Property newcomer NewRiver Retail marked its first full-year's trading with a maiden dividend, having acquired more than £150m of retail property assets since its formation by ex-Halladale boss David Lockhart.
NewRiver specialises in letting space to supermarket groups and value retailers such as Wilkinsons and New Look, which are thriving in spite of consumer spending pressures. It converted to a Real estate investment trust (Reit) last month, allowing a more favourable tax treatment of the property assets on its balance sheet, which are growing fast thanks to its ability to raise debt. In all, £95m of senior debt has been provided by Santander and HSBC, in spite of the current property lending drought, including a £25m loan note issued since the results, which enabled the purchase of a further £67m of property assets.
That builds on the £23m of properties acquired in the six months to September, as well as properties worth £10m held in a joint venture with the Morgan Stanley Real Estate Fund. The value of its assets rose £1.5m in the period. "Investment sentiment in the retail property market remains cautiously positive," says Mr Lockhart. "There is evidence of rental growth in the food sector, and the company has executed over 30 asset management initiatives in the period which is increasing the value of our assets."
House broker Cenkos forecasts adjusted NAV of 268p in the year ending March 2011, rising to 300p in 2012.
|NEWRIVER RETAIL (NRR)|
|ORD PRICE:||249p||MARKET VALUE:||£36.9m|
|TOUCH:||245-253p||12-MONTH HIGH:||294p||LOW: 248p|
|DIVIDEND YIELD:||0.4%||TRADING STOCK:||na|
|DISCOUNT TO NAV:||4.6%|
|INVEST PROPERTIES:||£37.5m||NET DEBT:||38%|
|Half-year to 30 Sep||Net asset value (p)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 17 Dec
Payment: 21 Jan
Given Mr Lockhart's track record, it's hardly surprising that NewRiver is working with powerful partners, pulling in deals and - importantly - raising finance. Good value.
Last IC view: Fairly priced, 272p, 15 June 2010