A tale of two, maybe three REITs: how tech has confirmed the right side of property investing to be on

Intu and NewRiver in trouble as Warehouse REIT thrives.

We all knew it was happening, but the rate of decline of traditional retail has caught many off-guard. When investing in property as an asset class, it is quite easy to think of it all as a homogeneous sector. But its not and divides are beginning to clearly emerge in terms of the the wrong side of property investments to be on.

The potential administration of Intu properties announced today (a REIT focused on shopping centres) and suspension of dividend payouts by NewRiver REIT (who own 33 shopping centres) are showing the severity of the divide that is emerging within the property sector.

By NewRiver’s own admission within its full-year results on June 18th, the face of retail has well and truly changed with much of the existing retail space in the UK needing to be ‘repurposed’.

Comparison between Warehouse REIT and NewRiver REIT

And it is technology that is increasing this pace of change. In fact its one of the key risks called out by NewRiver – to which it believes has provided some shelter against with a focus on retail parks that are well-served to click-and-collect.

But some REITs are already better equipped to handle this change. And it was an update from Warehouse REIT that was perhaps most telling of this (who counts Amazon as one of its top clients). There was one phrase that stuck out within their update – referring to being ‘firmly on the right side’ of the property sector. And it backed this up with a 3.3% increase in dividend – music to income investors’ ears at a time when solid dividends are becoming harder to come by.

While the likes of Intu and NewRiver face bleak futures, Warehouse REIT is raising £175m with a view to taking advantage of the opportunity to make acquisitions at attractive prices and ‘significantly scale’ its REIT.

Driven by acceleration to online shopping, last-mile delivery options and changing customer behaviors which are likely to remain in place long beyond lock downs finish – the ‘right side’ that Warehouse REIT referred to is becoming ever more apparent.

Regardless of if an investor is investing in property or not, it shows the importance of asking one simple question… what is the growth catalyst for the business?


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