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NewRiver makes property splash

property recovery vehicle NewRiver Retail has reported maiden results which reflect a busy seven-month trading period. Having raised £25m at September's IPO (a fraction of its original £250m target), a secondary placing raised £10.5m last month (at 250p a share) and a £250m joint venture with Morgan Stanley has further strengthened its course.

A retail specialist, in-town foodstores and value retailing are the two areas New River has focused on so far, amassing net assets of £26m. Morgan Stanley is a powerful partner, and as Mr Lockhart notes, "one with deep pockets". The joint venture gets sight of any deals above £25m. There is flexibility in how much equity NewRiver invests, ranging between 10-50 per cent, plus it also takes a management fee. Its first purchase, a £49m portfolio of retail assets from UBS Triton's portfolio, looks a shrewd deal.

May's secondary raise will fund NewRiver's £19m purchase of the Redevco retail portfolio (net initial yield of 7.7 per cent), which will be financed by a debt facility at 65 per cent loan to value (LTV). "We will go back to investors and raise more at the appropriate time," said Mr Lockhart. The company is also buying a retail property in Newcastle for £4.2m, at a net initial yield of 9.6 per cent, which will be funded by a debt facility at 60 per cent LTV.

NEWRIVER RETAIL (NRR)
ORD PRICE:272pMARKET VALUE:£40.4m
TOUCH:267-277p12-MONTH HIGH:294pLOW: 250p
DIVIDEND YIELD:nilTRADING STOCK: nil
PREMIUM TO NAV:4%
INVESTMENT PROPERTIES:£13.3mNET CASH:£1.4m

Nine months to 31 MarNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20102612.1621nil
% change - - - -

Click for a guide to the terms used in IC results tables.

IC View

The shares pretty much trade in line with house broker Cenkos's forecast 2011 net asset value of 278p. Acquisitions to date are impressive, and the joint venture gives NewRiver access to bigger deals, but at this level the shares are fairly priced.

Last IC view: na

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