA (agree likely to go up as furlough ends)
3. Portfolio is currently under-rented vs Mar-20 ERVs so there is some headroom to grow into
4. Net acquisitions in Mar-20 year are yet to see a full year of rent collection – meaning some further room to grow in FY21 vs. FY20 figures.

I expect the government to extend the commercial tenant eviction legislation to the end of 2020 or beyond. Some tenants will continue to take advantage in an unscrupulous way but NRR can simply match that by delaying the reinstatement of the (full) dividend. Ultimately the rents are simply deferred - tenants will have to pay later or do a CVA / go out of business.

I spoke with a couple of commercial agents selling retail property to gather their thoughts. Lots of tenants have taken advantage of the legislation to part-pay or refuse payment but are working out deals to bring themselves up to date over the next 6-9 months. This also allows them time to apply for business interruption insurance claims – the High Court has just ruled generally in tenants’ favour on this today in a landmark test case of business interruption insurance.

I’m also comforted by the other ways the business adds value beyond simply collecting rent on balance sheet assets, specifically through fees and profit shares of JV equity with BRAVO (PIMCO), active asset management and capital recycling capability (buy at 9-15% yields, sell at 5-7%), re-development capability, and asset management mandates.

I expect underlying cash flows from operations to be c8p in FY21 (starting at , rising to 16p in FY22 and NAV/share to fall to 150-170p over the course of the next two half year reporting dates. But I think that will be the bottom of the market.

The catalyst for a resurgence in the share price are:

- Re-instatement of the dividend and dividend guidance
- 1H21 results (Nov-20)
- Sales of assets and clear route to return to 40% LTV. [Given likely portfolio valuation declines against Mar-20 this will require a fair amount of selling and is probably the biggest risk to regaining a stabilised business]
- Covid-19 improvements:
o Realisation that ‘Covid 2nd wave’ is case-led and isn’t resulting in anything like the same level of hospitalisations and deaths even on a proportional basis
o Vaccine roll-out news / implementation

Although I do also expect further share price weakness on:
- The opposite or poor results on the above
- Extension of the commercial tenant eviction moratorium
- Retail business redundancies, CVA’s and administrations in the headlines
- Hammerson or other retail REIT administration / further equity raise / public distress / fire sales of assets

But I see those as opportunities to buy.

manouk2
20/9/2020
00:15
“New 52 week low here” How about a new 10year low here. “No business is safe in these uncertain timeless” Tell that to Microsoft, Apple, Google, Zoom or any of the other tech companies making hay while the sun shines.
zac0_4
20/9/2020
00:08
“Even resumption of one third of the dividend will be huge” not to long term holders it won’t be!
zac0_4
19/9/2020
18:15
noreply they are exposed in areas subjected to local restrictions so that won't help. However, i'd say that with New Look getting t/o rents away you can see all retailers wanting this arrangement and thats going to make certainty of income difficult to forecast. This is exacerbated by lack of transparency as to what these arrangements are - is there any base rent isn't disclosed the only thing that is clarified is service charges sit outside the arrangement.

Given income could be impaired for some years now will they need a cash raise to provide some breathing room?

As you say guessing the bottom is anyones guess currently!

nickrl
19/9/2020
17:17
New 52 week low here. No business is safe in these uncertain times.Might have a dabble in the future but no point trying to guess the bottom or trying to catch a falling knife
noreply1
18/9/2020
20:12
It will be tough and we may have to wait a while until we see 75p again, especially with a lower revenue winter than was originally forecast for the pub estate etc. But if the finances are in OK shape, then just wait it out. Even resumption of one third of the dividend will be huge, but I don't think we will see that this year now.

But I want to be holding these when it does restart.

chucko1
18/9/2020
17:39
Was that Norges throwing in the towel? 16mn traded today. They stated they were getting out of all sorts of UK things. They had 7.5mn as of yesterday having recently dumped over 1mn. Terrible close - good sign.
chucko1
18/9/2020
16:37
Big print after the close. Is that the seller cleared.
tole
18/9/2020
15:58
The bots would happily take this to 0.1p if they could. Mr 100k on the offer now changed to Mr 20k. Over 6 million volume. The suppression of level 2 hasn't stopped for weeks, no amount of buying has been able to push this up for longer than 30 minutes before the bid gets nuked. How many more shares do they have!? The elastic band is being stretched though. Keeping a keen eye on developments.
debeege
18/9/2020
15:05
Broken down it has
diggybee
18/9/2020
12:55
Gunnyboy...you are right about the number of either empty or pubs for sale ..NRR isn't immune from this ...go on to the Hawthorne Leisure website and you will see that 1 in 5 of their pubs is currently up for sale

--------

Are you referring to the approximate 16% of NewRiver's pubs that are coming to the end of a lease? Not for sale.

debeege
18/9/2020
09:25
brwo349
17 Sep '20 - 17:37 - 3216 of 3217

"I don't understand that. Why would any property owner agree to a 50% rent reduction?"

I have been sounding this warning for years now.
It's supply and demand.
If there is no demand for the empty properties , even at zero rent , then the property rents for those that are occupied has to come down.

This is exacerbated when the shop next door - see New Look for example - has agreed rent free.

If you are a successful business and Next are - you already know the tricks so you are going to use the threats of exiting leases and saying your competitors have gained an unfair advantage over you.

There is no sentiment its just business.

fenners66
17/9/2020
17:56
These stores must be anchor tenants that the shopping centre can't afford to lose.
brwo349
17/9/2020
17:37
I don't understand that. Why would any property owner agree to a 50% rent reduction?
brwo349
17/9/2020
15:33
This is from Next's results this morning:

"Based on our negotiations so far we anticipate that, on average, rent in these stores will fall by -50%, saving £9.9m per annum. Eighteen of these lease renewals are linked to store turnover, rather than a fixed rent, meaning that we can be more confident in the store’s longer term future."

zho
17/9/2020
15:23
Gunnyboy...you are right about the number of either empty or pubs for sale ..NRR isn't immune from this ...go on to the Hawthorne Leisure website and you will see that 1 in 5 of their pubs is currently up for sale...no matter which way you look at this, it isn't a positive sign..
candid investor
16/9/2020
17:48
GB, very decent of you, respect.

My concern is the ...at least...phrase used.

There is no sign of the moritorium ending in to 2021.

What I hoped for was some clarity of an end date, had expected another roll over,
but nothing on that front.

essentialinvestor
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