Newriver Reit Share Discussion Threads

[hpcg] 04/7/2019 11:23

RCT - great chart, thanks. The holiday period spike shows that internet retail excels at discretionary. Within that I would add rarely purchased items that are simply more difficult to locate or stock in a shop.

[hpcg] 04/7/2019 11:19

There go the betting shops. WMH to close 700. That's a third of their estate.

[nickname27] 04/7/2019 08:19

Article in the FT today btw about PE tooling up to buy "distressed" commercial real estate.

[rcturner2] 04/7/2019 08:13

This graph shows the steady rise in online as a % of overall retail.

[nickname27] 04/7/2019 08:12

RC, I have more than a passing interest in online retail and to do womens clothing online successfully is hard for exactly that reason. In my experience, which tallies with ASOS, over 50% of what you send out comes back to you. On a product where the margin is already thin (nominally 35%-40% gross per item from wholesale at full price, maybe up to 80% if you manufacture yourself, but across a range and season it's more like 10-20% realized) that is a lot of cost to stomach, especially if you're offering free shipping and returns (an item that comes back will never make a profit: after postage it also needs to be checked, restocked and then go through the whole picking cycle again).

Next appear to do it successfully but they have the scale to run their own delivery network. And actually appear to make a significant amount of their profit from credit.

Lots of retailers successfully blend online and offline but ASOS though: I don't know how they survive long term tbh. I bet they open "flagship" stores in big malls (bluewater, meadowhall etc) before long.

This is specifically women's clothing though. Men shop differently: they decide exactly what they want and keep it. So a lot less turnover but a lot more profit.

[spectoacc] 04/7/2019 07:33

Retail has to change and is changing, and rents are falling and will fall further, and usage is changing and will change more, and capital values have fallen and will continue to dive in all but the most prime (generally, tourist) locations.

And I'm still a big fan of NRR.

[rcturner2] 04/7/2019 07:26

All good points made here, but I do not believe that we are anywhere near equilibrium as regards the balance between online and high street. Online is going up and conventional retail is falling and that is a continuous process. My wife, a busy professional, now buys a significant proportion of her clothes online, frequently buying 2 sizes of things and sending one back.

As I said above unemployment is about 3% the lowest since records began in the 70s. When I graduated unemployment was over 10%. Think about what will happen to retail spending if unemployment goes to even 5%.

[fenners66] 03/7/2019 20:46

Except unless you are using your shop as a warehouse - you have to run a warehouse as well !

[minerve 2] 03/7/2019 20:10

The cost for running and operating a distribution point (warehouse) is converging with the cost of a retail outlet (warehouse with window). Some businesses are not easily put onto the internet. NRR is running sq ft costs that are getting close to warehouse costs. If you have a cheap landlord in a great location it really isn't that different from running a warehouse if you think about it.

Amazon will not be able to deliver £1 worth of goods at profit.

[nickname27] 03/7/2019 15:36

I used to own a reasonable sized online retailer, I know how it works. You're making zero or less shipping anything less than about £15 and on certain categories (eg womens clothing) returns will destroy your margin whatever the top line is.

Small high value items are most suited for online: electronics, footwear and various little niches. Most of amazon's turnover is done at a loss, the profit (if any) comes from a few big sellers and their own brand stuff (In fact last time I looked only AWS and taking merchant fees was profitable).

People like cheap and easy but they also like instant gratification, browsing and something to do on the weekend. No one is haggling for a £15 toaster or some cushions.

Obviously the internet has taken chunks out of bricks and mortar: I know, I was there, I did it, but that started 15 years ago and imo the new equilibrium has pretty much been reached now.

Obviously a recession is a threat to retail, but it has been for several years and people don't seem to have a problem loading up their credit cards these days so who knows (I'm not actually long any retailers btw now, the good ones aren't listed and there's no decent fund that focuses on them, which is partly why I'm here).

Not at all relevant to NRR but my local small town high st is now almost full again after years of empty shops.

Minerve (I like Minerve, I have some friends near Lezignan) the figures are just from news reports.

I don't think this is risk free, I definitely didn't anticipate the woodford issue (without him this would still be well north of £2) and there are corporate and management risks around that still, but I think the underlying business here is sound in a way that other commercial reits aren't.

[fenners66] 03/7/2019 14:45

Listened to some respected market commentator (economist or something) on Bloomberg the other day, explaining how globally there was less inflation because of internet retail.

He put it down to Amazon.

[fenners66] 03/7/2019 14:40

You rightly mention tired formats and innovation - but also refer to searching 'on-line' for trainers.

The innovation is being done online.

Prices are falling because of online.

Stores (some) are surplus to requirements because of online.

I would like to think there are a lot of savy people on these boards and what do we do before we purchase anything?
Go online and find the best price - then haggle with a shop if necessary and walk away if they cannot match.

You have explained part of the decline in one line ..... online.

[cc2014] 03/7/2019 14:31

Lidl, Aldi, B&M, CO- expanding and having no trouble making money. I've been in the Range several times. The range and price of products is fanstastic there.

Boots, old and tired stores with poor lighting and overpriced product, bathstore can't really comment on, office - well wtf is a shoe shop doing calling itself office? I'm no marketing expert but that's a strategy I'm struggling to understand. I know I'll search for some trainers on-line and buy them from the office. Office/VANS/Converse - which one is going to sell more? They deserve to go bust. Of course I'm probably too old to understand their marketing ploy. Carlucio's - people want a bit of something original these days at a reasonable price.
As for DEB and HOF again these are old and tired, haven't been invested in for years and have no niche. All being outcompeted by incoming brands.

Take a look at the new Primark

The doors to our brand new store in Birmingham are open, and we couldn't be more excited. Spread over 5 floors, and 160,100 sq ft, this store offers an enhanced shopping experience. Birmingham boasts our largest ever Duck & Dry beauty studio, our first in-store barbers salon from Joe Mills, and 3 amazing dining experiences, including the Disney Café.

imho the new are outcompeting the old and taking their retail space. 160,000 sq ft ffs. That's why INTU keep voting down the CVA's. they want the space for something long term and worthwhile. My kids went specially to Birmingham to the new Primark to see it and of course bought some stuff. Primark are still inovating despite their huge number of stores as are for example NEXT. Deb and HOF haven't got a scooby and can't compete it's too late. Even if they employed people who could innovate, they no longer have the working capital to do so.

so, the dinosaurs need to be buried or need to learn how to adapt. Either way imho we are coming to the end of these old tired brands who want to CVA to survive. About another year I reckon. Or as soon as some of them go into receivership as INTU finally find an ally to vote them down.

btw NRR do pubs too and looking at the charts on MARS, GNK, JDW etc they all seem to be picking up very nicely

[essentialinvestor] 03/7/2019 13:57

Very true, but at least it should offer some insight in to the
quality of their portfolio.

[fenners66] 03/7/2019 13:51

You cannot research the next rent review....

[essentialinvestor] 03/7/2019 13:44

This is a situation where it is possible to do research.
Visit a few of their locations and see for yourself.

[rcturner2] 03/7/2019 13:41

And remember that this is all occurring after 10 years of year on year GDP growth and employment at an all time high, unemployment of 3% etc. What happens if we have a recession, as we surely will at some point (maybe sooner than we think)?

[fenners66] 03/7/2019 13:30

"You see what you want to see"

Boots closing 200 shops
Bathstore 168 shops into administration
Office 100 shoe shops into administration
Carluci (did I spell that correctly?) closing 50?
Debenhams set to close 100
House of Fraser closing Hull - large dept store. more to follow ?

At least one of those Aldi is in place of the defunct Toys R Us - 1/3rd of the size - I would bet they got a lower psqft

You may think the retail apocalypse is over - these are the potential closures - let alone the rent reductions - I have been saying on here for what seems like a couple of years now, that empty units and struggling retail will bring down the rents across the board - look at the CVA's now being reluctantly agreed to rather than rejected.

We know there are more to come.

[minerve 2] 03/7/2019 13:22

Good post nickname27.

Thanks for the figures, may I ask where you got them?

[nickname27] 03/7/2019 13:08

Aldi are opening 21 new stores this year, lidl 40, b&m 50, the co-op 100. The Range is picking up ex homebase and bhs units and costa appears to be putting drive-thru units wherever I go.

You see what you want to see I guess. I see bad retailers dying and better ones taking their place. Personally I think we've bottomed on the retail apocalypse narrative (potential brexit chaos aside). People like to shop: they just want to do it somewhere easy to get to and free to park.

[chucko1] 02/7/2019 16:59

RCTurner2, I totally disagree. Well-run REITs remains a great investment with the backdrop of continuing low refinancing rates. Retail is tough, of course, but the better stuff like NRR is a fine investment in the long run. Cannot comment on the short term, but then I couldn’t give a stuff about the short term anyway other than an opportunity to switch between different REITs as they ebb and flow.

Rates and good management - the rest is all noise, some of it loud.

[essentialinvestor] 02/7/2019 15:16

Any trough in the share price will not be seen outside a recession imv - provided
there is not a bid. Unless something extraordinary happens domestic UK will
look even uglier next year.

[cc2014] 02/7/2019 15:12

Whilst the Woodford mayhem continues I have added to my position this afternoon. I'm scaling in so happy to add if it goes lower yet.

Woodford is now down to 11.8% which is still alot but my sense is that Woodford now has another month and won't be in a hurry and once it gets down to about 7% buyers will appear for fear of missing out. Also the shorters will become more concerned they have less opportunity to close into if that is their intention.

It would also be my view that Woodford won't sell down to zero with his new FTSE100&FTSE250 mantra. Timing the bottom is quite difficult

[rcturner2] 02/7/2019 14:33

As I said before on this and other retail REIT threads, I would be very careful buying these sorts of REITs. There is serious damage to the sector coming up, we are at the start of this process not the end.