Newriver Reit Share Discussion Threads

[gbjbaanb] 18/6/2022 20:40

From simplywall.st:

2023 revenue forecast increased from UK£50.5m to UK£62.3m.
EPS estimate unchanged from UK£0.12 at last update.
Consensus price target of UK£1.05 unchanged from last update

[nickrl] 08/6/2022 19:11

They definitely won't make 7.4p anytime soon but 6-6.5p is supportable which at current share price is 6.5 - 7% yield. Others yield less on similar discount not that i see anyone taking them out compared to others is more plausible.

[mindthestash] 08/6/2022 16:12

Thank you that very helpful and explains the softness in market over the last couple of days.

A 7.4p divi is not a given going forward, it needs rents firming and or buying new yielding properties that can support that margin over costs. I'll hold happily but Can't say I'm a buyer at 90p

[jg231] 08/6/2022 15:41

The 1.7p is income that they received in the last accounting period on assets that they've now sold. That was mostly the pubs business at £7.8m but also £2.9m of lost income from other disposals (see p20 of the presentation). They lost money on the disposals (at least vs their book values) but that is reflected in the NTA. So the question is where they get this income back from to get back to dividend cover. They are saying they have identified cost savings, think there will be a further rebound in rents post covid and that they can reinvest their excess capital. It doesn't seem too stretching to get back to 7.4p per share of EPRA earnings. They are definitely not trying to treat valuation gains as a way to cover the dividend.

[mindthestash] 08/6/2022 15:12

Thank you JG231. It's really helpful to understand that
The earnings per share covered by the ordinary business of rental and associated income from properties less all usual costs is 5.7p.

Assuming that is correct Could I therefore test my consequential understanding with the forum.

1. The remaining 1.7p of the divi comes from either net property sales profit?
2.or the remaining 1.7 of the divi is from the accounting treatment of a non cash valuation uplift?

[jg231] 08/6/2022 14:01

I agree their disclosure is really confusing. Per my note above, I suggest that you put the "is the loss on investment properties going to recur" into your thinking on NAV or NTA, not on earnings. NTA per share is 134p vs a share price of 90p. That might be indicating a bargain or that the valuation is still too high (valuers move very slowly indeed). I invest in REITs mostly based on the EPRA earning potential, i.e. the dividend yield it's going to deliver, not the NTA per share (which is ultimately a valuer's opinion). Check out page 20 of the presentation. 5.7p per share is covered by continuing earnings. It's not much of a stretch to get to 7.4p. No idea why they assumed 7% on the investment of the £60m - if they assumed an easily achievable 5%, that would still be a great result.

[fenners66] 08/6/2022 12:16

Since I have got the presentation I am going to read it now - see if there is any other mention in there.,,,

[fenners66] 08/6/2022 11:47

"JG231
8 Jun '22 - 11:12 - 3986 of 3986

Page 33 of the presentation says that it was a revaluation of investment properties." Thanks

So I went to p33 of the presentation ..... WTF !!

Is that it ?

"Revaluation of investment properties 12.3"

Sorry but this is arguably THE most material line in the whole set of accounts.
Its continuing business so cannot be ignored as a one off.
Its the largest move on the continuing P&L
It gets flagged on the accounts as having note 14 which is a 3 page note that has no explanation whatsoever only sensitivity analysis.

As for what is an investment property; isn't there some £25m adjustment in/out of investment properties etc (sorry I have not studied that bit properly) ?

How do I know - since I do not know what this is that its not going to change every year as a loss if they do not bother to say what and why?
I dont want sensitivity analysis I want an explanation ......

[jg231] 08/6/2022 11:12

Page 33 of the presentation says that it was a revaluation of investment properties. In other words, they reduced the property valuation, either because of lower rents or higher yields. The reason to strip this out of earnings, is that it's a non-cash (so it's not relevant to covering the dividend) and it comes off NAV.

[jg231] 08/6/2022 10:58

The problem with IFRS accounting for REITs is that the P&L includes valuation gains and losses. For REITs what you really want to know is the recurring revenue (net rental income) less recurring costs (overheads and finance costs) and express that per share (that's how EPRA defines earnings).
Fair value gains and losses as well as one off development profits then go through the balance sheet and go to NAV.
Then you can look at income per share vs dividend and NAV per share vs share price and make your investment decision.
I don't disagree at all that the IFRS stat disclosures are ridiculously over complex and don't aid understanding of the company at all.
Not sure why NRR don't report EPRA ratios - it would be really helpful.

[fenners66] 08/6/2022 10:52

Back to the "continuing business"

what was that "fair value adjustment" ?

[fenners66] 08/6/2022 10:51

nickrl

The state of the business now for an investment decision - yes I agree.

I also said that NRR are not alone in reporting the spin first. It's just seems to be getting worse across the market.
Its in vogue to reinvent the accounts in their own image and add in the statutory accounts as an after thought.

But if the management are those that made huge mistakes ... "but they are in the past!" .... what is the chance that they continue to do so , especially if they try and hide them.

I have read the accounts here over the years - previously the Pubs were the best thing ever ... then it was even if they have to close they will all have alternative uses worth so much more......

It was argued that pubs were being closed by the 1000's and that planning and repurposing were not easy and was not NRR's speciality and in the end..... they are sold at a huge loss , which turns out to be not continuing business so therefore it does not matter.....

Well they could hire me as say a PR agent for £40 m a year and sack me in the same year stating that they were no longer pursuing that business strategy and as its no longer continuing business its cool.... if they like.

[nickrl] 08/6/2022 10:10

fenners surely though you've got to evaluate the ongoing business shorn of Hawthorn and H2 was representative of that hence my forecast that 6-6.5p divi is achievable. My fear is they keep selling the retail pks into Bravo which whatever they say wasn't a smart move in the first place.

For info on results i get mine off LSE RNS news alert service as its plain text and formats fine on whatever device im using. Note i also jump down to the income table first before bothering to read the waffle that too many them resort to to tell you a good news story and hope you don't bother with the figures too much. NRR are masters of that but there not the only ones. Mind you I just give up with trying to make sense of HMSO numbers.

[fenners66] 07/6/2022 20:12

Just reading that P&L even the continued operations tries to split out the "losses" from the profits as if to pass the losses off as somehow irrelevant.

"Fair Value adjustments"

Of which £12.3m loss just about the most important figure on their continued ops has its own note 14.

Great we can find out if that is repeatable or not , I thought... note 14 here I come.

Note 14 spans 3 pages and has a mass of detail about "sensitivity analysis"

the it near ends with the footnote

"Net valuation movement in investment properties (11.3) (131.2)
Net valuation movement in right of use asset (1.0) (0.3)
Net valuation movement in consolidated statement of comprehensive inc – continuing operations (12.3) (131.5)

The reduction net valuation movement attributable to discontinued operations in the consolidated statement of comprehensive income was £nil (2021: £23.2 million


So despite a three page note - I am none the wiser !!

Some may want to read through the lot or have seen the presentation and know the answer , but its £12.3m of continuing ops losses and the note to explain it does not.

All adds up with the P&L as , look sucker , just read the good news story we want you to read and ignore the actual results...

So lets look to the market reaction then.....

[fenners66] 07/6/2022 19:57

Ok so I just downloaded the accounts from NRR
You can even read the formatting etc....

P&L is actually page 32

Shows continuing ops as £7m profit and loss on discontinued ops as £33.6m even that p&l is segmented so as to minimise the emphasis on the loss.

[fenners66] 07/6/2022 19:47

The gripe is not confined to NRR but its getting worse in the reporting I am seeing.

I literally had about 10 mins at 7.00am, final accounts out , great I will take a look....
You cannot see page numbers on advfn , you just keep scrolling down...

But to have the stat p&l as an afterthought too often these days is to draw attention away from the actual results and towards what they would like to present.

Hence my point above , present the results and explain the numbers away with the underlying /ignoring all the losses, etc.

Not: here is our wonderful business; because as a management team we never made any mistakes; trust us with your £bns you cannot go wrong , oh by the way we may as well mention if anyone's still there that we actually lost a fortune on stuff that we have been saying for years was the way forward...

Since the market (those that matter , not you and I ) does read the results they still get there sooner or later anyway - so my argument is just fes up / explain / apologise and move on - the market does not seem to receive the spin well anyway.

[nickrl] 07/6/2022 19:21

bondholder agree they won't achieve this years level of divi and they've not exactly hidden that although granted you have to deduce it from the information presented. That said i see divi at 6 to 6.5p for FY23 although i'd rather they just stick with what they've got but fear there will sell more of their retail pks to the Bravo JV and claim its a good deal.

[bondholder] 07/6/2022 18:35

The chart on page 20 of the presentation makes clear that the dividend for next year based on current Uffo should be sub 5p. The rest is hope value if the portfolio restructuring/covid recovery works out as planned. Are they really going to achieve 7 percent NET rent on future acquisitions without significant risk?Will retail recover as they expect?The costs of the portfolio restructuring are going to be significant professional fees/SDLT etc. They spent 2 million with one legal firm last year.Not saying it can't be done however the fall in share price is no surprise.

[marksp2011] 07/6/2022 18:24

It was sad that the presentation today simply didn't match the numbers

[marksp2011] 07/6/2022 18:23

JG231

They trade property. They traded, they lost money. How can they adjust that out?
They may never sell the Pubs again but, they can't sell any of their propoerties again :)

[bondholder] 07/6/2022 17:59

Oh please. Ceo on 600k and FD not much less and spending 4 percent of that on shares. A token purchase if I've ever seen one. The company has halved in portfolio size but the pay remains the same.

[jg231] 07/6/2022 17:35

To be fair, the loss on the Hawthorn pubs was mentioned in paragraph 3 on the front page of the RNS. I don't think it's fair to say that they were trying to hide it. It seems perfectly fair to adjust out the loss because it isn't going to recur (they can't sell the pubs again!)

[chucko1] 07/6/2022 16:01

UFFO is the correct lens, or at least if not wearing night vision goggles. In all US REITs, which are far more widely held/traded than any UK equivalent, NAV barely gets a mention.

[nickrl] 07/6/2022 15:25

fenners i watched the presentation and because i had put my time into SREI didn't read the press release. I can tell you the 30m loss wasn't mentioned on there. That said as i was about to have a nibble before i read your post ive paused and had a look. To be fair the main reason for the loss was the sale of Hawthorn c40m below book but even the remaining retail element looks less favourable when looked at through the P&L account compared to the presentation which looks at UFFO. I prefer the latter measure myself and look at most of the propcos through that lens which has cost me on a few when NAVs have snapped back over the last few qtrs.

[nickrl] 07/6/2022 15:07

Well the CEO and CFO have wade in this afternoon and picked up 22.5k and 22.3k at c89p. Immediate RNS put out which is unusual guess they want to show mr mkt it has got it wrong or has it!