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Real-Time news about Corpora (London Stock Exchange): 0 recent articles
|loobrush: Well I woudn't see it that it is reaching a top, far from it.
Property shares and funds have been hammered after Brexit and all are well down from pre Brexit levels.
What this indicates to me is that the expectations of a large drop in propert values suggected by anylists will not happen and that there are numerous share price bargains in this sector and once a few weeks pass we will be seeing the same people say BUY.|
|deadly: Interesting article, but the conclusions are unclear, e.g. the statement
"...similar reasons the share price of house builder Berkeley Group has fallen back."
is misleading. In fact BKG bounces strongly after every market fall.
Seems to me property shares have fallen along with most of the rest of the stock market, e.g. many diverse stocks like VOD, SL. etc. are at lows despite good results.|
|skyship: Nick Greenwood, manager of Miton Worldide Growth I. T. (MWGT) recommends ARTL in an extensive article on trusts in this week's IC:
Alpha Real Trust (ARTL) was originally an Indian property specialist; however, that market blew up during the global financial crisis before the cash raised at launch could be committed. Its management took advantage of its extreme undervaluation by acquiring 30 per cent of it, and have since increased their holding to around 45 per cent.
The trust changed its focus to high-yield property debt and during 2012 related assets such as the Freehold Ground Rent Fund and Property Investment Portfolio were rolled into it, with the assets acquired at NAV.
Cash has also been used to buy properties from distressed lenders such as Royal Bank of Scotland. Historically, the assets tended to carry high leverage, but the recovery in property values and banks' renewed lending appetite has transformed the trust's outlook. There is scope for revaluation and refinancing given today's low interest rate environment. Alpha Real Trust also tends to move to its own tune regardless of the general direction of global markets.
Alpha Real Trust's managers are clearly good at what they do and when sufficient loose holders have exited, the vehicle is likely to be taken private at a level closer to NAV, once a deal is struck with minority holders. In the meantime, the recently stated objective of steadily increasing the dividend should underpin the share price. The shares yield around 3 per cent and trade at a discount to NAV of 33 per cent.|
|skyship: Tertiary property investment company Local Shopping REIT (“LSR”) has proved a helter-skelter ride over the past 21months. From a start in Sept’13 at 25p, the shares have traded:
25p/32p/25p/40p/32p/37p…and now back to 28p. Great for swing-traders; not so good for those that BUY & HOLD!
Over that time the new managers Internos, brought in to implement the new liquidation policy approved in Jul’13, successfully sold 50% of the portfolio (Aug’14), so relieving the pressure on the Balance Sheet from the excessively high 82% LTV pertaining at the time.
In Q4’14 they confirmed the marketing of the 50% balance, attempting to make another single block sale rather than liquidating via piecemeal sales.
A buyer has been in the wings for some time; and with the Commercial Property sector still buoyant, interest rates still low and the General Election providing a positive result for business, it might well be that a single block sale could still provide an early, profitable exit for shareholders.
There has to come a time however that Internos should call time on negotiations and enter into a more active asset management and disposal programme.
The lack of news has caused the shares to drift back to an enticing level; such that just this week activist fund Damille Investments 2 has announced the £4.6m purchase of a 19.9% stake from long term holder New Solera – an investment company about which frankly nothing is known!
Being a listed company one can more readily find out about DIL2. Their investment performance has been pretty dull since their 2011 launch; and they now run a very cautious ship, with 50% of their portfolio in CASH. Plainly they see LSR as a mis-priced opportunity – see Extracts below:
Extracts from Chairman’s Statement in the Annual Report to 30th Nov’14:
“At the date of this report the Company is cautiously positioned, with weightings of 49.25% in equities and 50.75% in cash (including net working capital) at the Year end. Since launch the Company has invested over £93 million and realised over £61 million, generating a realised gain of approximately 14.4% on its investments.
Our view remains that near term the outlook is challenging for the risk averse investor. Our investment philosophy is that the price paid for an investment is the most important factor in mitigating the risk of permanent capital loss………………….
……………….. In this environment – where the risk of permanent capital loss is high – we believe it is prudent to maintain a healthy cash balance. Fortunately, periods of extreme complacency such as the present do not last forever and we continue to monitor markets for the mispriced opportunities we seek and have traditionally exploited. In short, we believe that market volatility will increase and that the Company is very well placed when it does so.”
They go on to say under the OUTLOOK heading:
“There are a number of issues influencing market sentiment. The most obvious of these is the long-running support to markets provided by central banks through their ultra-loose monetary policy. It is clear to us that without such support, markets would likely not be trading at such elevated levels. What is less clear, and what concerns the investment community, is what will happen as stimulus is withdrawn and policy tightens. The Company is positioned with this probable headwind in mind.
The Company is cautiously positioned and we have every expectation of being able to deploy further significant capital in a variety of existing and new holdings subject only to securing those investments at a sufficient discount to our opinion of the realisable value of those investments.
The key is to apply patience and discipline in pursuing our investment strategy. In strongly rising markets and extremely benign market conditions this can be difficult but we are confident that this is the correct course to take.
The Company’s aim remains to invest in situations where we believe the share price represents a significant discount to the realisable net asset value and then to realise that value in the medium term. We are confident that our investment strategy and processes will continue to provide attractive returns in the medium and longer term.
Whilst we do not make macro judgements, we believe quantitative easing (“QE”) has distorted markets and added downside risk. It seems logical to us that if QE has inflated the prices of many risk assets, then its removal may at least lead to some volatility. The Company is well positioned to take advantage of any such volatility in the prices of the securities we track and analyse.”
These words in particular seem relevant to LSR: “…we continue to monitor markets for the mispriced opportunities……… to invest in situations where we believe the share price represents a significant discount to the realisable net asset value and then to realise that value in the medium term.”
So what of that VALUE?
Well, the NAV has remained pretty constant over the past 2 years. As the Company itself admits, the secondary/tertiary High Street retail sector hasn’t really shared in the value uplifts prevalent elsewhere – see this extract from the LSR Interims in May’15:
“Whilst other sectors have experienced a surge in demand from overseas and domestic institutional capital, local shopping has been largely ignored. Good quality shopping assets continue to sell well at auction, particularly when located in attractive towns or larger cities, but there is little investor appetite for lesser quality stock.”
In those same Interims the NAV was stated at a static 42p; or an adjusted 47p stripping out the reducing debt swaps liability. The debt is dated to end Apr’18, but fortunately, as stated at the end of the Chairman’s statement accompanying the Interims, the hedges expire in just 12months time:
“Since the change of investment strategy adopted by shareholders in July 2013 we have sold GBP84.2 million of property, representing 49% of the Group's portfolio at that time. The remaining assets have been marketed and ongoing discussions are taking place with an interested party. In the event that those discussions prove fruitless then we will continue with a sales programme of individual assets or small portfolio sales. The majority of the interest rate hedges attached to the Group's debt expire in June of next year. This should result in a significant reduction in the Group's financing costs, with a corresponding improvement in cash flow, enabling us to accelerate the pace of disposals unfettered. To that end we will seek, subject to market conditions and capacity, to complete the disposal process by the end of 2017 and return cash to shareholders as soon as possible thereafter.”
So, one might assume that if Internos are successful in flushing out a single buyer, shareholders might expect a c40p pay-out in perhaps just 6months time. If instead they have to work for their fees and go the longer route, then shareholders might expect a higher net figure, perhaps nearer 44p, but will have to wait almost 3 years to get that figure.
Either way, LSR surely represents great VALUE, as the GRY on the former would be 90%pa (a 40% gain in just under 6months); whereas the latter would provide a GRY of 16.9%pa to 31 Mar’18.
An outlier view might be that power rests with the Buyer in this case, so an offer resulting in just 38p for shareholders might still gain acceptance, especially as that would still result in a 33.3% gain from the current oversold 28p.
LSR is a classic, out-of-favour and oversold asset play, which benefits from the one simple positive – it is in liquidation mode, so that discount WILL narrow and the value WILL be returned – perhaps sooner; perhaps later.
IMO they represent a great value buy at the current offer price of 28.7p.|
|scburbs: ARTL may be worth a look. I see it has been mentioned by Horndean Eagle here, but perhaps worth another look. It is a listed company with a mixture of mezzanine loan and equity investments in European commercial property.
ARTL is at 54.5p vs NAV of 107.2p for a 49% discount to NAV. It is up a mere 13% from its recent low point in 2013 despite the recent strength of UK commercial property.
The mix (debt and equity) is 58.3% UK property, 16.7% Spanish property, 12.7% Norwegian property, 5.7% Indian property and 6.6% cash.
Freehold Income Authorised Fund is £13.1m of strongly performing inflation proofed open ended ungeared ground rent fund. Must be worth £13.1m.
H20 shopping centre in Madrid suburb is at 85% LTV so whilst in the books at £12.8m (net of gearing) probably prudent to value at nil. Debt runs to October 2017 with no LTV covenant so there could be some decent value here if Spanish economy recovers.
Alpha UK Real Estate Fund loans total £12.7m and yield around 9-10% with maturity due November 2014. This represents around 73% LTV and whilst the fund has struggled with income performance it is now improving. Void rate has fallen from 31.8% at 30 September 2013 to 21.8% at June 2014, valuations also now rising. Results due any day for 30 June quarter, but with the upwards trend this looks close to worth par value, let say 90% or £11.4m. I expect the loans will be extended come November 2014, although may be part repaid.
Industrial Multi UK Property Trust (EPIC: IMPT) loans are £11.8m at 15%. The high interest rate reflects that they go from 69% to 83% LTV. There is also another slice of mezz debt (at 11%) before the ARTL slice. Valuations have stabilised and income is set to rise, but still the total interest is not covered (about 10% of the 15% is covered by cashflow). With the high LTV a discount is appropriate, but the higher risk is recognised with the 15% interest rate, so lets say 20% discount, giving £9.5m.
Europip is a Norwegian property fund where ARTL has loans of £5m at 9% and equity of £4.4m. Loan is well covered (LTV up to 73%) so should be valued at least at par whereas equity (9% yield) should be discounted by perhaps 20% giving a combined £8.5m.
Cash is £5.1m.
Other investments include an Indian investment worth £4.4m which is in arbitration and I would value at nil and an equity investment in IMPT which I would also value at nil (albeit it is listed and trades above nil).
There is £4.8m of investment in UK property in disposal process where assets with value are ungeared. I would value this at £4.4m for a discount just under 10%. There is also Cambourne Business Park at 50% LTV and providing a 12.9% IRR for the minority equity stake. This should be worth its NAV of £1.2m
Total valuation £53.2m or 74p. This is a 35% premium to the share price based on some fairly prudent valuations. The share also has a dividend yield of just under 4% (2.1p) to provide some value whilst I await the rerating.
Main risk is the fact that Alpha Real Capital manage all the underlying investments. This is somewhat balanced by the fact that the c.31% holding they have in ARTL makes it their most valuable asset by far so they will keenly protect value. There is a high 2% NAV fee and although there is reference to fee rebates to avoid double charging, the size of the rebates is unclear.
Looks like it is worth a moderate investment having been left behind whilst other property investments have rerated. Certainly not low risk, but with a decent chunk of lower risk assets (35-40%) the discount looks excessive given the downside protection.|
|red army: The share price rise was before the announcement so wondering whether there should be more in the morning.|
|red army: Asmodeus
I also hold and view this as a positive action for the share price if passed at EGM.
It provides security of future borrowing and is a good time to seocure borrowings.|
|skyship: Well, there we go. Stephen Wilmot - Property Editor at the IC, reminisces today over a few property tip successes and the one disaster - LSR. The relevant text for we bulls is in the second para, where he suggests that after the precipitate fall LSR may represent an interesting arbitrage play. That is exactly how I now see it:
"As for the worst tip, I recommended readers pick up shares in Local Shopping Reit (LSR) after the first of the market falls in August 2011 (Buy, 50p, 11 Aug 2011). The company's portfolio management was strong, and the shares yielded 8.2 per cent on our tip price, so for a while I thought I'd picked up a real bargain. But it turned out its boom-era debt was impossible to refinance, and last November the portfolio was effectively put up for sale. We promptly downgraded our advice to Hold at 36p, and the shares have since sunk to 26p.
The lesson here is not to be seduced by high yields and fat discounts to book value. That said, there is now a clear arbitrage play at LSR that could appeal to some investors. The company has a basic book value of 46p per share, which should be realised as its assets are sold off over the next three to five years into an improving market. It certainly seems a shame to sell out at today's share price.
|skyship: Ah - hadn't exceeded my monthly article allocation; so herewith. A good idea to register with propertyweek.com:
One of the world's most famous investors has built up a 6% stake in Development Securities.
Quantum Fund, the $20bn+ hedge fund that invests on behalf of the family of currency trader George Soros, holds a 6% stake in the listed developer, according to Stock Exchange filings this week.
Quantum is understood to have built up a small initial position around a year ago, and this week bought a block of 6.3m shares, equating to about 5% of the company, from funds managed by the Prudential.
The purchase has provided a boost to DevSecs' shares, which rose by 5% today to 158p. Quantum bought the shares at around 150p, putting the price of the transaction at around £10m.
Quantum's actions after buying the stake will be watched with interest. One source close to the deal suggested it was a vote of confidence in DevSec, led by chief executive Michael Marx, and an indication that the company's share price, which is close to a five-year low, is underpriced.
On the other hand, as a hedge fund it is not a shareholder that would typically buy shares and simply hope that they will rise, and one City source suggested the boost given to the share price was down to the possibility of future takeover action.
DevSecs was the worst performing UK property company in 2012, according to research from investment bank Jefferies, as a result of its exposure to regional development and its small scale. Its market capitalisation is £193m.
Soros set up Quantum in 1969, and it is believed to be one of the most profitable hedge funds ever. Soros rose to fame after making a huge profit on the pound dropping out of the exchange rate mechanism in September 1992.
In 2011 Soros closed the fund to outside investors as a result of more stringent US financial reporting for hedge funds, leaving the fund as essentially a family investment vehicle.
In property terms, Soros is best known for being a major investor in Delancey's DV4 evergreen fund
|skyship: Also posted on the JDT & CIC threads, so sorry to be repeating myself if already read:
Many on this thread will recall from just a year ago the opprobrium aimed at the Directors of Conygar Investment Company (CIC), the property company run by Robert Ware, well-known as the former boss of property major MEPC.
CIC took a real hammering in the PR stakes following an absurdly high remuneration and bonus policy. I was one of the many who added their name and pledged their holdings to the action taken by Carmensfella and Roger Lawson�s Share Society, to seek a change to the outlandish Remuneration package then in force.
They are putting it right, partly, and relying on the passage of time and underlying performance to regain trust. They are halfway there after this piece in the recent Annual Report:-
Review of Remuneration Policy
At the last Annual General Meeting, the Chairman committed to consult with a wide range of shareholders with respect to the Group�s remuneration arrangements for Executive Directors. We have also monitored and reviewed the topical debates in this area. It is essential that remuneration remains sufficiently competitive to attract, retain and motivate high quality management to achieve challenging
targets. The Group has been well run and has continued to grow through one of the worst downturns in living memory. However, we acknowledge that bonus payments, in whatever form, should only arise for true out-performance and to that end, we have increased the post-tax hurdle rate on the Profit Sharing Plan to 10% per annum on a cumulative basis. In addition, we have introduced a share price condition. The remuneration committee does not intend to pay out a bonus unless the market share price is at least 65% of audited net asset value per share. We have also made a number of lesser amendments to clarify and simplify the Plan, but in the main, our shareholder consultees were satisfied that the basic structure is appropriate for our business model.
I've been watching and waiting for CIC to emerge from its long, self-induced pariah status. It�s a bit soon, they may not be there yet, but I certainly feel the Company is now in remission; and at 90p the yawning 46% discount to the 168p NAV may well be even higher due to the undoubted potential of their un-revalued development projects.
There are many reasons why I believe now to be a good buying opportunity:
1. The basic fundamentals of the business are sound; and by any Commercial Real Estate metrics the share price is now significantly undervalued � see the annual Report HIGHLIGHTS below. With the high-yielding portfolio and considerable development potential, the share price might normally be expected to be standing at no more than a 30% NAV discount, ie 117.5p � some 30% higher than the current level
2. The Company�s share buyback programme underpins the current share price, is NAV accretive and over time is replacing the selling from more traditional fund management groups with what may be considered more entrepreneurial and active shareholders � the most recent two being Majedie Asset Management (5.5%) and Baker Street Capital Management (6.0%). The Share Buyback Scheme will be renewed at the AGM on 15th January.
3. On the new development side the Company has a development land bank, conservatively held at a cost of �30.8m, with various associated planning processes proceeding well. Short-term progress on any one of the Fishguard, Holyhead or Haverfordwest projects might be expected to have very positive NAV implications. All is fully detailed in the Annual Report and in this link to the Company website
4. The Company has very low gearing for a property company. The current LTV is just 27.4%. There are no funding concerns and the current cost of borrowings is a hedged 4.44%.
5. Technically the shares have traded out of their 2011/12 downtrend and have spent the past 4months consolidating above the 50day & 200day MAs. The way now looks set to challenge the 100p resistance last attempted in Dec�11. A successful break North would provide the impetus to targets around 120p.
6. Finally, there has to be the very real possibility that Robert Ware will retread a path he took many years ago with MEPC, ie an opportunistic MBO. Before any upside kicks in from the development projects, he could be tempted to launch an admittedly cheeky but likely successful offer at a 25% NAV discount. After all, who would turn down a cash offer @ 126p � a full 40% higher than the current offer price of 90p.
Other than the historic corporate governance concerns, the only other negative to an investment here is that regrettably they continue to be rather parsimonious with the dividend, stating �Our dividend policy is unchanged in that we will aim to provide some income return to shareholders but for the most part retain profits for reinvestment in the business.� At 90p the 1.25p annual dividend provides a yield of just 1.39%.
To summarise, I believe CIC to be a great Risk/Reward play - perhaps 5% downside versus a quite clear 33% upside to 120p.....& possibly then some! The famous US hedge fund manager Seth Klarman would view CIC as a cigar butt opportunity � ie, time to pick up a valuable commodity being carelessly discarded by others.
A good report following the Prelims in Nov�12:
CIC Annual Report � Y/e 30/09/12:
● NAV/share increased by 7% to 165.9p (2011: 155.2p). EPRA NAV/share
increased by 8% to 166.9p (2011: 153.9p)
● Pre-tax profit for the year �7.46 million (2011: �1.76 million)
● Acquired a portfolio of nine freehold and long leasehold properties (the �Edinmore portfolio�) for �39.8 million with a net initial yield of 10.6%. Valued at �42.4 million as at 30/09/12
● Obtained planning consents for our �100 million waterfront development at Fishguard, West Wales and our mixed-use marina development at Holyhead, Anglesey, Wales
● Net debt of �48.2 million representing gearing of 31.3% against NAV and 27.4% on LTV
● Strong cash flow and debt capacity for future acquisitions, with total cash and undrawn committed facilities exceeding �50 million
● Share buy back: the Group acquired 9.1% of its ordinary share capital at a weighted average price of 90.8p/share
● Post period end, submitted planning application in respect of the 60,000 square foot Sainsbury�s retail food store and 835 residential plots in Haverfordwest
Summary Group Net Assets As At 30/0912:
........................... GBP'm....... p/share
Investment Properties...... 176.0........ 189.6
Development Projects....... 30.8......... 33.2
Cash ...................... 31.5......... 33.9
Other Net Liabilities...... (4.6)........ (5.0)
.......................... -------....... ------
........................... 233.7........ 251.7
Bank Loans.................(79.7)........ (85.8)
NAV/share:................. 154.0........ 165.9
.......................... =======...... ========
Links to the principal assets in the property investment portfolio:
Corpora share price data is direct from the London Stock Exchange