Newriver Reit Share Discussion Threads

[lord gnome] 15/7/2019 09:21

By way of clarification before someone screams 'conflict of interest', I do not own and have never owned any shares in NRR.

[lord gnome] 15/7/2019 09:18

As examples, one local pub (a Marstons house in a village that had three pubs at the time) was closed down and converted into a co-op convenience store - by NRR as it happens, hence my interest here. Another, close to where I lived, was knocked down and the site used to build a care home for the elderly. One large site in my town was half-developed as a retail park. Change of use was granted for the other half and houses were built.

[lord gnome] 15/7/2019 09:12

Oh Dear. Sorry to say that you couldn’t be more wide of the mark, RCT. I came off my town and district councils at the last election. I was vice-chairman of my district council planning committee. I had to be trained for that job. I do know what I am talking about. My comments come from personal experience on the planning committee. Where do yours come from?

[rcturner2] 15/7/2019 08:32

LG, no offence, but I don't think you should be spouting off about the planning process, as you clearly have no experience in this area. You are way off the mark on quite a few of your statements.

[nickname27] 15/7/2019 08:30

12% of the working population works in retail. If a "tsunami" that wipes out retail sites to the extent that the land is worthless hits then your portfolio is going to have bigger problems than just NRR.

[propinv] 12/7/2019 15:17

Agree with all these comments fenners66. The change of use slide or alternative use that the board produced was meant to comfort all that there was downside capital mitigation plan that could be implemented in that Tsunami event. I doesn't stand up to scrutiny in the first wave of DD

[lord gnome] 12/7/2019 15:17

Nothing of the sort. It is just another option open to NRR and no doubt they will be evaluating every site against alternative uses. They have a huge pub estate now, and I venture that it would be very easy for any pub that needs to close to be redeveloped for residential. Similarly, a retail trading estate of big sheds could also go for change of use to industrial without great trauma. My belief is that NRR has the capacity and imagination to get best use out of its assets. That's why I will be buying the shares when I deem that the time is right.

[chucko1] 12/7/2019 15:16

The probability of the tsunami is far less than you think. In finance, tsunami-chasers (Bob Janjuah and such like) tend not to be good advisers to their clients. All these recessions and 60% market meltdowns etc. have a habit of not quite making it to the start line.

Every 20 years or so when they do, those with strong balance sheets will survive, and then thrive afterwards. NRR looks like it fits that description and is a well-priced risk.

[propinv] 12/7/2019 15:14

Good luck with that approach Gnome. I don't agree with your facts, save for the local council is obliged to consider any planning application, but you aren't going to get consent where they have mapped out their framework

[fenners66] 12/7/2019 14:18

So with declining asset values , rising debt ratios, reduced rents and profits - how would they fund a change of use?
Or are you suggesting a fire sale to another developer ?

Fine a small scheme in isolation -but that is not the Tsunami protection if a Tsunami hit....

[lord gnome] 12/7/2019 13:43

Not so PropInv. Most local authorities do not have a five year building land availability and are therefore open to planning applications from opportunistic developers. Plus, brown field development ticks a lot of boxes - better than building on green fields to supply housing. Even with an approved local plan in place, the local authorities must consider any formal application.

[propinv] 12/7/2019 12:52

Chucko - I think you are right on that assumption over time. But I think the time between A and B kills them if they all happen at same time (across all sites) In interim valuation plummets, cash flow drys up, covenants get breached etc. A lot of these businesses don't have issues because of profit, it's cash flow, market sentiment that forces their hand.

[chucko1] 12/7/2019 12:37

PropInv, I take the point. Though I think you are generalising as retail parks are only a certain fraction of the portfolio.

But either the park is functioning in which case there is a reasonable rent roll, or the opposite is the case (shades of grey in between, of course). In which case there is little employment in which case the council will likely accelerate matters.

[essentialinvestor] 12/7/2019 12:36

There were some extraordinary bargains in the ROI to be had.
To be fair if you can time anything about right there are usually
nice % gains available.

[chucko1] 12/7/2019 12:30

RCTurner, yes, anything is possible. Some trophy properties in Ireland fell 90% - but I can only speak of the general case. We are nowhere near as overstretched as we were in the run up to 2006/7 on the commercial side. Certain residential is mad, but there’s much more emotion in that, typically. And the fellow who bought the penthouse apartment of 1, Hyde Park Corner was not likely to have been fussed with the sub 1% yield.

[lord gnome] 12/7/2019 12:00

Surely Woodford is now out completely, full stop.

[hpcg] 12/7/2019 11:56

chucko1 Woodford is still a factor, he has between 14 and 28 days of volume to exit completely, if that is what will happen.

[rcturner2] 12/7/2019 11:55

Remember that these REITs have to value their assets and their loans contain covenants that include LTV ratios. The income can be fine, the voids can be fine but if the general market for these assets is going down, then so is the valuation of NRR's assets. The loans turn this into a geared play on retail, all fine when things go well, but equally it makes this worse when moving in the opposite direction.

I know personally an investor who held a £8m property asset with a £4m loan. In 08/09 the property was adjudged to have dropped in value by 50%, and he has been trapped in it ever since and it is not a happy situation.

[hpcg] 12/7/2019 10:49

I have short positions on almost all the time; shorting is the only mechanism that counters capital mis-allocation and criminal acts. I completely understand the short thesis here. However the primary driver of lower prices, and thus the short thesis, is Woodford's forced selling, and by proxy the new SJP manager optional selling. These technical processes are coming to an end. The shorts have been correct to this point. However now the share price has baked in a substantial discount NAV and the rent roll. A discount is completely justified, but the greater the discount the more of a mark down is baked in and the more the balance of probability that the discount is excessive. This is especially the case here where the company could withstand near enough a halving of the rent income. If you think that is a scenario then I have a much better short for you, ASC, which by that point would be running up significant losses as it would be unable to compete on price with bricks and mortar.

N.B. I don't think this pops much when the Woodford supply is exhausted, 185-190p maybe. In the long term a minimum 8% distribution is sustainable and that will provide a more than comfortable return. The short term excess return is just gravy.

[chucko1] 12/7/2019 00:47

20pps is 94% EPRA div cover. What’s more, they see 100% cover in FY2020 as a result of the newly announced JV with PIMCO and earnings from platform fees.

Perhaps people should stop worrying about Mr. Market (as you say) and worry more about whether or not NRR can achieve the targets they outlined in their presentation of May 23rd. Sometimes I get the impression certain posters here have not got that far.

One or two seem inclined to do neither as they believe the answer lies in the pages of the “i” newspaper, or The Guardian. Such sophistication.

[m_kerr] 11/7/2019 23:38

plenty on here take instruction from Mr Market. if the share price was at 250p, and all else the same, they'd be much more upbeat. remember, it's down recently because of woodford selling pressure.

i see much more upside potential than downside risk of loss, at this level. company indicated that once the recent acquisitions and HL synergies are taken into account, FFO will be 20p per share. assuming no growth at all, and a 12% discount rate, this gives a DCF value of 168p per share.

[ramellous] 11/7/2019 18:59

Wetherspoons seem to sell beer sub 2 quid a pint.. Food is where it’s at. I’m off to a pub tonight for quiz night. 3.50 a pint and free pizza. It will be full. On the way to that pub I will go past another one that was taken over by the Co op a couple of yrs ago.