Newriver Reit Share Discussion Threads

[m_kerr] 03/10/2020 11:58

to think by the way that the CEO described NRR is the best managed REIT in the sector, last year's results presentation (mysteriously they've taken it down from their site).

[m_kerr] 03/10/2020 11:38

well, NRR know that the shopping centres are the assets positioned the weakest, hence the last shopping centre they bought (not counting the grays shopping centre as the investment case there was to develop a large part into non retail use), was way back in june 2017. the only assets they have sold since then are pubs and retail parks. so effectively no NRR transactions for over 3 years. there are other reits out there that price in similar discounts to the gross assets (NRR is currently pricing in a fall in value of 38%). however some of the other reits don't have a majority of assets in structurally challenged sectors, and have much lower gearing, so i dont see why people are taking unnecessary risk with this stock. as i said before, NRR have been in the last year or so positioning their portfolio towards the sectors with the lowest income certainty to try and maintain a high portfolio yield, to support their dividend which after all their promotion and bluster about sustainability, has proven to be anything but.

[spectoacc] 02/10/2020 19:18

But the valuations reflect the quality of the assets surely. Accepted, the weaker stuff will be downgraded the most/likely due another bump down at next NAV, but it's value reflects whether it's good tenants on strong covenants, or poor tenants on naff covenants.

LTV was getting too high, I see them keeping 10%/still getting the management fee on the full 100% as not a bad deal. You'd have to mark everything else down a long way to get anywhere near existing discount.

Yes, LTV could still come in to play, assuming we've really got 6 months of increasing lockdown, continuation of the moratorium on chasing rents, and unemployment starting to kick in.

[m_kerr] 02/10/2020 17:42

NRR continue to sell their best assets, leaving them stuck with the effectively unsellable assets with unsustainable rents. spruce field was largely about the development plot of land, which they no longer own (well, only 10%). it has 7 years left on leases to very high quality tenants like sainsbury's, kingfisher (b&q), b&m and next. i remember them selling an asda supermarket at something like a 7% yield. well had they retained that they would have received that rent throughout lockdown (£1.2m or so annualised). i see the spruce field disposal as an act of desperation. they should have retained the development plot. i'm not saying NRR is or isn't a good investment at this share price, just that it's difficult to value assets that they can't dispose of at a price say within 20% of book.

[chucko1] 02/10/2020 10:22

They would be buying the bonds back at a 10% discount (or so) whilst selling the assets at a lower discount. And reducing the LTV.

Sensible capital management over a period of many months or even small years could yield interesting shareholder returns with current valuations. This is far more than a prospective income play now. Market has not caught on yet, possibly as news flow is still pretty wretched. That said, CZ Capital the only notifiable short now at 0.55%, having cut the position from 0.90% a few months back.

[catsick] 02/10/2020 09:59

I think they are in cash preservation mode, share buybacks while not paying a div do not make sense, the bonds are trading at 88 at the moment so buying back some of these with the proceeds of the sale could make sense and would also unwind the effect of selling at a discount to nav, with the bonds only on a 5pct yield I don't think the credit markets are too concerned about them

[candid investor] 01/10/2020 22:40

I agree VOW..Management won't do this...when management say they exist to maximise shareholder value..switch the word 'shareholder' for the word 'management'
What we need is an ACTIVIST shareholder forcing them to wake up to the reality that anyone who has placed their trust in them and holds their shares today has LOST money..apart from maybe a few people lucky enough to invest this week.
We could hope for a move by a hedge fund or a sell off of separate discreet portfolios .I am afraid that pubs will be scattered so they will probably have to be looked at on a pub by pub basis..

[candid investor] 01/10/2020 22:28

Flyfisher...your assertion isn't correct..the £53 million quoted in August didn't represent COMPLETED disposals..i.e. cash received for them. only a certain amount of that (which we don't know how much ) had been completed...we know that Spruce field has now been completed for £34.7 million increasing the COMPLETED disposals to £50 million...the total amount now sold or under offer totals £65.7 million, so the remaining £15.7 million of sales has still to be converted into cash rather than just being under offer ..it should further be noted that this wont increase the current cash total by a further £50 million for the completed disposals, because NRR have also spent money on capital expenditure projects on the pubs to both prepare them for social distancing restrictions and also improving the premises to make them a more attractive place to visit.. . The half year ended yesterday so we will see these half year results unimpeded by what happens from now ..we wont know this until November but ALL retail premises remain open...40% of them remained open ALL the way through lockdown , pubs were open for 3 months out of six months and other retail outlets a bit longer . not as disastrous as it could have been ..I am forecasting a small UFFO surplus based on these statistics but we will just have to wait and see.

[vow] 01/10/2020 21:52

Candid,

I used to dream of that back in 00’s when biotechs were sitting on millions in cash and their price was trading negative levels.

Alas managements very rarely do themselves out of jobs, plus it would be a fire sale of the pubs.

[candid investor] 01/10/2020 21:38

Yes, I have said all along that I would balance the proceeds of asset sales between reducing debt (and LTV ) and buying back shares to both prop up the share price and enhance shareholder returns.
I have a plan though that would maximise shareholder returns IF it could be enacted..The current years asset sales have gone through so far with only a 3% discount on current year asset values, I would be in favour of them selling ALL of their assets at up to a combined discount of 10% , repaying ALL debts and return the excess funds to all shareholders...I calculate this would reimburse us all with around £1.50 per share, i.e. 3 times their current value..not a bad return in such a relatively short period of time ..

[hpcg] 01/10/2020 21:26

flyfisher - very interesting.

EI - thanks, I presumed so as they can do it from debt, capital from sales, or the remnant 10% of income. It would only be be wording in revolvers and the like that might prevent.

[essentialinvestor] 01/10/2020 13:46

hp, the answer is Yes - GPOR, BLND, SREI ...etc.

[fenners66] 01/10/2020 09:44

flyfisher - I trust your figures are correct - in which case I commend you for researching the facts and not the rhetoric - they paint a different picture.

[hpcg] 01/10/2020 09:42

I don't know the rules on this but can a REIT buy back shares? Simply not paying the rental income out puts the REIT status at risk, they'll have to resume at some point.

[flyfisher] 01/10/2020 08:26

At 18/08/20 completed or under offer £52.5m, Sold sprucefield £34.7m, Should total £87.2m.

Currently £65.7m sold or under offer.

It would seem that sales of £21.5m have gone off over the last month and NRR have elected to dispose of an asset to a trading partner on the last day of the accounting period, at a loss, in order to dress up the figures.

[dhoult12] 01/10/2020 07:56

Yep from the disposal RNS.

"One of our key priorities for this financial year is to dispose of £80 million to £100 million of assets, in order to improve our LTV in-line with Company guidance"

[spectoacc] 01/10/2020 06:59

I see absolutely no prospect of a buy-back at NRR, unless missing something? NAV going to fall, LTV already too high, hence selling some of the better stuff.

[gbjbaanb] 01/10/2020 00:09

They would have gotten the rents in that time, hopefully, so you have to factor that in. And they keep the management role, so fees coming in for that.

Now, if they use the money for a share buyback, at 75% discount, that's a great way of selling high, buying low!

[nickrl] 30/9/2020 18:29

EI shame some of it doesn't rub off onto EPIC!!

[essentialinvestor] 30/9/2020 17:59

Got to admire some of the consistent optimism here!.

Well let retail parks are finding buyers currently.

They may be the sector surprise asset class of the next 3/4 years,
if you can avoid lower quality parks.

[dhoult12] 30/9/2020 17:33

They bought for £40m back in only December.

Sold for a 100% value of £38.56m.Will be costs involved as well. CV19 in between.

Not ideal, but doesn't quite translate into a devastating impact in asset value which is priced into the share price. Assuming of course the rest would get a cash value of similar in an open market.

[chucko1] 30/9/2020 17:29

Not at a share price of 75% discount. Sod the income, the capital accretion smashes it.

In principle, I agree with you but the maths here is compelling.

[dartboard1] 30/9/2020 17:25

Ideally you want to be invested in the fund cleaning up all these cheap assets (pimco) not offloading your best ones to stay liquid

[hpcg] 30/9/2020 17:22

Which is why I was explicit about the property portfolio. I'm not saying the transaction is not a good idea, but that is relatively high quality revenue sold. It reminds me of businesses that perpetually sell off their growth areas to support their badly performing core when it would be better to do the opposite.

[chucko1] 30/9/2020 17:06

Cash is Aaa.