Shares in NewRiver REIT (NRR) soar on upbeat results
By Rob Griffin
11:12, 25 November 2021
Shares in NewRiver REIT soared today after it revealed its half-year losses narrowed to £49.9m ($66.5m) as its operational and financial metrics improved significantly.
The retail and leisure assets specialist reported underlying funds from operations increased 67% to £15.5m and announced an interim dividend of 4.1p per share.
This is comfortably higher than the 3p per share paid in respect of the entire full year 2021 and was enough to lift the stock price almost 16% to 86.17p by mid-morning in London.
Financial highlights
Chief executive Allan Lockhart said it had sustained the resilient operational performance achieved during the pandemic, with rent collection moving to a normalised position.
“We end the first half of the year in a stronger position and, with the benefit of an improving market backdrop and our clear strategic plan, we are well positioned to achieve our medium-term target of a consistent 10% total accounting return,” he said.
In addition, the company has no refinancing obligations on drawn debt until March 2028, following the £335m debt repayment during the period.
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Upgraded recommendation
Matthew Saperia, an analyst at Peel Hunt, noted NewRiver’s interims were marginally ahead of expectations as he upgraded his recommendation to ‘hold’.
“With the shares having fallen around 30% since the sale of the pubs business was muted in April, we now believe they are fair value,” he said.
He suggested it offered a sustainable dividend yield of approximately 7.5%.
Revised strategy
Lockhart said the company’s revised retail strategy was underpinned by a resilient retail portfolio, focused on retail parks, core shopping centres and regeneration, and a strong, flexible balance sheet.
This incorporates three main pillars: disposals, redeployment and regeneration.
Disposals will be focused on assets where it’s believed a lower risk profile or higher return through disposal and redeployment of capital can be achieved.
“We expect our disposal programme over the next five years to total approximately £300m,” he added.
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