The Lemon Fool

Hi Again dealtn, Well clearly we have very different views on this report. Personally I like my investments to be making a profit (cross), have a well covered dividend (cross), an increasing NAV (cross), a solid market to sell into (cross), have if not a low but definitely an improving debt position (cross) and have good expertise/management team (tick).

It has lured in many due to the huge yield on offer. Over all of the years that I’ve known it (I first had a punt on it in 2017) it has performed as a value trap, paying out lots of dividends while allowing the share price to decline precipitously.

But those are just my thoughts and to an extent my own experience. I have no problem with people holding a different view.

GLA Holders

Pref

PrefInvestor wrote: Over all of the years that I’ve known it (I first had a punt on it in 2017) it has performed as a value trap, paying out lots of dividends while allowing the share price to decline precipitously.

In 2017, the price was above 300 for all of the year. It's now below 200, having dropped to below 150 earlier this current year.

dealtn wrote:They don't look a bad set of numbers to me. NAV per share at 244 against a price of 180ish. Disposals made were at about 2% loss to book value, which given the portfolio was revalued down 3.3% over the period translates as (approx.) sold at book value to me.

It does make you wonder if anyone would ever consider the arbitrage of just buying one of these companies and undertaking a complete disposal programme at or about book value (and strip out all the management fees and director's salaries etc.) and book the potential profit of approx. 30%. It's probable a premium to current share price would be required to do this making it unlikely. It would be nice for Directors to make such noises but who would be willing to give up a salary and management fee and actually act in the best shareholders' interests?

As with much of the sector, I guess, it's one for the patient. Regardless you would hope for a bit more stability and forward thinking post-election and post uncertainty about Brexit.

Local Shopping REIT did that... looked to be on for 20% when they announced the disposal strategy, but as they sold and sold, the retail environment worsened and the sales margins dropped too. Then Duncan Stoukup got involved and wrecked what was left. I ended up with a 1% profit on it, but without the idiot, might have gotten as much as 10%. Its difficult to sell retail these days, sending off to auction results in a lot not selling, others selling above guide price, really depends on the property.

PrefInvestor wrote:Hi Again dealtn, Well clearly we have very different views on this report. Personally I like my investments to be making a profit (cross), have a well covered dividend (cross), an increasing NAV (cross), a solid market to sell into (cross), have if not a low but definitely an improving debt position (cross) and have good expertise/management team (tick).

Pref

I can agree with much of that, except if it was profit making, covered dividend, increasing NAV etc. it would likely be trading over 300p, not sub 200p. I wouldn't be buying, I would be selling (probably). It's great that there are differences of opinion, and I too am happy for others to hold them. As a natural contrarian I would be more concerned if others didn't agree with me! That's what makes a market after all. Every seller finds a buyer, it's just price at the end of the day.

Best regards

Hi All, Well NRR has been in another downtrend of late, starting with the last dividend payment at Xmas. You could buy at just over 190 around lunchtime yesterday (15/1) and I confess that my finger hovered over the buy button. No news that I could find to provide any reason for the fall. The company remains well regarded as a good asset manager, though still with a troublingly high exposure to retail. Anyway then I remembered the two previous occasions when I had bought into this stock when it’s price had fallen significantly and I was looking forward to some capital gain and the tremendous yield. In practice though on both occasions the share price continued to tank for an extended period thereafter. So this time I resisted the temptation to buy. No third time lucky for me.

I confess that having a bad experience with a stock definitely influences me when it comes to considering buying again. I have the same sort of feelings about VOD and stock in which I had much faith in at one point, but which I held during in its extended downtrend. Plenty of reasons to stay out of that one now, though it has been doing better lately. But like NRR I shall be steering clear. I shouldn’t feel that way I guess, but I just do. Fortunately there are plenty of other fish in the sea.

ATB

Pref

my finger is on the sell button for NRR , i have disposed of my vodafone already .

most of my experience of averaging down has not been rewarding .

i dont see much sign of retail picking up , the divi could be in line for a cut .

i will take the loss and move on .

jackdaww wrote:my finger is on the sell button for NRR , i have disposed of my vodafone already .

Hi jackdaww, Well I guess you in truth you should try to ignore past experiences and just buy or sell based on your own view of the company and prospects as they stand today. But I dont find it easy to do that.

On the plus side NRR are trading well below NAV and have a good reputation as an asset manager. On the minus they are highly loaded with retail property, lots of debt (like all REITs), dont have full cover for the dividend etc. Nothing much seems to have changed since I was holding TBH. No doubt many income seekers might take a punt - but as I said I have done that before and regretted doing so.

ATB

Pref

Dividend will be cut at some stage. Take 90% of their free funds flow as a more sustainable rate for payment. Then factor in the large exposure to retail. 190P could be viewed as expensive to buy!

today Annual Report:

solid Q3 with an increase in retail occupancy to 96.1%, footfall outperforming the UK benchmark by 60 bps. balance sheet strong "following last year’s successful debt refinancing, all of which is now entirely unsecured"

£37m loss after tax, caused mainly by a loss in portfolio valuation apparently. "Our IFRS loss after tax was £36.9 million, reduced from a profit of £45.7 million in FY18, predominantly due to a non-cash reduction in portfolio valuation of £89.5 million" (which I don't understand, you don't make an operating "loss" from reduced asset valuation, but what do I know.. might be a tax "efficient" was of saving tax!)

Div is 21.6p.

Very quiet here

The reaction to today's update was not good. Anybody prepared to take a punt......or is it heading for oblivion.

My speculative purchase @1.88 in December as a recovery play isn’t looking so smart. That much I do know.

“Just because the price halved, doesn’t mean it can’t halve again” or in my case another 75%, rings very true.

Expecting another big fall tomorrow in response to the lock down of non-essential shops.

Cheers,

Juan.

Its a blip caused by the obvious reaction to retail closures.

When the lockdown is lifted, those shops will be back up and running and people will be running outside to spend, and get away from their loved ones. The question is how much damage will be caused, how many shops will board up instead, and what will NRR do with them. There was a move to repurpose many shops for leisure in some company report I read, and that was apparently the new direction for the high street in London, but that regional shopping centres were mostly unaffected.

So frankly, I'd hold tight and wait it out. You may have to wait some time, and the dividend may be cut a bit (but I doubt by too much). The 38% dividend may drop to as low as 25%... oh dear, what a pity, I might buy some!

I’ve no intention to sell however I’m afraid the dividend horse has bolted. Yield currently a mighty 0%

JuanDB wrote:I’ve no intention to sell however I’m afraid the dividend horse has bolted. Yield currently a mighty 0%

Its a REIT, the yield cannot be 0% as they have to pay out 90% as PIDs to be a REIT. They may fiddle this, they may suspend it a bit like the Q4 dividend payment but those are temporary. In a year's time things will be different. That's what you're investing for, not next week.

gbjbaanb wrote:

JuanDB wrote:I’ve no intention to sell however I’m afraid the dividend horse has bolted. Yield currently a mighty 0%

Its a REIT, the yield cannot be 0% as they have to pay out 90% as PIDs to be a REIT. They may fiddle this, they may suspend it a bit like the Q4 dividend payment but those are temporary. In a year's time things will be different. That's what you're investing for, not next week.

You can have losses in a REIT where property rental income is below the cost, so a 0% dividend is possible and consistent with remaining a REIT (although not the case currently here).

I should have added a after my message. Was entirely tongue in cheek.

Hi All, Not been back to this thread for a very long time now. NRR utterly tanked in the meantime. Just hope nobody bet the farm here.

ATB

Pref

PrefInvestor wrote:Hi All, Not been back to this thread for a very long time now. NRR utterly tanked in the meantime. Just hope nobody bet the farm here.

ATB

Pref

Have you seen the rest of them?

A better question is - would you bet the farm on them today, in 3 years time you could be looking at a trebling of the share price and all your money back as dividends too. I'm not tempted as betting the farm is a fool's game, but I will try and remember to look back in 3 years to see.

gbjbaanb wrote:

JuanDB wrote:I’ve no intention to sell however I’m afraid the dividend horse has bolted. Yield currently a mighty 0%

Its a REIT, the yield cannot be 0% as they have to pay out 90% as PIDs to be a REIT. They may fiddle this, they may suspend it a bit like the Q4 dividend payment but those are temporary. In a year's time things will be different. That's what you're investing for, not next week.

they are currently forecasting rents down about 35%. their annual revenue is £148m, of which about £120m is rent. so forecast only collecting £83m (assuming the other £28m is fully collected). their operating costs and debt interest come to about £100m.

so that comes to a loss of £17m - so there's nothing to distribute. or if they do distribute anything, it'll just be funded from debt or disposals, so not really 'income'.