It hasn't been an easy year for shop landlords, but NewRiver Retail's (NRR) portfolio of small shopping centres has proved surprisingly resilient. Valuations fell just 0.5 per cent, compared with 2 per cent for the index. They were supported by strong cash flows and high occupancy levels, which remains at 96 per cent. The only significant victim of the current wave of retail bankruptcies was a TJ Hughes unit, which the company is in negotiations to let back to the company that acquired the brand, reports chief executive David Lockhart.
NewRiver has made two minor acquisitions since March. The first was a vacant Somerfield store next to its shopping centre in Wallsend, which it has received planning permission to convert into three big-box retail units. The second, in November, was a shop in Warrington, which it bought for £3.5m and immediately let to Primark on a 25-year lease for £475,000 a year - giving a yield on purchase of approaching 14 per cent.
Recurring profits rose 40 per cent to £2m, thanks to last year's transformative £68m acquisition of four shopping centres. Recurring earnings per share fell as a result of the equity issuance needed to fund it, but the generous dividend remains fully covered. Meanwhile, adjusted net asset value per share (NAV) fell 2.3 per cent to 252p over the six months, as gearing magnified the impact of the portfolio writedown on the company's equity value. Broker Investec Securities expects adjusted NAV to fall further to 245p by end-March 2013.
NEWRIVER RETAIL (NRR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 202p | MARKET VALUE: | £64m | |
| TOUCH: | 198-206p | 12M HIGH / LOW | 225p | 177p |
| DIVIDEND YIELD: | 7.4% | TRADING PROP: | nil | |
| DISCOUNT TO NAV: | 18% | |||
| INVESTMENT PROP: | £209m* | NET DEBT: | 167% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 257 | 2.84 | 14.5 | 6.00 |
| 2012 | 246 | 0.48 | 1.8 | 6.00 |
| % change | -4 | -83 | -88 | - |
Ex-div: 2 Jan Payment: 30 Jan *Including share of joint ventures | ||||
