Newriver Reit Share Discussion Threads

[bondholder] 21/10/2021 14:24

https://auctions.allsop.co.uk/lot-overview/well-located-long-leasehold-shopping-centre-investment-in-widnes/c211102-049#tenancyPlenty of landmines out there.

[hugepants] 21/10/2021 14:00

I see what you did there.
More relevant to EPIC but NRR are still over 20% retail warehouses.

[mindthestash] 21/10/2021 09:10

Thanks HP thats EPIC of you

[hugepants] 21/10/2021 08:03

fyi from the BCPT Q3 update this morning;

"...The retail warehouse sector recorded the strongest performance in the portfolio with valuations increasing by 7.6 per cent."

[mindthestash] 30/9/2021 15:23

Hello hp. I'll recheck the slides I downloaded but no I don't think they gave a nav number but they gave the impression that they believe recent year end accounts as low point. Well they would wouldn't they. Business does appear to have stabilised in rent collection and level. 22-23 looks very much more promising if cost cutting and sales are all achieved. Divi could go much higher.

[chucko1] 30/9/2021 15:10

Another 3% or so but with a positive second derivative.

[hugepants] 30/9/2021 14:43

stash did they produce a NAV estimate?



"...Our Board is acutely aware that our shares are trading at material discount to NAV. We expect that with valuations stabilising, an improving market backdrop, a significantly strengthened balance sheet, a reinstated dividend and our clear strategy to deliver attractive returns, the discount should narrow."

[mindthestash] 30/9/2021 11:38

Hi folks
just listened to cap markets presentation
for me it looks like they're not going to bet the balance sheet on re-development and keep to LTV 40% - getting someone to do the resi and take most of the risk.
slides 54 and 56 have the interesting numbers
uffo this year 21/22 6.9p indicated divi 5.5p
looking forward 10% total return each year
share bounce on relief they appear to have scaled back their loony comments on development; plus itll be an awful long time for most of the redevelopment to happen.

given i can buy EPIC and AEW yielding circa 7% a share price of 70-80p for NRR looks about right. If it goes back to £1 i'll sell.

Increasing interest rate climate will - i think temper the rally values; but they were bullish on retail park/sheds.

[paulof2] 28/9/2021 23:01

Couldn’t agree more chucko, I also find the excessive fear here makes for an interesting proposition.

I may end up being corrected but I feel NAV of 130p is a very prudent estimate and could very well represent the bottom.

If this was still at 100p+ I can see an argument against buying, however at 70/80p I feel the bad news, and then some, is already baked in.

[chucko1] 28/9/2021 17:48

Yes, a 20p decline seemed implausible absent of any assumptions about other values.

My argument is that if the rents hold up reasonably, and we will only see that in a few months, the NAV will take care of itself. Do not confuse the horse and the cart. In other market segments, we are seeing uplifts in NAV even within the retail sector after furious write downs. Valuers had to take this course of action, but the evidence involved was almost non-existent, and they had never seen market conditions like this before. This represents the fear element I find attractive. Besides which - margin of error? 80p to 120p (so a 14% discount to pro forma NAV) is a "mere" 50% gain.

As I said, I see excessive fear here. In terms of target share price from investment banks, you would be better reading fairy tales. Whether high or low.

Also worth adding that even when the share price was 46p, posts were not any more or less positive than they are now. The primary point of investing in NRR is NOT to be totally correct about every aspect of its business, but to make money. Waiting for a clear line of sight in its future prospects is all fine, but you will do so when the share price is back at 110p or so. I would prefer the hard cash before the medal because I am an investor, not a credit analyst.

[riverman77] 28/9/2021 17:02

Just checked - Shore have a pro forma NAV of 140p per share (i.e. just factoring in the impact of the pub sale, but not any further valuation declines).

[riverman77] 28/9/2021 16:51

The Liberum note from August has an estimated NTA per share of 131p for 2022. I see there is a more recent note from Shore but not looked at that yet.

[chucko1] 28/9/2021 16:40

Riverman, what is the source for the post-pub-sale NAV of around 130p?

Thanks

m_kerr. "madness" is unlikely and diminishes the other claims!

[m_kerr] 28/9/2021 16:04

the share price is down 70% from float. yes they've paid out about £1.70 per share in dividends, but even still your total return is down 20%. management in my view are very poor as they got a lot of big calls wrong. piling into pubs, and then doubling down by becoming a pub operator (and taking on all the risk, despite having no expertise) is just madness. they focused solely on short term yields when they were trying to maintain an unsustainable dividend, forcing them to sell their best quality assets, and rotate into lower quality at the worst possible time. had they made difficult but necessary decisions earlier, they would not have been forced to sell some of their best assets as they have been doing now.

with pubs they actually had a good thing going - identify unexploited asset management opportunities and combine with rents. that was the case up until they acquired hawthorn leisure, which was a very run down (it was owned by private equity who would have put minimal capex into it) portfolio of pubs with very little asset management opportunities. they talk a good game, and target the retail investor who is not able to fully hold them to account. ultimately as a shareholder you can only sell out at the current share price, and their record on returns is awful.

[riverman77] 28/9/2021 12:12

Chucko, this is currently on a 40% discount to estimated NAV (which fell to around 130p after the pub sale). But it is still highly geared with an LTV around 40% - so it would only take a 25% fall in property values to lead to a 40% fall in NAV. Given all the uncertainty and with no sign of retail property values having stopped falling I think the share price looks about right. Certainly not tempted to get back in yet.

[chucko1] 28/9/2021 11:45

No problem. I also know there is a chance I am wrong, hence 3%. But if only I could find 33 things like this with the risk-reward I believe it has. With a degree of diversification, not just property!

[mindthestash] 28/9/2021 11:40

Thanks chucko for the detailed reply. Ill think on. I think we agree there's money to be made here and a decent income. I'm not convinced the management has the right strategy but I'll wait till the capital markets day; if they want to use any headroom created by the pub sales and go big into development i'm out (im a retired surveyor so development is home turf for me but im still learning on investment). Alternatively if they want to work the planning and sell on /JV then its got legs.

thanks for taking the time to illuminate the thinking behind this which is very helpful.

[mindthestash] 28/9/2021 10:04

Morning chucko1 - hope all is well

I take ghh earlier point about sentiment and the size of the discount is enough on its own to turn the tide for a certain type of investor. I think i may have overlooked that rather obvious point.

I have big downer on the board and leadership so i must take issue with you on your comments above and look forward to your reasons

1. 'Bring about renewed success' - the way i see it they have turned £3 into 80p. call it bad luck or whatever but they've made the wrong calls.

2. 'management here are excellent' - what evidence do you have for coming to this conclusion

I have sold down but still holding a stake and welcome the recent rally ahead of the capital markets day

[chucko1] 28/9/2021 08:48

Well, that is one way of looking at it. But they bought the Moor Sheffield in the Bravo JV likely from a more or less distressed seller. Their own contribution was £4.1mn in the context of 20 to 30x that in overall disposals.

It is intended to redevelop into housing and not only will they have a 10% financial interest but will also receive additional fees representing de minimus risk.

This is entirely consistent with the activities of other REITs whereby you sell the redeveloped properties at lower yields than the ones you purchase. Little difference here.

Were a REIT in trouble, then yes, you would cherry pick and sell off the best properties, but in the end, it is a call on management as to which of the two reasons you wish to believe.

Another poster here raised the question as to whether or not this management were to be trusted to successfully bring about renewed success for NRR, and implied significant doubt on this point. My own view is that management here are excellent, but I could be proved wrong in time. However, at this price, I estimate that it is an excellent risk to take as I think many of the doubters do not grasp why certain actions were taken when they were in order to better align the risk of their portfolio and finances with the unforeseeable difference between Feb 2020 and now onwards.

[m_kerr] 27/9/2021 19:07

look at the huge difference between the yields they've been buying on the open market, v what their own portfolio constituents are valued at. e.g. IIRC the moors sheffield was on the market at a guide price of about £90m, eventually selling at £41m. i'd be wary of a read across on their disposal yields as they are generally selling their best quality assets.

[lord gnome] 27/9/2021 13:18

Bouncing again today. We are in demand all of a sudden. I won't get too excited just yet, though. I will raise half a smile once we get past 100 again.

[ghhghh] 27/9/2021 08:33

Shares bounced last Monday on a 14 page Shore Cap Note

Page 7 breaks down the Alt Use value - £768m versus £726m alive.

Retail Parks get hit, £157m down to £117m and Work Out suffers the biggest % drop, £132m down to £61m.

Regional Shopping Centres are the big winner, a £120m uplift.

[m_kerr] 24/9/2021 23:28

there's a lot of garbage in their portfolio. they're paying the price for chasing yield and prioritising short term returns, having sold quality assets like supermarkets, and spruce field. NAV has roughly halved in no time at all. they're stuck with plenty of assets for which there are virtually no buyers, at least at prices coming anywhere near where they'll be in the books at. it's been over 7 years since they sold a shopping centre from what i can see.