Newriver Reit Share Discussion Threads

[chucko1] 18/7/2019 11:43

HPCG, they must use the property income to pay the dividend for the most part. Woodford would have had minimal, if not zero influence on anything with NRR in that respect, for two reasons:

1. The rules of how a REIT must pay out its income, and

2. The people running this have a very successful track record that goes back a long way, and NRR was set up in the same mould as the two previous enterprises. Unlikely that they would bend to the will of any one investor (though one must recognise that NW was responsible for the purchase of half the company in his times at Invesco and WIM).

[hpcg] 18/7/2019 11:10

I believe I mentioned ASC as a better short than NRR :) Bought more here this morning. Might be the bottom this time, still might not. There are of course reasons it could go further down some time in the future. Enterprise Inns taken out at a hefty premium by Stonegate underpins the pub element of the asset value.

RCT - the company can also use some of its rental stream to pay down debt. Probably easier to do that now that Woodford-the-higher-the-dividend-the-better can no longer apply any influence.

[rcturner2] 18/7/2019 08:23

mk, many thanks. I think a 40% drop in valuation is highly unlikely but certainly not impossible.

[m_kerr] 17/7/2019 19:39

slide 16 of the results presentation PROPINV.

[zccax77] 17/7/2019 19:30

There maybe a 10% variance in current use to residential conversion. But that does not factor in the conversion cost. Look at the next AR again and you will understand how expensive it is to convert. So you need to factor that cost into your valuation. I think you will find that the cost to convert will lop another 20-30% off your valuation

[propinv] 17/7/2019 18:29

M_kerr. Thank you for this. I have looked in the 2019 annual report, but they do not state the LTV covenants. They just say there are some. Have looked at PR on the £430m facility in 2017. Can not find it there. What is the LTV covenant please?

[m_kerr] 17/7/2019 17:22

RC, if you'd done your research, you'd know that NewRiver's portfolio would have to decline in value by over 40% to be in breach of covenant. it's certainly possible it will decline by that much, but extremely unlikely, given that the residential value is within 10% of the retail valuation. and especially given that rents have held up well, and there has been minimal impact of CVAs and administrations.

[shawzie] 17/7/2019 16:47

Taken from Hawthorne website,
"From traditional to contemporary, community or town centre, we own and operate 298 leased and managed pubs across England, Scotland and Wales."
Almost 50% seem to be available. Is thus a cause for concern?

[chucko1] 17/7/2019 12:57

RC, we’re talking proper lending here. The fact in the case of a single dwelling, that Nationwide or whoever have an LTV formula and take income into account only to see if you cannot afford it, rather than you can easily afford it, is a reason to mange LTV when you are beholden to an inefficient lending market. Divorce is an emotional thing - I don’t suppose NRR are ridden by emotion.

If NRR ever were to get close to an LTV breach (a long way away), the remedy is a further equity capital raise. Or refinance with a bank other than the one unprepared to offer a waiver. Waivers are commonplace where the cash flows are clearly adequate, but other metrics are in breach. Not always, but it is pretty standard. A bank might try and increase the cost of lending a little, but not always.

[rcturner2] 17/7/2019 10:35

chucko, I can't believe you are even asking.

Once any fixed deal is completed what deal is available (if any) will depend entirely on the LTV, NOT the income. A mate of mine his new girlfriend had exactly that problem after her divorce and the only option was the lender's standard variable rate which was nearly 5%.

[hpcg] 17/7/2019 10:15

Interest rates are going to zero or negative, irrespective of what happens to Sterling. So long as the interest is being paid lenders will extend and pretend because that is what is in their best interest. No impaired debt and a massive positive carry.

[chucko1] 17/7/2019 08:07

RC, really? If the homeowner still has the same job (rate of pay), it makes no material difference. Negative equity in of itself does not mean foreclosure.

The cash flow is what matters to a lender. Either resi or commercial. It’s strange how many posters here view the NAV as a driver of anything (other than refinancing) - all it is is (principally) a reflection of the expected Net Operating Income (NOI) of the asset. It’s the NOI that serves as the battleground for real estate investment. Those out there who have actually been involved in this business, and have used or overseen the valuation models would be aware of this.

[rcturner2] 17/7/2019 07:41

I think it is dangerous to focus on the cash flow and rents here as that is misleading. What will damage NRR is the writedown in value of other people's properties, which will go across to the valuation of NRR's properties. Then the LTV starts to come into play.

If you have a £500k house with a £400k mortgage and you are working and paying the mortgage this is no help if the lender turns round and says the market has fallen 20% and you now have a 100% mortgage.

[fenners66] 17/7/2019 07:27

spitthecat1
17 Jul '19 - 00:32 - 1414 of 1416

Fenners 66

"Given what you say about having no position here, what on earth motivates you to contribute to this forum ?.."


I refer you to my previous answer

[marksp2011] 17/7/2019 07:14

and someone will call time on Industrial Heat which has the equivalent of a secret process to turn lead in to gold using the blood of virgins

[spectoacc] 17/7/2019 06:50

@fenners66 - I told you repeatedly to go short. I remain thoroughly long, and expecting more pain before the glory.

Woody has to sell everything - in WEIF at least. Jury still out on IFF but I suspect the same. He's lying IMO when he claims he'll "reposition to FTSE350 liquid stocks". I've gone on about it ad nauseum on the WPCT thread, having first called Woody in 2016.

(In a nutshell - redemption were running at £10m/day before the publicity from the gating, ie 11 months to absolute zero. Unlisteds were already breaching the limits, esp inc Guernsey, since before Kent CC asked for their quarter of a billion quid back, before HL withdrew their rec, before the publicity, before WEIF was down over 1, 3 & 5 years & 50% below a tracker over 3. So the notion there'll still be a fund around if/when he reopens is laughable. Unless, perhaps, all the unlisteds, unicorns, and unsellables suddenly disappear? Or - and this one's even better - unless there's a massive turnaround in performance, as he sells everything below the bid).

[spitthecat1] 17/7/2019 00:32

Fenners 66Given what you say about having no position here, what on earth motivates you to contribute to this forum ?..

[zac0_4] 16/7/2019 23:35

fenners66

No-one can answer your question other than Neil Woodford. And any suggestions you might have as to why he's chosen to liquidate NRR stock is pure guesswork on your behalf!

In fact, looking at your previous posts I'm amazed you're still posting here with such a negative viewpoint on this company! Oh, you could be shorting this stock, couldn't you? Then again only you know the answer to that question, don't you?!!!!. .

[m_kerr] 16/7/2019 22:47

zccax, CVA and admin impact this year was £0.6m, the previous year £0.8m. funds from operation was around £55m. so it reduced FFO by about 1%. what they are seeing in practice, is although there are retailers going bust, the low average rents in NRR centres means they continue to open, because it's easier to make a profit when rents are already at a realistic level. for instance, with arcadia, they expect at least 3 out of the 4 units to stay open, with a FFO impact of just £50k. pubs also make up about 29% of the rents, which aren't showing any signs of plummeting.

in terms of downside risk, how far can rents fall from an average £12.50 per square foot? buying assets at a low valuation protects downside.

they also have a fully unsecured balance sheet, meaning that they can buy and sell assets quickly, without needing to gain lenders approval, which is obviously an important advantage as a buyer.

fenners - i've no idea. woodford needs to access liquidity, and plainly, NRR is one more the more liquid (notwithstanding it was a 30% position), compared to the long list of unquoted holdings. as a locked in woodford investor, i'd hope decisions would be made on investment merit, but this plainly isn't the case, hence the concentration of unquoted assets, and subsequent lockup.

[propinv] 16/7/2019 22:34

Fenners66 - think Woodford focusing on retaining liquid stocks before reopen. Don't think value is a driver. Just guess only.

[fenners66] 16/7/2019 22:03

Can anyone answer my woodford related question earlier ?

[zccax77] 16/7/2019 21:12

The problem is your income is about to plummet, put that in your DCF and see hat value you get.

[shawzie] 16/7/2019 20:09

As older posters will recollect, Lord Young was a business man in the Conservative Cabinet. He states in his book "The Enterprise Years" that in 1973 he was involved in real estate. He argued that commercial property had no intrinsic value and it was only worth the value of its secure income. On that basis he and his banking partner would lend a multiple of the secure income and not bother with any valuations. Over many years there was never a need to write off one penny of any loan.
I will stick with NRR for the present.