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Stock of the week: NewRiver Retail

Written by:
Helal Miah, investment research analyst at The Share Centre, picks UK property development group New River Retail as stock of the week.

NewRiver Retail is a property development company focusing on UK retailing. The ongoing trend towards convenience-style shopping remains strong and is more resilient to any broader downturn in retail spending.

Founded in 2009, the company is structured as a real estate investment trust (REIT). Its assets range from shopping centres to pubs and convenience stores, most of which are outside of London. The group’s strategy is usually to buy existing retail sites, refurbish and then look to raise rental levels.

In its interim results reported in November, the group highlighted an 8% rise in funds from operations and a 2% increase in the European Public Real Estate Association (EPRA) net asset value per share. Investors should also recognise that the occupancy level at its retail properties remained steady at 97% despite the group experiencing ‘a more challenging operating environment’.

This is a company with a dynamic and innovative management team led by CEO David Lockhart who has been developing retail property for 30 years. Moreover, thanks to a relatively high dividend yield and quarterly payments, it is currently a very attractive option for income seekers.

As a result, we recommend NewRiver Retail as a ‘buy’ for investors who want exposure to the convenience store part of the property sector and are prepared to accept a higher level of risk. The focus on smaller sites spread across the UK, the willingness to be innovative and the payment of quarterly dividends are all positive factors, although the potential squeeze on disposable incomes due to higher inflation raises the risk level for investors.

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