Newriver Reit Share Discussion Threads

[spectoacc] 27/9/2020 08:40

"Issue you have is NAV has been falling year on year"

"..Current price suggests that this Cv19 is permanent which I don't agree with"


Re NAV - perhaps the question should be "when does it start rising again".


Re CV19 - current situation not permanent - it can't be, it's completely unsustainable - but always living with CV19 a distinct possibility.

[dhoult12] 26/9/2020 23:09

Candid I concur that current price suggests that this Cv19 is permenant which I don't agree with.

I however don't agree with nonsense such as share buy backs when the bottom has fallen out of the market and the divi has been suspended.

Reference alternative use.. Check the value of alternative use in 2019 accounts. How come 2020 NAV shot right through it? Should the loss not cap out at alternative use 2019? Residential has not shifted neither has warehousing

You can be "bullish" without drifting into fantasy

[candid investor] 26/9/2020 22:59

Dhoult, I do take your point about timing of any share buyback and like I said, it was just by way of example to dismiss the idea of an additional fundraise. ...wrt further asset write-downs , I had assumed up to 25% i.e. twice amount of last year...there should be a floor on the NAV of the retail assets due to their repurposing capability NRR have put a value on these of c £800 million that is just £100 million below current value...(this includes excavation works etc)...repurposing retail assets was always on their agenda, Corona has just speeded the process up...they also believe that JV acquisitions which are capital light, are more beneficial particularly where they are also rewarded with their subsequent asset management ..I believe that this time next year the situation will be much different ...no fool though, I can see occupancy rates falling, due both to CVA and non renewals at end of lease, rents falling (cushioned somewhat by only £12 per square foot presently charged) and pubs closing ..bottom line is significant liquid resources to weather the storm until the necessary and appropriate asset restructuring has taken place ...if you don't concur with that then I guess you should be putting your money elsewhere ..

[dhoult12] 26/9/2020 21:41

Issue you have is NAV has been falling year on year for a while.

There will be a write down in asset values again only question is how much with Cv19 and non payment of national chains till dec.

Its also easy to sell x.. Who is buying right now? I am sure the board are selling ASAP to reduce debt. But to suggest share buy backs are on the cards until to situation is stabilised misses the reality of what's going on

[candid investor] 26/9/2020 20:45

Sorry cut off too soon..for safety sell another £50 million of assets and reduce LTV to below covenant ratio...by the way all loans are unsecured ..the reduction in shares increases shareholder value, naturally the reduction in net income would likewise need to be calculated to support the validity of the restructuring strategy..

[candid investor] 26/9/2020 20:36

Should..my point was a general one rather than a direct path ..however, it's not entirely inconceivable in today's situation ...£100 million sales reduces debt to £463 million approx...reducing NAV to £1100 million = 42%. Even assuming a further asset devaluation then new asset value is £825 million increasing LTV to 50%. Then deciding to buy back up to 20% of share capital at say 60p per share cost and extra £36 million increasing LTV 60% is still compliant...for safety

[essentialinvestor] 26/9/2020 15:57

Might be worth noting NAV discounts across the sector are blowing out.


You can now buy diversified REITS on LTV's under 30%, still paying dividends

at 40% plus discounts.

[dhoult12] 26/9/2020 13:09

Candid you seem to ignore the LTV. Or to be exact you state.

-banks should allow banking covenants to be broken for a year...

And

-they can or should use cash for share but backs no less.

If you are a bank, your client sells assets your loans are secured against and then uses the cash for share buy backs and then breaks your banking covenants.. How forgiving will you be???!

Cash from asset sales will reduce LTV. Has to. Other option is a raise at this level ala Hmso which would be devastating for shareholders

[chucko1] 26/9/2020 12:58

They were right to be as prudent as they have indicated. Mark Davies (boss of Hawthorne) was being interviewed on Sky yesterday, and he was spitting blood about the idiocy of the 10.00pm curfew. Well, he would do that, of course, but said that the 20% of non-viable pubs would grow to 40% or even more as a result of this action. Never to return as businesses. Sounds dark, but far away from terminal and the imposition to us shareholders is mainly one of having a long, long slog to the other side. But the excellence of the management and current strong capital position (which they seek to strengthen further via disposals) will likely be the determining factor.

Tuck them away. I have added slightly on this renewed weakness.

[candid investor] 26/9/2020 12:21

Ok lots of misconceptions going on here so let me correct them...first and most importantly, lots of cash and loan facilities so let me explain why ..NRR has an incredibly high margin so even in worst case scenario and net income of £90 million was reduced by 50% due to the pandemic there is no requirement for cash, since interest and admin only require £45 million (even ignoring furlough scheme benefits for admin costs)....secondly NRR selling £100 million of assets so they should end the year with more not less cash. Asset revaluations don't need any extra cash BUT any further Negative revaluations (i.e. devaluations) will have an adverse impact on NRR ..if these contravene covenants then I think that the lenders will temporarily waive them..next benefit is that all or any profits are TAX FREE. plus we have to get at least 90% of those benefits as dividends which remains a huge benefit to us as shareholders...if there are no profits on a UFFO basis then we don't get dividends BUT likewise NRR don't part with cash..very important this next point.if NRR make and cash profits we get them not NRR, likewise if they don't make any cash profits then they don't need to pay out any cash to us so in either scenario NRR are not better off not worse off...think about that . With asset sales they will end up with more cash, likewise with asset purchases they would end up with less cash...speaking personally and with the share price so low they should BUY back shares with sales proceeds, absolutely no need, (or would it make any sense to issue more shares at these prices..might of course issue more at a later date at a higher price once this pandemic is over and resume their asset growth programme. Too much to take in, I realise. I will explain the share buy back strategy another time..other options availabl with new asset purchases is via JV sharing capital costs which they are already on to..finally it is time to repurpose assets although not right now.

[gbjbaanb] 26/9/2020 03:11

Go back through the contents here, there was talk of how much cash they have to hand. IIRC they had enough to keep going into 2021, and of they're hoarding dividends then that may last longer.

[trikytree] 25/9/2020 16:15

Thanks LG. I don’t currently hold any REITs but they’re all looking very cheap atm. For good reasons though I guess. Are NRR likely to be needing to raise cash to get through this? A rights issue at these prices wouldn’t be pretty.

[lord gnome] 25/9/2020 16:10

The last two quarterly dividend payments have been missed. No dividend until further notice.

[trikytree] 25/9/2020 15:57

Is NRR paying any dividend at all at moment? Ex div in 20 days apparently? I’m assuming dividends suspended? Thinking of buying in here. Seems cheap.

[dhoult12] 25/9/2020 07:28

It's increased from 3 to 4%.

However that's transact which is a platform. So made up of who knows how many individuals etc. Like having HL file a TR1. They appear on the register so need to file one when the % shifts but are certainly not the underlying holder who would be a lot of individuals

[diggybee] 25/9/2020 06:11

Increased to 4% from 3% I read?

[candid investor] 25/9/2020 00:17

Don't understand what you mean...I read it that they had significantly reduced their holding ?

[tole] 24/9/2020 09:08

Shorts closed and now IntegraFin Holdings increasing their holding this should be a good sign.

[candid investor] 22/9/2020 21:18

Yes they did close out their short...it was a short term stealth move in and out..I was relieved to see their short position closed because that implies that no longer sufficient profit to be made from their perception of the additional risk..

[tole] 22/9/2020 19:02

Millennium closed out their short the other day.

[dhoult12] 21/9/2020 22:34

Maybe already priced (yes apologies famous last words) in given pub co collapse today, even weathersooon was down 10% but 10pm shut for pubs.