|Doric Nimrod 2
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Doric Nimrod 2 Share Discussion Threads
Showing 26 to 49 of 50 messages
|small tick up|
|AA4 the new Nimrod IPO started trading today at a premium.|
Thanks for the feedback on the 787 and Norwegian. Aircraft leasing certainly has more of a fascinating appeal compared to other sectors in my fixed income portfolio!|
Thanks for the feedback - and the lead to DPA.
My partner is American and we spend some time Stateside every year (in fact I'm writing from California at the moment). So the USD aspect is not necessarily a negative !
In 'further fact', by coincidence , we must have flown here (to LAX) on one of the two Dreamliners leased from DPA by Norwegian Air......
On a customer feedback note, the plane was indeed quieter than my previous hops,the air quality the best I've ever had, so much less jet-lag; the seat configuration good, the food and inflight entertainment good. The larger shutterless windows were great for viewing, but not so good at keeping out the glare of direct sunlight (they're not physical shutters, just an electronically adjustable photo-sensitive pane).
The ticket price was also v competitive, certainly better value than our usual United/Virgin/BA....
Coming back on topic, I'd imagine the residual value of a twin engine, 'standard' body long-range 787 would be higher than the A380, with its 4 engines, high passenger load requirement and special airbridges needed.
So, more DMOR, but thanks again for the so far promising lead.
Richard Aboulafia, whom your linked article quotes, has always been cautious about the A380 and dismissive of Doric as inexperienced in the aviation leasing market. He may right. But after the planes came off lease to Emirates, the economics would be more attractive to another lessee if they could retro fit extra seats to around 750 seats which is more like what the plane was designed for.
Unfortunately leasing companies keep all the lower asset risk planes such as A320, 737-800, A330, or 777-300 to themselves and only offer private investors an opportunity to take part in planes like the A380 with greater asset risk. I have a small stake in DNA3 but also an investment in DP Aircraft I Ltd (DPA) which has a couple of Dreamliners out on lease to Norwegian. Hopefully the asset risk here should be lower for a similar return but DYOR - I should also point out that DPA is dollar denominated so there is currency risk to consider.
|I'd be very cautious atm extrader, with news just out yesterday from Airbus, about potentially ceasing production of the A380, or upgrading the current version with more efficient engines. Made me wonder where this would leave DNA at the end of their leases, if either of those cases pan out:
Particularly worrying was the quote from Emirates boss, Tim Clark, who said 'the stance would not help the future second-hand value of A380 aircraft.'
On the back of this news, I regretfully bailed on my holdings in DNA and DNA2, and intend to sit on the sidelines and see how this all unfolds now.|
Looking at some medium term income for a couple of portfolios....and DNA2, running to 2023 and DNA3 running to 2025 seem to fit the bill as far as yield goes (around 8% at the moment).
Question is : what happens at the end of the lease ie when debt has been paid off and we own the aircraft. What are they likely to be worth then ?
Will the residual value leave shareholders with a capital gain, their capital back, or a capital loss ?
Interesting article (a bit dated) suggesting that the outlook isn't too rosy....
With 36 A380 aircraft in the fleet as of late September and a further 104 now on order, the aviation community is trying to calculate what will happen to Emirates’ superjumbo fleet when the time comes to retire the type, at around halfway through its lifetime. Some analysts believe that, given a lifespan of 25 years, a proxy for the useful life of a modern widebody aircraft, the A380 will face problems in the secondary market when major leases come to an end after the standard 12-year term......
Some punchy input from other industry analysts and a fairly subdued reply from Doric, I thought.
Maybe a suitable investment on a 5 year horizon, but arguably not one to be holding when the music/lease stops ?
|Well it's time to find some cash for my pension payout in July so I had a look at the Nimrods. DNA share price seems to be very stable. DNA2 most volatile and below recent highs but still above the March lows. So it could rise or fall. DNA3 below recent highs and so my strategy seems to be buy DNA3 into my ISA and sell an equivalent amount in my SIPP. ie lower chance of falls, some chance of a rise, and of course I keep hold of those juicy dividends.|
|thanks for running the maths, there, speedsgh|
|DNA - last published NAV (30/9/13) 101.69p - current mid price 116.50p - premium to NAV +14.5% - current yield 7.7%
DNA2 - last published NAV (30/9/13) 193.09p - current mid price 230p - premium to NAV +19% - current yield 7.8%
DNA3 - last published NAV (30/9/13) 92.74p - current mid price 110.50p - premium to NAV +19% - current yield 7.5% (once full payments of 2.0625p/qtr commence)|
|Thanks, Graham. They're an interesting play for a small corner of the portfolio. Appreciate the commentary.|
|onehand you can't look at DNA2 in isolation. Check out my posts on DNA #4 and DNA3 #2. As I suggeted DNA2 was overpriced and it has fallen, DNA seems to be the benchmark and down slightly whereas DNA3 has risen. Appx movements -5.5%, -1.5%, +0.9%. The relative prices have simply been sorting themselves out and now more nearly represent equal value than before IMO. You wont be surprised to learn that based on the sentiment expressed back in November I bought 1 and 3 and steered clear of 2. Got it right for once.|
|This seems a good one to buy and hold and be happy with the yield. The risks seem to be well documented - mainly whether they calculated the residual value right in year 12 and, if you're a trader, the exposure to interest rate rises. But why is the price so weak? RSI is on the floor. c.6% off the high. Is this just early buyers, trading out? If you bought for yield and got two years of that yield handed to you as capital gain, may be I would cash out too. Or are we missing something more sinister?|
|on rise today again|
|ex div today|
For dna3 info|
AIUI, the answer's here :
...once the lease has expired, the aircraft are likely to be sold and investors paid out from the residual value."
Because aircraft are depreciated in a shorter period than their economic/commercial lives, there is (other things being equal) a gradual build-up of a surplus, which in this case has been projected to be sufficient at the 12 year point to allow the 169p payout on resale/refinancing.
|Trying to get my head around the DNA3 investment model.
"DNA3's investment strategy is the purchase of four A380 aircraft, scheduled for delivery from September to November 2013, and leasing them to Emirates, each for a period of up to 12 years. DNA3 will aim to pay a dividend of 2.0625 pence per share per quarter, equivalent to an annual dividend of 8.25 per cent per 100 pence share. Under the terms of the lease, the airline is responsible for insurance and all other service, maintenance and repair costs. In addition to the regular yield of 8.25 per cent, once the lease has expired, the aircraft are likely to be sold and investors paid out from the residual value."
The dividend is pretty straight forward + attractive. However I can't quite get my head around return of capital in the future. Presumably the planes are constantly depreciating assets.
In post #6 WirralOwl notes projections of £1.69 capital on redemption i.e. pay current offer price of 109.5p now, get back projected 169p on redemption (are we assuming in 12yrs time?) and benefit from a fixed income of 8.25p per annum in the interim? Where does the projected £1.69 figure come from?
Any help greatly appreciated. TIA|
|I cannot understand why the company doesn't have US dollar as its functional currency (as is the case for most aircraft leasing companies - aircraft sales and leasing are dollar denominated businesses). Then the accounts would be a lot simpler - all rents would be in dollars and no exchange rate fluctuations. Doric seem to be making things overly complicated. Not sure how their auditors have allowed them to have GBP as the functional currency.|
|RNS on report|
|DNA3 ticked up|
|ex div today|
|Well done if you managed to get in on the initial offering, if so you'll already be showing a nice gain and an 8.25% div to come! Yes, saw the news, all looking good for DNA2 and nice quarterly dividend to receive.|