新河房地产投资信托公司（NRR LN）

2025A2026E2027E2028E7.508.008.309.10102.0107.0114.0116.08.108.208.509.306.506.606.807.40 Mike Prew * | Equity Analyst44 (0) 20 7029 8422 | mprew@jefferies.comSarim Chaudhry * | Equity Analyst+44 (0)20 7029 8423 | schaudhry1@jefferies.com The Long View: NRRInvestment Thesis / Where We Differ•Expecting consumer spending to come under further pressure, meaningnegativeretail tenant sales movements and therefore downwardpressure on rents.•Negativity is centred around the underlying property, but this is factoredin with the discount, so we are more positive about the equity.•Spending slow-downs prompt the consumer to be more price consciousand frequent value-orientated centres.Base Case,89p, +12%•Less affected by administrations and CVAsthis cycle.•The CAL merger is immediately earningsaccretive and is guided to enhance the groupscovered dividend paying prospects.•Asset management synergies boost shouldoccupancy and rental growth with greaterscale in asset and capital markets.•Price Target is based on DCF valuation.Sustainability MattersTop Material Issue(s): GHG Emissions -REITs are increasingly implementing energy efficiencymeasures, sourcing clean energy, and implementing carbon reduction goals. Despite additional costs,landlords can improve pricing power by increasing the penetration of these measures.Company Target(s):1) 58% of the group’s investment portfolio is currently below the minimumstandard expected to be required by UK legislation of band A-C Energy Performance Certification (EPC)by the 2030 deadline; 2) The group estimates the associated gross retrofitting costs of its key portfolioto be £8m-£12m which is negligible in the context of the GAV.Questions to Management:1) Any upside risk on EPC retrofitting costs associated with constructionprice inflation? 2) Is there a risk the government might switch the green building benchmark to a morerigorous and expensive metric than EPC? 3) Can costs be recouped from tenants via service charges orrolled up in scheduled life cycle maintenance? 4) Is there a risk of relative portfolio underperformanceuntil the necessary cap ex is deployed?Link to ESG Sector Report- linkPlease see important disclosure information on pages 4 - 9 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Upside Scenario,110p, +38%•Higher value alternative use of over spacedcentres for residential.•UK'seconomyreturns,severethan expected,and bounce backmeans unemployment recovers faster thananticipated.•Valuation declines less than expected. Downside Scenario,55p, -31%•Running, marketing, branding & maintenancecosts inflate more than expected.•UK enters a prolonged recession causing amore notable downward shift in consumerspending putting retail rents under furtherpressure.•Higher level of administrations and CVAsmeans a slower recovery in the dividend.Catalysts•Further negative shopping centre valuationevidence is expected; however, NRR is likely tobe more cushioned based on lower valuationmultiples.•Potential portfolio declines if the UK consumercontinues to retrench downturnless 2 Exhibit 3 - NRR - Summary Forecast and Estimates.Income statementYear end: MarchNet rental incomeOther income (inc JV mgt fees)Admin expensesEBITDAJV (rec.)Net interest payableRecurring PBTRevaluation surplus/(deficit)JV (non-rec.)IFRS PBTEPRA EPS (p)Underlying FFO (p)DPS (p)% Growth in DPSWeighted No. of Shares (m)Dividend Cover (x) - underlying FFODiv Payout (%)Balance sheetYear end: MarchInvestment propertiesInvestment in JVs/AssociatesOther assets (excluding cash)Net debt (Incl Cash)Other liabilitiesNet assetsEPRA NAV per share (p)% Growth in adj NAV% Change in Underlying Portfolio ValPeriod End no. of Shares (m)LTVRatio AnalysisEBITDA Margin (%)Net Debt / EBITDAAdmin cost to Rent Roll (%)Debt / Total Assets (%)EBITDA / Interest ExpenseSource: Company data, JefferiesPlease see important disclosure information on pages 4 - 9 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Company DescriptionNRRNewRiver is a Real Estate Investment Trust specialising in buying, managing, developing and recycling convenience-led, community-focused retailand leisure assets throughout the UK.Company Valuation/RisksNRRPT is based on DCF valuation. Risks inc.softer rental growth; rent roll expiries.Analyst Certification:I, Mike Prew, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subjectcompany(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or viewsexpressed in this research report.I, Sarim Chaudhry, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly o