It’s interesting for several reasons to learn about Invesco becoming New River REITs largest shareholder, but in particular it’s interesting that the price reflects a 10% discount to NAV.
New River is a company that invests exclusively in retail and leisure assets yet has traded much more positively than Hammerson, for example: far larger, more established, yet trading at a much deeper NAV discount. The suggestion is that the stock market sees New River as more secure because it owns a range of secondary assets serving local communities in towns that, dare I say, the new investors probably couldn’t point to on a map.
So is it reasonable to extrapolate this to assume that convenience led, local servicing retail is more immune to the myriad threats facing the general retail market? Clearly the stock market thinks so, but our experience of falling rents and closing shutters in many secondary towns suggests otherwise. Nevertheless, it does seem that the bottom of the market may well finally be in sight. Time will tell.
NewRiver trades at a 7 per cent discount to net asset value, according to Peel Hunt estimates. Around the time of the sale to Invesco, the discount was closer to 10 per cent. Much larger Reits, such as Hammerson and Intu, have swung to discounts of between 50-60 per cent in recent months