Comptoir Share Discussion Threads

[torabora] 20/8/2006 20:01

The investment property databank [IPD] at the end of 2005, was showing an all property yield of 6%. This has come down in the last 8 months, to, could i say around 5.7%.Comland has some fab property, that should sell well under 5%,others a bit over.All in all a 5.7% yield might be spot on, in line with the market at this time. £10.00+ here we come.

[torabora] 20/8/2006 19:45

From the Daily Telegraph sat 19th Aug 06: In small caps, COMLAND COMMERCIAL shares soared 150p to £5.62 after the property group said it had received a possible bid approach."The group is a property trader,and therefore carries its properties at the lower of costs and nett realisable value.Any offer would have to reflect the underlying value of the group*s property assets".it said.Traders speculated it could attract a bid of between 700p-750p. Any bid at that level is, in my view far to low.At £7.00 a share it would be worth £32m + the debt of 52m =£84m pounds.This is a yield well over 7%,and is way above what is on offer on the open market.

[torabora] 20/8/2006 17:52

Comland is a property trader, and therefore carries its properties at the lower of cost and nett realisable value.To you and i this means property bought many years ago, is in the books at that price.Now a bidder has shown up,looking to get hold of the company.In the next few days, other buyers may appear for a look in.The share price has gone up on the bid news, but in my view not to a level that any buyer would have to pay in a takeover..After the rise comland has a stockmarket value of 25m pounds. To this debt of 52m pounds has to be added = 77m pounds.Rents are 6.2m pounds giving a yield of 8.2% to the new buyer. This can not be correct in my view ,They would 5,000 buyers at that yield!!!.The going rate for commercial property is 4%- 6%. A yield a little over 5% might be nearer the mark.A big yield of 6.2% would add over £5.00 to todays share price !!.AT 5.2% yield you are looking to add on around £7.50.A very large tax bill would be due at some stage, however if the bidder converted to a REIT, this would fall from 15-20m pounds to just 2m pounds.The property is all in good areas in the south east , close to the M40, M4,M25.They have 11 sites in planning adding yet more value.

[torabora] 18/8/2006 14:56

Well the market makers ,have not got a clue, as how to value this company.Any buys and sells will only show up at the end of the day.To right, a bid would have to way over share price at start of today.Try £10.00-£16.00 a share!!!.Looks like the door has been opened, the world and his dog can now have a good sniff around. Should see at least six groups that might want it, and a smart buyer may get in quick with a knockout bid. If you can now buy at £6.50 per share, seems to me, money for old rope.

[cybercity.] 18/8/2006 13:03

Check QXL - Bid imminent

[wiganer] 18/8/2006 10:08

Ditto from me. Well done tora. Couldn't resist a nibble on the news so bought a few at 530p. The spread had put me off initially, but it's looking a decent buy so far.

[tiredoldbroker] 18/8/2006 09:49

torabora, can I be the first to congratulate you after reading today that COM has received a possible takeover offer our of the blue, I do hope this will be as profitable for you as you've hoped.

[torabora] 13/8/2006 17:04

A few good points,but even on the your very low valuation, nav will come in way over £8.00 per share.At a 6% yield, acc to you, the going rate at the start of the year, nav would hit around £10.00 per share.[Has fallen hard since and not gone up.] Have a look at Mercury park,100,000 sq ft of new office space, at around £25.00 a ft.A 5% yield on that gives a £50m value alone.[enough to pay back all the debt in one hit!!] They have sold an office in High Wycombe on a high yield,it had a short lease left on it, with no development scheme in place. The shops they have are in very good towns Marlow, High Wycombe, and so on.They will not suffer in a downturn,having no large exposure to any one big company.11 schemes are in planning, that will add value. No way, in my view, would a buyer get hold of Comland on a yield of much over 5%.Look at what they have ,it is not rubbish.Just get in the car and take a drive!!! At year 2000 ie six years ago, the shares were 50p.Showing an 8 fold rise to date, yet you can still buy at a massive discount to nav.Why when you can get one pound of property for 30p or less, in England, would you buy other prorerty shares at under a 5% discount to nav?ie 95 pence to buy a pound of property. They have been very smart to date, growing the company fast paying very little tax. The way to go now would be a buyout by the big boys, or come off aim, get a up to date valuation, and convert to a REIT.Any of the above would bring a big profit to all shareholders. Can you please tell me any other listed companies who hold all assets as stock i have not found them.

[jonwig] 13/8/2006 15:52

UKNEONBOY - post #3.
The Treasury seems to have decided that AIM Property Companies can't become REITs. Whilst they may well recant, at present that's a given.

They've also put very strict limits on the number of shares allowed in a single holder, and in this respect COM loses, with over 50% in directors' hands.

In fact, I don't think I would want to be in this club: whatever the unlocked value, control is too tight for my liking.

[tiredoldbroker] 13/8/2006 15:14

I'm not convinced it is reasonable to make a blanket claim that commercial property yields are in the 4-6% bracket now. If you register at propex.co.uk for example, you can view details of all sorts of commercial property in the SE of England, many with yields over 7%. The lower yields usually apply to larger buildings in prime locations, whereas the smaller developments in fringe towns which COM goes in for usually have rather higher yields. Note that their St Johns Court building in High Wycombe was sold on a 7.47% yield.

Also I might suggest you look at the IPD website - their annual index survey of UK property returns has been going 20+ years and they reckon at end-2005, the "all commercial property" yield was 6% and that the outlook for 2006 was for this to rise, reflecting higher interest rates. Again, the 6% average is made up of lower yields on large prime properties and higher yields on smaller properties outside prime locations.

The last set of figures didn't give an entirely clear picture, though they did say that "other operating income" of £6.3m was primarily rental income, but this could easily represent a capital value under £100m gross - for example, on a 7.1% average yield, the capital value would be £89.15m. They stated net debt at 31.3.06 as £51m, so I think it may be fairer to state NAV at about £38m. That still makes the shares cheap on asset grounds but not by the amount suggested above.

COM isn't the only quoted property company tightly controlled by its directors and this accounts in part for the general lack of interest in the shares, the wide spread between bid and offer prices, and the general lack of a liquid market. Nor is it the only such company to deliberately obscure NAV by classing most property as Current Assets in the balance sheet - and this can go on for donkeys years, so that the real NAV per share is never revealed. SO while I think COM is probably quite cheap, it could carry on being so for a long time.

[wiganer] 12/8/2006 17:55

I understand your thought process, but I'm not necessarily convinced the value gap is as wide as you suggest. I do think it's decent value now, but am being greedy and hoping to get in cheaper.

Btw, I know you like property value plays- do you hold ART?

[torabora] 12/8/2006 17:44

Wiganer,yields on commercial property are now in the range of 4-6%. 10 years ago,10% was the norm.They only need to bring in 7m pounds at 5%.In effect,if you have £140m of property, with a yield of 5% in todays market,that is the cash amount a buyer would to pay to get hold of it.Comland has debt that has to come off of that,[of £54m or so.] so £140m -£54m = around £86m.Todays value is £18m with the shares at 412 pence each mid price. As above tax has to be sorted. Do you understand now?

[wiganer] 12/8/2006 16:56

I am unclear how you arrive at 350% upside. If their properties are really undervalued to anything like that degree then how come they are only bringing in £7m a year in rental income?

[torabora] 12/8/2006 16:01

Well,the spread is large, but if you do the sums at £4.50 to buy, huge profit is still in the offing.That gives a 350% upside.[in what could be less than four months time ie Jan 1st.]When and if, the revaluation is done it will be to late to buy in, and some here may be pig sick!!!Myself, with all the sites posted up on the net, bidders must be looking, at, an, instant, clean, acquisition, [that shows growth over the up and comming years.]Looking back at the share price over last few months,around 12,000 shares have been sold, putting the stock down a pound. That is the way stock markets work, however we all know the commercial property market has gone through the roof, over last 5 years.In turn when buys start, £2.00 a day jumps may be the norm.

[ukneonboy] 11/8/2006 08:14

The killer here, is the current massive bid/offer spread.

Having said that, I'm guessing it will turn itself into a REIT next year - then (and only then) do a full property portfolio revaluation

UKNEONBOY
:-(

[torabora] 07/8/2006 12:58

Yes,This share seems to offer about £16.00 of property for £4.00 a share.If we look at "The Future" [in the accounts]"We have seen the value of our portfolio increase signiticantly in the year." Fact is this does not show up in the accounts. Reason is that they hold property as stock, not at todays value but at the price paid ,often many years ago.I have to say,the web page for the company is great it tells you all the property they own and run.All in good areas around M25, M40, M4,NW of London.One could drive round them all in a day or two, to see what you are buying into.The yield they are getting is 10%[,twice the going rate,] which in effect doubles the value of the company on the open market. ie true value of stock if sold now might be 130m pounds not the 65m odd in the accounts. Yet more value will show up as and when they get planning on 11 yes 11 sites.A very large lump of tax would be due,but REITS could save the day here.2% of 130m pounds is a very nice gift from MR Brown[.A hell of a lot less than 30%cap gains.] Web page is www.comland .co.uk

[siskinbird] 04/8/2006 15:32

Results out - any views?

[siskinbird] 28/6/2006 19:52

Any views on the following? :--

1 Why does this share have such a huge spread? It doesn't exactly encourage buyers, does it?
2 Why is it drifting down like this on such low volume?

Oh yes, and does anyone know when we might see any results?

tia

[torabora] 30/4/2006 22:02

Nickcduk, thanks for the above,a few points to add.First,you have pointed out that some of Comlands properties would sell on a much lower yield,but you have not added that to the share price. I put that at least 50p per share. They also have 10 sites in the planning stage, this I would say would add at least £1.00 per share. [The increase in the land value alone could be worth a lot more, without development profits] Now we have the tax that would be due, [worth in your view around £2.00 per share] Two ways to get over this, cut the gearing to save part of it, or better still sell up and let the new buyer convert to a REIT [within a larger group that would meet the new rules.] This all adds up to £11.20 per share.I may be wrong however, if now we go for a yield of 5.75% ie half way from your idea and mine we get a big uplift to around £13.00 per share. The commercial property market as you know is red hot at this time, to get hold of a good property company any bidder would have to pay a full price.Get six or so bidders in the frame[as seems to be the case with other firms that are being bought out at this time}we may then see if you or I were anywhere near the mark.I am not saying they will be bought out,but if I can see value, as you do, [but to a lesser extent]then others will, given time.

[nickcduk] 30/4/2006 20:13

I think you may be being a little optimistic on your valuation for Comland. The 5% yields you are referring to doesn't apply to most of Comlands portfolio. Yields that low tend to come with properties that have AAA tenants with long leases. Comland has a few excellent tenants at its Mercury Park development, but if you read through their RNS over the years you will see that the tenants who signed up for 15 year leases signed up around £26-£28 per square foot. They then struggled to let other space and ended up letting the rest at between £21 and £26 per square foot. A few of their leases are also only for 5 years which diminishes the property value if it were put on the market. The fact that these properties on the whole have limited scope for rent increases (current rents are around the £25 per square foot for the thames valley), suggests that a more appropriate yield rate to use would be around 6.5% when trying to ascertain the real value of the portfolio. The annual rental income is circa £6.2 and using a 6.5% yield across the board would suggest an overall value of £95m. The uplift would be around £29m.

You suggested they might convert to reit status and avoid capital gains tax. This is unlikely as they wouldnt meet the criterion set out by Gordon Brown on the interest cover front. Their gearing is way too high even if they revalue their properties.

Once CGT is deducted from the revaluation gains the NAV of comland is roughly £35m or approx. £7.70 a share. This is probably an underestimate because some of their properties will demand a lower yield such as the woolworths store in their portfolio.

The stock is cheap compared to the rest of the sector but not particularly so when compared to historical valuations afforded to property companies. Its gearing is also very much higher than the rest of the sector and whilst that helps when the property market is going up it equally doesn't help if it stagnates. Its focus on secondary retail and offices leaves it vulnerable to a slowdown in the economy.

[torabora] 25/4/2006 12:09

Just read the chairman*s statement they have got 10 future development schemes on the go.That must be worth a few extra bob.

[wbarbour] 25/4/2006 10:35

I have had these shares for years,done great for me.