Retail vulture fund NewRiver Retail more than doubled its market value in June by raising £42.5m of equity. It used the cash to buy a portfolio of four downmarket shopping centres from Zurich Assurance for £68m, taking total assets under management to £270m.
The strategy is to buy cheap shopping centres and then work hard to boost rental income by reconfiguring and releasing space. It's a risky strategy – most retailers are trimming their store portfolios rather than increasing them. Yet NewRiver's management is convinced the company will be protected by its relationships with supermarkets, pound shops and pharmacies, which are proving relatively resilient in the current retail weakness. For example, the company recently picked up a retail arcade in Witham, Essex, which it hopes to fill with a major supermarket once the existing leases expire.
Meanwhile, operationally, pre-tax profits grew strongly in the period as acquisitions last year started contributing rental income. That also included a £1.3m revaluation gain, thanks to like-for-like portfolio growth of 4.1 per cent. But adjusted net asset value (NAV) fell from 273p in March to 260p because of the fees and dilution effect associated with June's fundraising.
House broker Cenkos expects year-end adjusted NAV of 270p.
NEWRIVER RETAIL (NRR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 223p | MARKET VALUE: | £71m | |
| TOUCH: | 218-228p | 12M HIGH / LOW | 266p | 221p |
| DIVIDEND YIELD: | 4.7% | DEVELOPMENT PROPERTIES: | £0.2m | |
| DISCOUNT TO NAV: | 13% | |||
| INVEST PROPERTIES: | £190m | NET DEBT: | 144% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 261 | 1.7 | 12.3 | 1.0 |
| 2011 | 257 | 2.8 | 14.5 | 6.0 |
| % change | -2 | +68 | +18 | +500 |
Ex-div: 7 Dec Payment: 23 Dec | ||||
