Taking figures from the bond issue announcement and the 2017 R&A suggests that the Company will, based on full drawdown, be saving around £3.4m pa on the reduced cost of debt, .With a new average cost of debt at 3.1% (down from 3.6%) on debt of around £680m,this equates to 7.5% of pretax and 9% of the cost of the div.
Accepting that the Company will not be able to avoid some impact of the market place it does provide some comfort that there is enough in the pot to protect the dividend.
Even if that were correct (most likely not, anyway), a loss of 3.9% of the yield would still leave the dividend yield at 7% (assuming they cut it by the amount of rent not received, and I am using some heroic approximations here).
Of course, who says they can not replace the tenant at a reasonable rate in short order, anyway? So the sp falls 10% - makes this yet another interesting stock to trade on top of invest.
Yes its possible. Again not one of NRRs top ten retailers, and might be a "more of the same" problem as Maplins etc. Might bring the total to 3 * 1.3% max. But still not a big deal I wouldn't have thought ?.
SP continuing to drop today, but a bit more slowly, 288.4 now...... Below the 297 NAV figure now, so no longer trading at premium.
Well FWIW the Maplins and Toys R Us issue looks like it order to be business as usual for a REIT to me. Could be wrong as always.
A Woodford and maybe even Invesco redemption to provide the funds for the Provident 330M rights issue sounds much more likely to me. Guessing that they both have to find their ~25% share of the £331M to fund that, about £80M each. Got to get it from somewhere.
Chuck, re: Woodford - yes I read somewhere that due to redemptions in his funds and the cash he will have to find to fund the PFG rights issue (of which he is a major shareholder) he may be a forced seller of some of his other holdings. In which case, he has several much better candidates to sell and I would have thought NRR would be somewhere near the bottom of his list to sell, especially as he has only recently increased his stake here (again).
Pref, from the information and percentage figures we have available to us it seems most likely that any exposure to ToysRus and/or Maplins will be somewhere between minimal and none at all. However, worth mentioning is that when BHS failed and NRR had exposure at three sites, two of those sites were relatively quickly re-let (can't recall what happened to the third). I think that speaks volumes - NRR management don't let the grass grow under their feet.
Yes, as you suggest, there was a statement in the Q3 trading update regarding all Q3 rents already paid + 97% occupancy.
Overall I agree that from what we know it doesn't seem a big deal but for whatever reason sentiment is fickle here at the moment. But then nothing is ever certain, that's why we need to ensure we're sufficiently diversified.
I wonder if a fund has bought the bond and then reduced their holding in NRR stock in order to balance their exposure to NewRiver overall. There were 4 book runners so imagine it was sold quite widely. Like others I don't really know but 6% is a big fall when there is no negative news.
Knew Id read some words about all rents having been collected in advance. After going back and scouring the various documents I found this statement:-
NewRiver REIT plc Third Quarter Company Update 18 January 2018 RNS Document
Convenience-led shopping delivering good operational results and strong metrics Section Bullet 5
100% of our Q3 rents have already been collected
So that being the case they shouldnt have lost any significant amount of rental income as a result of any tenant going into administration and their problem, I guess, will be one of re-letting the vacated rental units. A problem that I suspect that they must face all the time ?.
Well according to their HY18 presentation Page 15 neither Maplin or Toys R Us were amongst their top 10 retailers, so according to the table in that presentation the maximum possible exposure to each is 1.3% each or 2.6% in total.
They have a maximum single tenant concentration guideline of <5% actual figure of 2.3% in the HY18 presentation (which clearly isnt for either of these two retailers). Not sure if Toys R Us are likely to be client at all as mostly they seem to be sited in stand alone out of town sites - but I could be wrong.
Anyway I understand the potential issue now. Personally I suspect its not a big deal though. Thought I remembered reading somewhere that all their tenant rents had been paid long in advance. Will have to try and find that wording again, thought it was in the Q3 trading statement ?
FRTEB, I was scratching my head this afternoon pn this one for sure. I bought some at 293p as I really like what NRR is about and their track record. I have been looking at this in some detail as I am intending multiplying my holding by a factor and over the last few months have bought in at all sorts of prices from as high as 340p to as low as 278p (not long ago).
The most recent trading statement was very positive and I get the sense that the top people pulling the strings are pretty canny and understand the property business and its cycles very well.
Your point about Woodford is interesting and I have been looking at this as well. It is a large holding of his and I feared that as his investors were leaving his funds and he was having to manage this, he would have been forced to sell some of his holding and this would have been one of them. Investor sales have meant that the size of his equity income fund is about 20% smaller over the past year or so. If he had had to sell 20% of this NRR holding, this would have been a heck of a lot for the market to bear as it is only a relatively small stock (unlike AZN or IMT etc. etc.). Well, what he has actually done is to add to his holdings, as shown by the regulatory filings that I have been looking at.
I reckon that what really drives NRR is in fact the random general news relating to the entire retail sector. What caused the NRR fall from 330p or so to about 275p not many weeks ago was the UK retails sector numbers published by the ONS. Today was simply another awful statisticin that respect. I think that if you can look through this (loud) noise and trade this thing over and above any core holding one may wish to have, happy days. Let the weak hands wonder and suffer and the believers to fly in the front of the plane!! (so to speak).
The debt/bond & secured/unsecured swap is positive.
See the PS in my previous post for my take on today's fall but to elaborate:
ToysRus is not in NRR's top ten tenants but 1% of income comes from "Games & Toys" so maybe NRR might be affected by ToysRus going into administration? Pure speculation on my part - I know nothing.
Similarly, I'm not sure which income sector Maplins would fit into (if any) - "Home, Electrical and DIY" represents 13% of income and "Other" = 2%.
Above info from latest annual report.
Even if NRR is affected by the above two administrations, I think there is sufficient diversification for today's drop to be overdone. However, the drop might reflect the fear of more retailers going kaput. Things come in threes - we've had two...?
Looking at price action alone, spikes down are frequently followed by a subsequent retest so I don't think the sp movement is particularly unusual from that point of view but it depends on what happens hereon.
Also, as bizarre as it may seem, I wouldn't completely rule out the Woodford effect. I have a serious suspicion that the City is out to give him a good kicking...
NRR got a pounding today for some reason, started the day at ~311 and ended up at about 293. Anyone got any ideas as to the reason why ?.
Two RNSs published today, the first was a "pre stabilisation notice". Really not sure whether there is anything significant about this or not, anyone know what its about ?. Link given below. Appreciate input for someone who understands this issue.
The second RNS was them publishing that they have completed replacing their secured debt with unsecured debt at a lower rate and a extended duration. Sounded positive to me, though I thought that typically you replaced unsecured debt with secured debt to reduce the rate that you were paying ?. But anyway....
There is quite a lot of short interest on NRR stock, about 3.68% see
I know that feeling re the wife. I try to time the market but rarely succeed. If you bung a lot of trusts into the Hargreaves Lansdown website and look at the five year performance, its only the smaller company ones that look very good. But it also suggests to me that smaller company shares may be very overvalued, which is what Ive found from my own research.
The five year performances off the Woodford/Invesco stable are OK, but the one year performances are a bit of a shocker.
I dont like GSK and AZN. The borrowings are enormous. If their income declines, theyll be the next Carillion. But all the experts will say dont worry, the new drugs will come through.
I thought buying in at more than 10% below the open offer made an interesting opening position.
I've not been able to find a short position recorded in the stock?
As usual, if not in any rush to add. Happy to sit back and await the div. and developments.
I also added EDIN and UKDV.
I dont think they'll have the yield you like, but the contrarian in me feels EDIN at 4% had good defensive qualiites.
UKDV when I bought it had a 4% yield. I've wanted to add for some time. At a 4% yield.
Overall, I look for a 7% yield from my portfolio, income and growth. I aim to try and make that in good and bad markets, any single year excess if just a bonus.
I've really need to update my portfolio management software, but last year (calender) my IRR was18% and the previous year almost 28%. There abouts.
Bought this, REC, EDIN and UKDV so far this year.
HHI appeals, I'd like to have bought it at the recent low. GSK might be interesting and IPO is way down. I might, when I've got cash add a little of that.
My wife's portfolio has been a little bit tougher. We've been cost averaging ISF and IUKD for her, she's less worried about month to month returns, so she'll be carrrying on with that. Sad to say, over the long hall she usually out performs me, so I'm not going to say much more. I check my stocks everyday, she does every year....there might be a lesson in that.
I'm still adding gently. The shorters have got their teeth in, predictably because of interest rate rises.
In my view this is a sensible if mildly risky bet on high yields coming off a retail and development REIT.
My idea of a REIT moat is massive yields giving a wide gap between borrowed funds and property income. This lot seem to have the widest gap of all.
I note the ailing Chief Exec is moving upstairs, which seems OK also.
If anyone at NRR reads this, don't forget the opportunity presented by ageing oldies needing retirement flats and complexes.........especially big ones with big flats too, plus pools, gyms, care homes, all on site.......
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