|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.|
|Yes I saw that and was wondering whether it was a buy back.|
|A bit more volume than usual with 180k going through at 13.5p or c.8% more than I paid yesterday.|
|Latest on O'Donnell case. Very explicit statement to court that all parties support the disposal proceeding.
"The High Court has continued orders preventing the sons of retired solicitor Brian O’Donnell and three companies dissipating any money they may get from the sale of a valuable property in London.
Blake and Bruce O’Donnell had argued there was no need for such orders and contended Bank of Ireland’s action seeking them was an effort to damage their reputations. Bank of Ireland claims firms connected to Blake and Bruce O’Donnell may get as much as £6 million (€7.6m) from the sale of Columbus Courtyard, Canary Wharf, after substantial debts on the building, valued at some €132 million, have been paid, Bank of Ireland claims.
The bank wants the Columbus Courtyard sale to proceed, as do the O’Donnells and the court-appointed official administering the bankruptcy, the court heard on Wednesday.
He did not see how these proceedings could have any affect on the sale of the property, the judge added."
|One potential stumbling block to the Canary Wharf sale was the action by Bank of Ireland against Brian O'Donnell transferring the shares which are being sold to his son Blake O'Donnell. If BoI were making any claim over the shares this could have delayed any sale (indeed this could potentially have been a reason why the sale was removed from the Knight Frank website).
Happily it seems that Bank of Ireland are only taking action against the £6m proceeds which Blake O'Donnell is due to receive imminently. Proceeds of £6m to the equity holder means senior, junior A (DREF) and junior B (Partners Group) being paid out in full, hopefully with a nice early repayment fee!
Looks like news can't be far away now, perhaps contracts have exchanged but not completed. Good spot on the withdrawal from the Knight Frank website which does indeed appear to indicate imminent sale, now confirmed by this article.
"Blake O’Donnell, a son of retired solicitor Brian O’Donnell, has described as “scurrilous” a bank’s claims concerning potential dissipation of assets from an expected imminent sale of a valuable property in London.
Blake, who is also a solicitor, was responding in the High Court to claims made last week by Bank of Ireland (BoI) when it sought orders preventing Blake, his brother Bruce and three British Virgin Island-registered companies dissipating an estimated £6 million (€7.7 million) proceeds expected from sale of a property, Columbus Courtyard, in Canary Wharf.
Stephen Dowling BL, for the bank, said his client was concerned about the proceeds of the sale being dissipated and was standing over the claims it had made to the court. A six week adjournment was too long, counsel argued."
|Yes I was just about to post the same. The quarterly NAV and dividend announcement has been made on 13 Feb the last two years, so it seems fairly clear that they were waiting for resolution on Columbus Courtyard before releasing the latest NAV update, which should now be with us fairly soon. Meanwhile the shares are quite cheap - I picked up some more at 12.82p yesterday.|
This link to the Knight Frank listing of Columbus Courtyard directs to a "not available" link, so I think it likely this transaction has closed. If it had fallen through I would have expected the listing to still be up although I can't eliminate that possibility entirely...|
|Thanks erstwhile2, will be good if they can get it done this week. Canary Wharf continues to look good for purchasers.
"Canary Wharf rent is rising faster than anywhere else in London, according to Knight Frank.
The estate agent said that office rent in Canary Wharf will increase 12.8 per cent in 2016"
|Property Week reports 17 Columbus Courtyard being under offer to Chinese conglomerate HNA Group.
Last year they bought 30 South Colonnade at Canary Wharf which was on the market for £215m.
One report suggests the offer for Columbus Courtyard is over the asking price.