It was a year of feverish activity at
But these acquisitions came at a short-term cost. Purchase costs – typically about 5.5 per cent of property values, mainly for stamp duty – and underwriting fees for the well-timed capital-raising last summer cost 33p per share, entirely wiping out revaluation gains. Chief executive David Lockhart stresses that without these adjusted net asset value (NAV) would have risen 7.5 per cent. As it was, adjusted NAV actually fell 5.5 per cent to 258p.
NewRiver's strategy is to turn around failing high street shops and shopping arcades. The basic idea is to buy cheap, re-let to the more resilient retail sectors – convenience stores, pound shops, drug stores and cheap clothing outlets – and eventually sell on to institutions or private investors, while distributing the rental income directly to shareholders.
Broker Investec expects adjusted NAV to rise to 266p by next March.
|NEWRIVER RETAIL (NRR)|
|ORD PRICE:||193p||MARKET VALUE:||£61m|
|TOUCH:||190-195p||12-MONTH HIGH :||266p||LOW: 189p|
|DIVIDEND YIELD:||7.8%||TRADING PROP:||nil|
|DISCOUNT TO NAV:||24%|
|INVESTMENT PROP:||£209m*||NET DEBT:||126%|
|Year to 31 Mar||Net asset value (p)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 20 Jun
Payment: 13 Jul
*Including investments in joint ventures
Bearish sentiment towards retail property has pushed NewRiver's shares to new lows. Yet there is mounting evidence that its ambitious strategy is working, so this could be a canny contrarian income investment. Speculative buy.
Last IC view: Fairly priced, 223p, 29 Nov 2011