Newriver Reit Share Discussion Threads

[fenners66] 24/12/2021 12:30

Forgiving the management for their doomed venture into pubs and conveniently exonerating them ... stretching it too far. Are you married to a director here or something?

If the valuation was all covid related why sell , just sit and wait it out ?
But of course its not as easy if the balance sheet is overstretched and they have nothing set aside for a rainy day / in too deep.

But that is modern here today gone tomorrow modern management - leverage, maximise the short term gains for the bonus scheme and if it all crashes around you , make the shareholders (or creditors) pay for your huge payoff and on to the next victim er sorry job.

With apologists to wish them well on their way what can go wrong?


Thank you for concerning yourself with my non/investments , but don't worry I can take care of them.
As for not investing in these at 180 try 330.
You have no idea where that money went instead.

[chucko1] 24/12/2021 09:49

Fenner - you don't invest as far as I can tell, merely pontificate on management statements. As you did with PLUS500 - horribly incorrectly.

AS I said, I have read similar dire opinions on lots of things which were grossly misunderstood by the poster, especially in the asset-backed sector (not just REITs). I believe that NRR is not far from that category, although has suffered a permanent loss of capital from the necessary sale of the pubs and also from some non-recoverable rent. You might recall that they had their value (the pub estate) impaired substantially as a result of periods of forced closure. The redevelopment opportunity could therefore not be realised, and so we will not know what might have been - at least in the near term.

Well done for not investing at 180p or so, but then well done me for buying in size at 46p because of the desperate action of others. You really come across as mortally risk-averse!!

Once again, and sorry to have to repeat this, I sense there are some here who are incapable of differentiating between chance and error. This is where the intelligent risk takers make their money. Better to be wealthy and appear reckless than the opposite.

[fenners66] 23/12/2021 23:50

"chucko1
23 Dec '21 - 15:29 - 3861 of 3866

I am not saying they deserve credit for any recovery, but neither do I think they have misstepped in any material way, despite the loss of value."

I would hate to have invested in any company you actually thought mis-stepped then!

What does it take , if throwing away hundreds of £m on pubs is not enough?

As for blaming it all on covid , I'm sure you can remember me going on about pubs in decline a long time before covid.

Remember, I was looking at these as an investment for yield a long time ago and decided against. Without the 70% valuation hit that would have come with them. Perhaps I don't fall into the category of mismanaging my own investments...

[chucko1] 23/12/2021 22:42

Was it was poorly positioned a priori? Absent the pandemic, I see little evidence that they would not have been able to provide a reasonable return, especially over the long run which is not yet spent. Property cycles are long even if the patience of share traders is short. That three huge funds were forced to abandon this stock, representing some 70% of the entire company is partial testimony. The last of the three at 46p, such a time when there were comments posted on here similar to those I am criticising today. Well, that's a doubling of investment missed by some!

They are experts as they have shown in previous incarnations. David Lockhart had conspicuous success and more than once in a long career. Alan Lockhart will likely have learned much in that time. He is paid a reasonable amount for sure, but you pay for experience. But no one had to experience a pandemic before.

Given the above, those complaining about performance are, as I said, missing the essential point and therefore have only themselves to look to. I am a shareholder, and am at about breakeven by understanding the fears and opportunities attached to this security - not that it has been easy. The fact that I have made a lot on other REITs means nothing in terms of my perception of what is going on here. A perfect storm hit NRR, but it has managed the situation pretty well and this will become clearer in time, in my opinion.

As an equivalent(ish) one could look at, for example, SL Green Reality Corp in the US which specialises in NY offices. Has been smashed in about the same proportion as has NRR. No need to ask why - it was just the thing they did which they were prevented from doing as envisaged. If you were positioned sensibly as an investor, then I am sure you would be back on track and looking at decent future returns. The excellent iReit publication highly recommends it and takes an entirely practical view on what management has done to deal with the situation. So what if the share price has been clobbered (and the NAV in turn - although they rightly care little about the NAV in the US REIT market as FFO is what pays the dividend)?

By contrast, Boston Properties (BXP) has been far less affected. Would one seriously blame the management of SLG for their NY-centered stock selection and praise that of BXP? Pure bad luck, as similarly happened to US banks in 1929 to 1933. Little rhyme or reason why they might have suffered different fates other than their precise positioning at one given time.

And I am contending that many who moan on these boards are unable to distinguish between bad luck and bad management. This is often because they are angry owing to poor overall investing judgement/risk management. Such a shock to the system is akin to the tide going out - you thought you knew it all but never considered that you could not. Saw the same in 2008/9 with many ITs - investors railed at management and talked themselves out of the excruciatingly obvious eventual recovery. They lost patience because they failed to understand what was really going on, seeing only the share price as an explanatory tool.

On NAV, only the specific sector of warehouses has notably increased NAV and dividends (in the US, add cell towers etc. to the list). A pandemic-induced rush for this real estate has been responsible, but it is not clear how quickly this would otherwise have occurred in more steady circumstances.

[m_kerr] 23/12/2021 20:02

chucko - it's a cop out to say it's the shareholder's fault for investing in a poorly positioned company. management are extremely well remunerated to position the portfolio to maximise shareholder value over the long run. they are meant to be the experts here.

it's also a poor comparison to compare the situation here with airlines. real estate spans many classes of asset from supermarkets to care homes to offices, shopping centres, industrial, pubs. some have better fundamentals than others and characteristics that make the income more or less secure than others. many reits have significantly increased NAV and dividends through the pandemic.

[chucko1] 23/12/2021 16:03

If you look over at the REITs in the US, they generally specialise. You can hardly fault a prison REIT for being in prisons or praise a tower REIT for being in cell towers.

With NRR, you knew you were buying retail and development potential. The latter has yet to play out. The pandemic messed up the timings which is always a problem (and for many businesses).

[hugepants] 23/12/2021 15:50

They mis-stepped in one obvious way surely. Diversification, or lack thereof. They chose retail, mainly shopping centres. The trend was down well before covid.

[chucko1] 23/12/2021 15:29

I am not saying they deserve credit for any recovery, but neither do I think they have misstepped in any material way, despite the loss of value.

If the outcome is unpleasant for some shareholders, tough - they ought to have managed their overall risk better. Analogously, who is blaming IAG for its loss of value? Or TEG? Possible to construct an argument at the margins, but it's missing the big picture.

[m_kerr] 23/12/2021 14:22

you are correct valuers have no idea how to value shopping centres - the reason for that is there are no transactions to compare with, other than those that allow for redevelopment. there's no transactional evidence because buyers have effectively withdrawn from the sector, which is seen as in structural / terminal decline.

on the credit rating, agencies are assessing the likelihood of whether NRR will generate enough cash to service £10m or so interest on a £300m bond. well you'd certainly hope they'd be able to do that from deploying £800m or so of capital. in order to meet that, they'd have to make a 1.25% return on their capital, so it's not a high bar to clear. it's like buying a house, losing 25% on the sale price, then the bank being perfectly content given you paid the interest and paid off the capital.

it's important to stress i'm not saying forward returns will not be attractive from here on in (remember the shares are down 53% since pre pandemic, NAV having halved in the last couple of years), merely that management cannot take any credit for this given the precipitous decline in NAV and destruction of shareholder value they have driven through their strategy.

[chucko1] 23/12/2021 13:48

I am not sure that Fitch share the view on management - the credit rating remains affirmed since the March 2018 launch of the NRRLN 3 1/2 2028s even through the pandemic.

For that matter, I do not think they have made any material mistakes given the selected property asset class. Where retail is concerned, we have seen that the valuers have had almost no idea how to value them, so absent further pandemic setbacks, I expect to make substantial returns from investing in this stock. Barclays disagree with me, but then they were neutral on Carillion.

On then question of incentives etc. - that is an argument used by all. Some may find it distasteful, but the alternative is worse.

[m_kerr] 23/12/2021 13:31

what matters is the overall IRR, not promoting the successfull investments and glossing over the detractors. management here are highly promotional, they don't tell it as it is, which is ultimately what sharehoders need to know. shareholders have lost about 70%+ and are stuck with many shopping centres for which there aren't buyers.

[flyfisher] 23/12/2021 13:28

The market is full of this sort of thing. I would prefer much more institutional intervention to clear out the inept, liars and conmen.

We all could probably name a handful of culprits.

Whilst i am no expert in NRR'S affairs, any asset based business which has halved its nav in a couple of years, should be seeking a new board.

Sadly, shareholders seem complacent.

[chucko1] 23/12/2021 13:22

"The truth of the matter" - is that this story still has a long way to run.

On the IRRs - Hawthorne was an asset they effectively had to stop themselves out of - I could not care less about the IRR on that. The reduction in LTV was key and will rive better achieved sales prices on the following sales.

More importantly, although I am interested in the IRRs of the elective sales, more solid verification of stability and a recovery will come over a longer period of time and the sales prices on comparable assets by other vendors will help to validate this.

For these risks, a 35% discount to asset values is really generous.

[nickrl] 23/12/2021 13:14

marksp2011 they recalibrate the bonus scheme to make sure its sure bet and have the cheek to justify their action by saying we need to retain good talent!!

[marksp2011] 23/12/2021 12:59

You are right flyfisher

I wrote to the Chairman and asked what the incentive was that had taken the share price from over £3 to 60p and how that was deemed to be a success that warranted a bonus.

No answer

[flyfisher] 23/12/2021 12:11

Correct m kerr.

The truth of the matter is that nav has halved over a few years, after which a Deferred Bonus Plan has vested.

A bonus for halving the nav !

[m_kerr] 23/12/2021 10:34

they like talking about IRR when it goes well, what about the hawthorn leisure IRR?

[chucko1] 23/12/2021 10:27

In the Bravo JV, they are acting as advisor and earning a fee. As only 10% of the exposure is their own, they do need to be seen as providing sound advice, aside the fit of the exposure to their own portfolio. How they weigh the two is not clear, although probably very rarely in conflict especially given the young age of the JV.

[nickrl] 23/12/2021 09:36

With NRR only having 10% say in Bravo JV they've presumably have little control over Poole decision but it does demonstrate that there are keen investors out there and this must surely drag the NAV's up on this sub sector for all owners.

Wonder who the purchaser is?

[mindthestash] 23/12/2021 09:20

Selling the central traditional shopping centres to redevelopers = good long term strategy

Poole retail park (retail sheds ) is the sort of place we should be buying with the dosh from above

[fidra] 23/12/2021 09:13

We did only have a 10% stake in it tho .so likely reason for sale .

Decent return tho.

[marksp2011] 23/12/2021 07:16

That was a decent retail park, busy and very well positioned. It is a shame they sold it IMPO.

[marksp2011] 23/12/2021 07:15

OK Fenners
i will take that as a "yes" then.
Now I understand the context of your many, many posts.

Everyone is free to post as an anonymous poster on a free public BB. In the same way, viewers can decide what is worth reading.

[fidra] 22/12/2021 20:34

We are also forgetting they made a good % return per annum on the investment in terms of rent .

That’s what property investment is all about .a rising* return and a profit on sale .