Company voluntary arrangements (CVA) and administrations continued to blight NewRiver Reit (NRR) during the first-half, causing a 3.5 per cent decline in like-for-like rental income. A further deterioration in the value of the commercial property group’s retail parks and shopping centres offset a marginal uptick in the pub estate, resulting in a portfolio devaluation of 3.3 per cent.
Admittedly, 337,900m square feet of new retail lettings and renewals were agreed at 2.5 per cent ahead of passing rents, although that compared with a rate of 11 per cent at the same time last year. There was a small improvement in funds from operations, although that only covered the first-half dividend payments by 80 per cent. Unsurprisingly, the third-quarter dividend has been held flat at 5.4p a share.
In an attempt to boost dividend coverage, management is selling lower-returning assets that yield between 5 and 7 per cent, and reinvest capital into those offering 9 and 12 per cent. It is also earning more fee income for undertaking work for third parties, which included being appointed as strategic asset manager for Kirkby Town Centre by Knowsley Council.
House broker Peel Hunt forecasts adjusted net asset value (NAV) of 244p at both the March 2020 and 2021 year-ends.
| NEWRIVER REIT (NRR) | ||||
| ORD PRICE: | 184p | MARKET VALUE: | £563m | |
| TOUCH: | 184-185p | 12-MONTH HIGH: | 246p | LOW: 143p |
| DIVIDEND YIELD: | 11.7% | TRADING PROP: | nil | |
| DISCOUNT TO NAV: | 25% | |||
| INVESTMENT PROP: | £1.29bn* | NET DEBT: | 51% *** | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) ** |
| 2018 | 261 | 3.2 | 0.9 | 5.4 |
| 2019 | 244 | -20.9 | -7.0 | 5.4 |
| % change | -7 | - | - | |
| Ex-div: | 17 Oct | |||
| Payment: | 15 Nov | |||
| *Includes investments in joint ventures | ||||
| **Dividends paid quarterly, XD and payment dates refer to second-quarter dividend of 5.4p a share | ||||
| ***Excludes lease liabilities of £87m | ||||
