|It's only beer money, but I was able to sell my holding just now at .856p, which is over 70% more than the under .5p they're worth (.4 div plus under .1 p liquidation payment).
(If I miscalculated please let me know!)|
|Some bizarre trades today now that it is ex-capital return - some (relatively) chunky buys at 2.35p and even 3.9p. And sells at 0.6p!|
|6.63p would be disappointing. Hopefully a tenth or two to follow after the winding up to get us closer to 7p.
6.8p or more would be decent, although coming down to small fractions as the end approaches and certainly been a great investment overall.|
|So we are to get a final, or nearly final, 6.63p per share in capital and dividends.
By my calculation the return between April 2015 and April 2016 was 25.89p, and the NAV which had been 36.92p came out at 14.48p rather than the residual 11.03p, thus making a gain of 3.48p over the year. This continued the pattern of consistent yearly gains in real NAV in previous years, which have made this such a good investment for long-term holders.
But since April 2016 the return has been/will be 14.3p, marginally less than the 14.48p NAV at that point.
I suppose this is because management costs are disproportionally large once the investments are reduced to a rump.|
Yes let's see how much they have left to distribute. Hopefully an announcement should follow in the next week as they must have been preparing for this moment.|
|Indeed. I will not fully relax until I see the calculations of the cash actually to be returned, as they have kept their cards infuriatingly close to their chests throughout 2016 about the relative contribution of the various loans to the overall NAV. But assuming that there is not some sting in the tail, I would be very interested in hearing about a follow-up investment of some kind if they are planning one...
And thanks for your detailed input from time to time on this board, which has been very helpful!|
|Final loan repaid. End is close for a very profitable investment. Never understood why this traded for so long at 10-15% discount to NAV when it was holding loans worth more than par value as made at attractive rates into a real estate market that subsequently recovered strongly.|
|And then one, which sounds like it is well progressed for redemption or sale in the next couple of weeks.|
|And then there were two.
"The board of the Company is pleased to announce that the full repayment of all principal and accrued interest has been received on the Master Fund's UK Healthcare bonds (CMBS 1), earning returns in-line with its investment criteria. The Company's share of proceeds realised by the Master Fund totals £1.1 million, equivalent to 1.56 pence per share.
The board is anticipating the full realisation of its investment in the Master Fund in the short term and is exploring the best method of distributing proceeds to shareholders shortly thereafter."
|WCBoy - Any ideas of what the NAV is now?|
Confirmation of the return of capital.|
|Good spot westcountryboy.
If the loan was £21.7m at 31 December, it should be worth £22m on 31 March and c.£22.35m on redemption using the payment in kind interest rate of 6.75% which is settled on redemption.
On the FX any profit on the loans should be matched by a loss on a FX derivative.|
|So, 7.93p to be received. I note that the valuation of the loan (£21.7m) did not change between December 2015 and March 2016 - I wonder why not?
So if the 7.93p is distributed (and I guess it may not quite all be) that leaves 6.55p, or £4.7m, left. I am struggling to find any way of reckoning potential upside on the three remaining loans - which incidentally have hardly changed in valuation in the last 15 months.
However the euro value of E15.8m for two of them is now worth £13.1m as against £12.4m at the end of March.
In all, still rather opaque, but difficult to see too much downside from a current share price of 13p!|
|No problem Erstwhile2. It is 56% of the remaining assets so its repayment is quite important to returns!
It will be very interesting to see whether they get interest to 12 July or to loan expiry on 31 December 2016 in the form of an exit penalty. With an eyewatering interest rate of 13.25% there is c. 6% of potential exit penalty which could add to NAV c. 3.4% and push the NAV close to 15p (before performance fee). Even if it redeems at NAV based on interest to 12 July still a good result.
Looking forward to a c.8p return of capital in the next few weeks.|
|Thanks for staying on the due diligence watch!|
|Completion of 17 Columbus Courtyard sale occurred yesterday.
|FX being fully hedged is obviously not ideal. I hope there are no mark to market losses on their FX hedges which result in margin calls and blow them up from a cashflow perspective|
|Updated NAV of 14.48p. Not too much else of interest other than clear statement that FX fully hedged and statement of confidence in security of underlying assets.
Whilst not mentioned, HNA today gave shareholder approval for the 17 Columbus Courtyard transaction.
|HNA Group shareholder meeting to approve 17 Columbus Courtyard is on 5 July (well ahead of 22 September deadline).
The effective interest rate (before costs) is 11.18% (being 6.55% in cash and 4.63% paid at maturity/redemption). There are no borrowing costs, the LTV is referring to the position in the company which DREF is lending too.
The position is further complicated by the fact that the portfolio numbers are referring to the Master Fund into which DREF invests, i.e. £39.2m is the loans in the Master Fund not the loans which DREF participates in (its holding is in the c.25-30% range).|
|The share price drop today brought me very close to my top up price so I thought I ought to run the slide rule over the FY figures to be sure I knew what I was buying. NK104 I agree the results are far from clear on those matters that existing and prospective shareholders really want to know. These 3 Directors are pocketing £82,500pa to do a pretty lousy job of explaining where we are NOW. Far too much dwelling on what happened many years in the past, which seems like an attempt to justify their own existence.
Westcountryboy I think you are a bit on the optimistic side. Only 5 loans 'exist' at 31 December. The German hotels were loan 12 and aren't mentioned at all as current assets. So any uplift can logically only be included in the NAV figure rather than be added on. Loan 5 is in fact UK Healthcare at zero value. The other four are loans 2,10,11 and CMBS1. Use an exchange rate of 1.225 Euros per GBP and you get exactly the stated value of £39.2m. The NAV is quoted as 29.3pps but in the accounts it is 29.2pps. So take off the distribution of 14.93p and 12 months admin cost of by my reckoning 0.48pps which leaves a shareholder value of 13.89pps. That's not much incentive to buy shares at 13+pence and wait the best part of a year, bearing in mind the many risks.
However the elephant in the room is the loan interest payments less borrowing costs. This could make all the difference to any investment case. And yet we get next to nothing in the results. My reasoning ends up with 'hidden' value of 1.02pps: If £39.2m loans earn 6.6% cash or 4.6% in kind, say 5.5% average; assume the debt at 68.7%LTV costs about the same in financing costs: £12.27 net loan assets; then divide by shares in issue 71.813m. DYOR|
|More detail here, looks like contractual exchange, but completion may be a few months away (although interest will be clocking up at 13.25%) so DREF news may still be a while.
"HNA, the owner of China-based Hainan Airlines, confirmed it had agreed a sale and purchase agreement with Brian and Mary Patricia O’Donnell̵7;s Vico Capital to buy 17 Columbus Courtyard, E14, for £131m, plus around £9m in transaction costs.
The group yesterday paid a deposit of £13.1m to secure the deal, 50% of which it will lose if the deal does not complete by 1 September.
HNA will fund the acquisition through proceeds raised from a £246m rights issue last November and said it will complete its purchase by September, conditional on approval from shareholders and the Hong Kong Stock Exchange."
|News should be imminent. Will be interesting to see if there is a c. 8 month early repayment premium (may not sound like much, but interest rate on the loan is 13.25%!).
"State-owned HNA International Investment (0521) said it has acquired 17 Columbus Courtyard, a London commercial building, for HK$1.44 billion, with cash from a rights issue to UK-based investor Fourteen Ninety Two.
The A-grade office building in Canary Wharf has a floor area of 195,400 square feet, and is single let to Credit Suisse until November 2024. Last year's rent was HK$70.4 million."
|Thanks WCB - the results weren't exactly a model of clarity. I'm trying to work out if there's much to gain (or lose) in buying some more.|
|Interesting final results. NAV equivalent on 31 December (post capital return) was 14.27p if I have done my sums right. It has reduced like for like since 30 Sept, if it is meant to include the 2.91p uplift from the realisation of Loan 5. It should have been 15.2p. A number of possible reasons:
- annual expenses may not have been charged to NAV before - they are now £340k which is going to have an impact (about 0.45p)
- accrual for a performance fee is mentioned in the notes but I can't see any figure for this
- the valuation of the three remaining loans other than Columbus Courtyard has reduced very slightly since 30 June
- I am not entirely sure that the NAV given on 31 Dec is sensitive to the uplift for Loan 5: the sum received from the Master Fund for this in January is given at £10.979m. So might there still be some uplift due there?
No dividend this quarter which is not a problem.
No news on Columbus Courtyard, though there have been a couple more articles saying sale was imminent for a sum in excess of the £132.3m. I note the value of the loan in the accounts rose from £21m to £21.7m in the last six months.
No reason to think that any of the loans will pose a problem, or that the wind-up date will pose a problem.
I note that £170k of income was received on 12 Feb so if we include that then NAV would be 14.56p.
Altogether I am not much clearer! But I hope that interest received this year will at least match expenses and that therefore we can expect the NAV to stay robust.|