Brixton Share Discussion Threads

[sportbilly1976] 05/6/2009 15:11

excitement over for today??

[arty] 05/6/2009 14:46

I genuinely like your "gut feelings" explorer (o8

[explorer88] 05/6/2009 14:28

don't hold me to this - just a gut feeling...

... two hours left to buy BXTN before bid is announced on Monday morning?

[sportbilly1976] 05/6/2009 14:27

from their annual results on the 29th March.

" Adjusted NAV per share -46.8% to 290p (2007: 545p)"

So for JPM to sday that they are 91p a share is requiring a 68% fall since 01.01.09 in asset values...!!

[explorer88] 05/6/2009 14:21

lomax - looks like either an IC misprint or JPM need to buy a new battery for their calcultor ! ;-)

[sportbilly1976] 05/6/2009 14:19

SGRO moving along now...

[lomax99] 05/6/2009 14:09

scburbs/explorer, et al - JP Morgan's assessment of net book value at only 91p is a concern, any views? thanks

[lomax99] 05/6/2009 13:55

IC Segro comment:

Segro's industrial revolution
Created: 4 June 2009 Written by: Claer Barrett
BULL POINTS:

■ Potential takeover of Brixton

■ Finances sorted out

■ Vacancies under control

■ Respectable dividend yield

BEAR POINTS:

■ Risks of taking on Brixton's debt

■ Tough leasing market ahead

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When industrial-property investor Segro announced it was considering an all-share offer for quoted rival Brixton a fortnight ago, its share price hardly reacted, but Brixton's shot up 26 per cent on the day. Yet the prospect of Segro riding to the rescue of a company weighed down with £862m of net debt - albeit one with good quality industrial properties - is difficult for investors to grasp. Only three months ago Segro was forced to raise £500m through a rights issue and renegotiate its banking covenants to avoid debt problems of its own, and is actively pursuing several asset sales. These moves have insulated its balance sheet against future falls in property values, but only up to a 30 per cent drop, so some may question the logic of mounting a bid for Brixton.

There has been no sign of a firm offer yet, but Segro looks ideally placed to drive a hard bargain. Brixton's shares are trading at 70p, and investment bank JP Morgan estimates net asset value of 91p per share. This assumes a portfolio writedown of 24 per cent, but ignores the collision course the company is heading for over its banking covenants at the end of this month.

City analysts think Brixton will need at least £300m of fresh equity to avoid breaching terms on its borrowings, which seems a big ask. Three-quarters of its debt pile is in bonds, of which £275m-worth are due for repayment next year.

Several private equity names are also said to be stalking Brixton, but a bidding war seems unlikely. For starters, the level of outstanding bond debt means that any sale would be subject to support from the credit ratings agencies, or persuading the bond holders to roll over their commitment. A difficult task, this would nevertheless be easier for a quoted real-estate investment trust, such as Segro, to pull off.

SEGRO (SGRO)
ORD PRICE: 27p MARKET VALUE: £1.53bn
TOUCH: 26-27p 12M HIGH 87p LOW: 14p
DIVIDEND YIELD: 5.2% TRADING STOCK: £358m
PREMIUM TO NAV: nil
INVEST PROPERTIES: £4.3bn NET DEBT: 77%


Year to 31 Dec Net asset value (p) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p)
2005 123 582 16.6 3.2
2006 130 506 32.4 3.4
2007 125 -247 -9.7 4.2
2008 46 -939 -39.1 1.4
2009* 27 na 1.6 1.4
% change -41 - - nil
Normal market size: 30,000

Matched bargain trading

Beta: 1.03

*JP Morgan forecast



Guide to the terms used in IC results tables.

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Check out our tip performance...

Then there is Brixton's high vacancy rate of 20 per cent, which is off-putting for private equity, particularly as business rate relief on empty industrial property has been abolished. Segro, which has managed to keep vacancies in its own portfolio to 11 per cent, has the infrastructure and management in place to tackle this problem head on.

However, market conditions are getting tougher. In April, Segro said that it had lost nearly £1m of rental income so far into 2009 due to tenants going bust. And a further £3.6m is at risk from tenants currently in administration (that is 2 per cent of its rent roll). That said, its exposure to developments is low, and lettings are up on the equivalent period a year ago.

Another intriguing angle is the number of shareholders Segro and Brixton have in common. Segro's top 15 shareholders also control just over 25 per cent of Brixton. It stands to reason that if Segro's directors can win the support of the institutions, they may even support a fund-raising to buy back the bond debt below par. The company's own net debt has been reduced to £2.0bn from £2.5bn as a result of its rights issue, and its weighted average cost of debt is 5.3 per cent.


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SHARE TIP SUMMARY:
BuyA takeover led by Segro looks the best option for battered Brixton, its shareholders and debt holders, who are fast running out of options before the covenant test 'D-Day' on 30 June. Buying Segro's shares now, when they are trading in line with forecast net asset value, is speculative in the sense that the terms of any deal are unknown. But, with the probable support of institutional investors, and the growing likelihood that Brixton will otherwise collapse into administration, Segro stands to finish the game with a good quality industrial portfolio spanning 74m square feet and worth some £5.6bn. Then, as the property market recovers, opportunities will arise to boost the rent roll. In the event that the all-share deal does not materialise, Segro is in good shape financially and its shares offer a 5.2 per cent dividend yield, which is not to be scoffed at. Buy.

[sportbilly1976] 05/6/2009 13:54

SGRO at the days high currently....with the order book here loking very positive too

[jpendle] 05/6/2009 13:08

iwillbe
BXTN along with many property companies are worth much more than their current market value - buyers that have the cash can buy assets cheap i.e. £1 worth of property for 50p say.

If they buy, it increase their NAV which will eventually be reflected back in the share price

Cash is the Key to property companies not going under, driven down by Covenants, Loans and other creditors they can't pay, before the end of current crisis.

So cash rich companies are simply picking up distressed assets - nothing wrong with that!

[hamsterape] 05/6/2009 12:32

Offer side of the order book just got active again.

There seems to be an iceberg at 67.5p
If that clears it will be interesting to see what
the declared Market Makers do - will they move their
offers up yet again or leave them to fill at current
levels?

SGRO creeping up a bit too.


Edit: The iceberg seems to have melted.

[iwillbe] 05/6/2009 11:08

why would the two companies combined be beneficial? not sure what to make of it all? how would segro be better off with brixton? answers much appreciated.

[sportbilly1976] 05/6/2009 11:05

SGRO oder book now heavier on the sell side (which one might expect if they are about to bid on a share offer)... 2mln v 3.2mln

[sportbilly1976] 05/6/2009 11:03

. dble post

[sportbilly1976] 05/6/2009 11:01

Hamster,

level 2 through M...oney AM.

I've just tried BARC, RBS & STAN and they all appear exactly the same as this one (no red, or blue figures).

[warmsun] 05/6/2009 11:00

The provider is the same as mine . . m o n e y a m

[hamsterape] 05/6/2009 10:56

Who is your L2 provider, Sport?

On My ADVFN one there is a chain-link in the centre of
the "yellow strop" which you can click on to join or break it,
but I can't see what difference it makes to the actual display
and your version doesn't seem to have it.

Also, on the banks the price-levels are sometimes shown in
red - what does this signify?

Normally the price-level is shown in black, occasionally in blue
as well, I've just noticed, and again for reasons I can't fathom.

[sportbilly1976] 05/6/2009 10:42

current level 2:

[hamsterape] 05/6/2009 10:31

SGRO not selling off though. Bid side filling up a little
more since the recent activity on BXTN - I would have
expected the opposite.

BXTN still very active (comparatively speaking) on the offer side.

[sportbilly1976] 05/6/2009 10:26

the 52.8k sell keeps staying out of the way too....

[gatdecor] 05/6/2009 10:26

something is up!

[sportbilly1976] 05/6/2009 10:20

for reference...SGRO currently 25.5/25.75

:-)

[hamsterape] 05/6/2009 10:17

Order book has suddenly become quite active.

Several MMs moving their offers up too.

[warmsun] 05/6/2009 10:08

Nice upward move today....news coming??