NewRiver Reit (NRR) chief executive Allan Lockhart hopes that focusing on discount and convenience retailers will insulate it from the broader gloom impacting the sector. However, an £89m devaluation in its investment properties meant the Reit swung to a loss last year. Funds from operations declined 13 per cent to 18.5p a share, following £4.8m in profits from disposals in 2018. Funds from operations were equivalent to just 84 per cent of the dividend, down from 94 per cent the prior year, prompting management to hold the payout for the first quarter of FY2020 at 5.4p a share in a bid to regain full coverage.
NewRiver has a “net neutral strategy” in acquiring new retail assets, said Mr Lockhart, with disposal proceeds reinvested in assets worth £35.5m at a 9.1 per cent blended net initial yield. However, it re-entered a joint venture with asset manager Pimco to buy four retail parks in locations including Aberdeen and Dundee for £61.5m. The Reit also bought £127m in pub assets, building on the portfolio acquired with Hawthorne Leisure in May 2018.
Broker Peel Hunt has downgraded its underlying March 2020 NAV forecast from 254p to 244p (against 261p at the end of 2019).
| NEWRIVER REIT (NRR) | ||||
| ORD PRICE: | 213.5p | MARKET VALUE: | £ 651m | |
| TOUCH: | 213-214p | 12-MONTH HIGH: | 305p | LOW: 192p |
| DIVIDEND YIELD: | 10.1% | TRADING PROP: | nil | |
| DISCOUNT TO NAV: | 18% | |||
| INVESTMENT PROP: | £1.26bn* | NET DEBT: | 60% | |
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 267 | 39.5 | 37.5 | 17.0 |
| 2016 | 295 | 69.5 | 39.2 | 18.5 |
| 2017 | 292 | 37.4 | 15.5 | 20.0 |
| 2018 | 292 | 46.9 | 16.0 | 21.0 |
| 2019 | 261 | -36.4 | -12.1 | 21.6 |
| % change | -11 | - | - | +3 |
| Ex-div: | ** | |||
| Payment: | ** | |||
| *Includes joint ventures **Dividends paid quarterly, fourth-quarter dividend of 5.4p paid on 24 May | ||||
