25th Aug 2023 17:22
(Alliance News) - NewRiver REIT PLC will not see a sizeable hit should discount retailer Wilko close all its stores, broker Shore Capital Markets believes, as the real estate investment trust's portfolio of well-positioned tenants puts it on comfortable footing.
Wilko has around 400 stores, though only five of these are in NewRiver's portfolio.
"Of these five stores, two are located in shopping centres in the company's Work Out portfolio and are due to be sold within the next year, a further two are part of shopping centres in the Regeneration portfolio and scheduled for future closure (now without the need for compensation payments to the retailer) and the remaining store being a standalone unit that should be relatively straightforward to re-let," Shore analysts commented.
Administrators for stricken Wilko denied planned to close stores as early as next week, PA reported on Wednesday, after the GMB union said "the majority" would be shut.
The GMB, which represents more than 3,000 of Wilko's 12,500 staff, said it was told the high street chain is set to announce a raft of redundancies as a result.
The retailer fell into administration around two weeks ago.
Away from Wilko, which Shore expects NewRiver's rent roll to see "some impact" from, the real estate investment trust is in decent shape.
"While we expect there will be some impact to the rent roll from Wilko's failure, it is important to put this in context with the wider investment case for NewRiver REIT. The overall rent roll remains resilient and focused on essentials and value retailers with top tenants including Poundland, B&M, Boots, Iceland, M&S and Superdrug. These operators are strategically well-positioned and many are also continuing to open new stores. Ideally these will be on out-of-town retail parks which are mostly fully occupied and have waiting lists. The Wilko stores closing in these locations should be rapidly re-let – reaffirming the attractive characteristics of these out-of-town assets and indeed, NewRiver REIT's own successful retail park portfolio," Shore added.
"NewRiver's REIT retail real estate proposition should be well worth a visit by investors."
NewRiver shares fell 0.1% to 80.60 pence each in London on Friday.
By Eric Cunha, Alliance News news editor
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