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Apologies, was discounting down to estimated as of today per an average at best spreadsheet.. point remains given that NAV is 120p or so, that diluting at 70p or so isn't preferable to selling assets if you can get the equivalent of close to carrying value for said asset. Which is why to be fair they are doing the later.
Also agree at some point the valuation decline stops, on out of town centers it already has, pubs probably there as well as a generalisation. Shopping centers, God knows. You go around some of these centers and half of the tenants seem to be 'art galleries' or 'bag shops' which is just a way for a landlord to avoid paying the buisness rates when empty. Redevelopment with less retail, is probably the only viable solution.
NAV was 151p at 31 March.Where did you see 120p? That would be a good guess as to where it is know after the pubs sale and continuing fall in values for big shopping centres,but is it official? Apologies if I have missed it.
Can anyone confirm if a REIT is able to direct operational profits towards debt repayments before paying out money as dividends to retain the REIT status? In other words, can the profits usually payable to shareholders be used to pay down debt (a amount of the company's choosing) and then pay out 90% of what's left.
If so, NRR can keep reducing debt by using funds that would otherwise be a dividend to pay back the debt. Not very appealing for shareholders but perhaps better than dilution at an unattractive rights issue discount.
Reference rights issue.
Stop being silly it was meant as an example.
By doing a rights issue they could reduce or remove all debt.
Hence reducing risk which would be good for the share price, very good.
"Ideal to be snapped up by a larger REIT?? what's your opinion SD235?"
Possible but I don't know of one that would be a good fit. I was thinking of Bravo buying it.
Just to add that 90p will be discounted by the market for future write downs in asset values to 70p or less much in the same way that current published NAV is discounted.
Sd235 your lack of knowledge of how share issues work is frankly worrying.
Last published NAV is 120p
If you raise cash at 70p doubling, yes you have number of shares * 70p in cash.. but you now have double the number of shares in issue. Given NAV was 120p and you are raising at 70p in cash. NAV falls to 90p a share overall. Not great for existing holders.
SD 235 .You do not have a clue.Jstar’s comment is perfectly sensible.In any event, it is all hypothetical.Pubs are sold.Debt is still too high to give much flexibility.NAV will be reduced again on next valuation.As at 30 Sept.So,by Nov we will know how much damage Covid has done to nrr.A share placing then may be the answer,but share issues at a discount dilute value for existing shareholders.
Ideal to be snapped up by a larger REIT?? what's your opinion SD235?
Jstar
Your maths is ridiculous. That's not how rights issues work.
On 1 for 1 basis (assuming that amount is necessary, which is unlikely) 82 + 70 divide by 2 = 76p. As the LTV is now much lower (if it exists at all) interst rates will fall to zero hence bigger profit. Result higher share price. Now risk and uncertainty has also been removed equals a higher share price.
At what price? 70p? that would be a far greater discount to NAV than what they are effectively getting for the pubs.
LTV isnt nice on this, they need to sell something and seemingly there's no real market for shopping centers at the moment.
If LTV is such an issue then it might have been possible to address this by raising additional equity capital?
Yes it seems like a crazy decision to sell the pubs when conditions are improving and at a discount too - madness. What is the BOD thinking? This cannot be good for confidence in the company or the share price. Disappointing is an understatement. Lets hope the proposed sale is blocked by the shareholders.
I've voted against the sale. Hopefully some of the IIs do too. Terrible discount considering we're going into recovery now. Delay sale and get a better price if theyre so determined to sell off the pubs.
Really disappointing. The sale of the pubs is a fire sale and a terrible decision. Wish I had never invested in this bunch of jokers
The circular makes interesting reading.Pubs + 9 ancillary properties valued by independent advisers at £251m. Gross/Net proceeds£223m/ £216m.Pubs are being sold because NRR is too over leveraged.Even after the sale the leverage of 40% is still too high,particularly if the malls are down valued again as seems to be happening in other funds.
i agree its difficult to figure out.... i am not much down just a little... i guess its worth keeping for the divi at least.....I would hope for 10p by 2023 at least!!
Is it possible that Newriver is getting rid of the pubs to make the firm a better option to be taken over? by Bravo for instance.
snudge
I am thinking the same but I won't do anything unless I have something else in mind.
I am down 1% on my first purchase and up 40% on my second. I just can't work out what the long term dividend payment is likely to be.
10p a year say 2023 wouldn't certainly be worth thinking about. Possibly a little hopeful!!
Im not sure but im struggling to find compelling reasons to not sell these and take a small hit....?
@snudge1234
Will it mean that borrowing will be a lower interest rate? Or is their interest rate already fixed? I am ignoring the revolving credit.
@edwina dear did you mean 100p this time next year!!
agree with everyone else that selling the pubs doesnt seem like a good idea at this point.... But it feels like NRRs hand was forced so something had to be sold..... distressed sale almost