NewRiver Reit (NRR) continued to show that selective investment in the retail sector can still generate impressive returns. Specifically, it has focused on convenience shopping and discount retailers, two sections of the market that continue to see sales growth.
The quality of the portfolio and the management team were reflected in the results of an oversubscribed £225m placing in July, priced at a 15 per cent premium to March adjusted net asset value (NAV). A further £430m was raised through new unsecured debt facilities, replacing most of the secured debt, and including a £215m revolving credit facility. When this is fully drawn, the cost of debt will fall from 3.6 per cent to 2.9 per cent. And thanks to the placing, the loan-to-value ratio fell to 25 per cent, although this will rise to nearer 40 per cent when the proceeds are fully deployed.
Funds from operations rose 8 per cent to £26.5m, with headline profits boosted by a £2.2m valuation uplift which replaced an £8.2m devaluation on the portfolio a year earlier. A total of 113 leases were secured covering 505,600 sq ft at an average 1.5 per cent above estimated rental value.
Work in progress includes a 465,000 sq ft site in Burgess Hill where the entire residential element has been pre-let, and the retail and leisure part 60 per cent pre-let.
Analysts at Peel Hunt are forecasting adjusted NAV of 299.3p per share at the March 2018 year-end, from 292p a year earlier.
NEWRIVER REIT (NRR) | ||||
ORD PRICE: | 333.5p | MARKET VALUE: | £1.01bn | |
TOUCH: | 332.9-333.5p | 12-MONTH HIGH: | 369p | LOW: 305p |
DIVIDEND YIELD: | 6.1% | TRADING PROP: | nil | |
PREMIUM TO NAV: | 12% | |||
INVESTMENT PROP: | £1.23bn* | NET DEBT: | 34% |
Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
2016 | 292 | 7.0 | 2.8 | 10 |
2017 | 299 | 29.9 | 11.0 | 10.5 |
% change | +2 | +327 | +293 | +5 |
Ex-div: | 28 Dec | |||
Payment: | 09 Feb | |||
*Including joint ventures **Dividends paid quarterly. XD and pay date refer to third-quarter dividend of 5.25p |