The Local Shopping Reit Share Discussion Threads

[hillofwad] 23/11/2016 11:54

Internos are on an annual fee based on 0.7% of gross asset value Any decent west end surveying practice with a management team would undertake this task for considerably less especially if they get hooked in to the sales fees . Internos require 6 months notice Sales have stalled Lets get on with it and serve them notice

[deepvalue2015] 23/11/2016 11:01

@gfrae Can anyone tell me when Internos actually made money on a property sale for LSR? Their largest sale of Nos 2 & Nos 3 in 2014 cost shareholders £1.3m and the ones done in the first half of 2016 brought in cash of only £4m against a book cost of £4.3m (ref 2016 Interim report pg 12 & 16) this wasnt even enough to cover the debt repayment and SWAP break cost totaling £4.2m. So they are still bleeding cash even after being 'on the job' since mid year 2013. They seem also to have a habit of writing down the book values just ahead of the sales.

[gfrae] 22/11/2016 21:27

The annual recurring profit should be around £3 million based on last year's rental Inc after costs of £5.6m less admin costs of £1.5m and interest costs of £1m. Some of this will be used to pay down debt say £1m the rest could be paid as a dividend. This might be a bit high if they are successful at selling off the properties. So possibly eps of 3 or 4. Less if they sell a lot of properties .Financing costs will have fallen substantially now that they are out of the interest rate swaps.

[catswhiskas] 22/11/2016 16:43

Thal share price now moving up on sells something could be going on .DS could launch an all paper bid for LSR but the thal share price has crashed this last year and I doubt ds would want to issue paper at the current share price but what if the thal share price was to start heading north he might then.

[strathroyal] 22/11/2016 16:13

Specto - We shouldn't lose sight of the fact that this is a REIT. Despite reservations about the costs and perhaps slow progress under Internos, I can see that the various processes have largely been aimed at the bottom line and once LSR is in profit, it will have to pay a dividend, which is why I suggest that the new borrowing facilities are the price being demanded by HSBC.

Whilst the interest rate payable was unchanged by the extension of the banking facilities, the elimination of the SWAP liabilities at the last half year should now give a truer picture of profitability by reducing the financing costs. It will be disappointing if LSR is not now showing a reasonable profit, a fact that was referred to in the last accounts.

[orinocor] 22/11/2016 15:17

Does Duncan need 75% of the votes cast or just 50%?

I wonder what his next move is going to be since I think he'll lose. Can he use THAL shares to make a take-over bid. I can't see LSR shareholders being happy with that unless the terms are very good. Also Duncan will likely be diluted too much and will lose control.

[spectoacc] 22/11/2016 15:01

Thanks @hillofwad & @gfrae

@maiken - much the same as I thought when originally in LSR, but it didn't do me any good! Never sure why the business model didn't "work". (& re loan repayments - lower than you think due to LTV, but higher since LIBOR currently about 0.4%, 4% pa in capital next two yrs, & 0.5% arrangement fee which ought at least to be tacked onto year 1, & then the 2% on top. Also £1m of property added in, though that's in the LTR point, as perhaps are the capital repayments. Makes you wonder why they've not been a roaring success).

Everything has a price - maybe it's 27.75p, maybe it's 34p, maybe it's much higher. Don't mean to knock LSR, just have bitter memories from years ago & interested to analyse it now.

[maiken] 22/11/2016 14:49

at 28p the portfolio yield is 14.6%.I think that leaves scope for cash-flow to enhance shareholder returns even after voids,running costs and interest payments of 2.25%.

[hillofwad] 22/11/2016 14:41

Specto Grahame Whateley was the guy who sold at 34p who has always done very weell for himself but perhaps less so for his investors ie Castlemore He was one of the first guys in the immature retail warehouse marketmany years ago who relaised that B&Q and their like would pay a cash prenmium over and above the rent Been a face in Birmingham for may years Likeable and charming but never known for sloshing it around Relentless in chasing the last £ Put it this way I would be very surprised if anyone else gets more than 34p

[spectoacc] 22/11/2016 14:31

Thanks @strathroyal, point taken re rental income/dividends. I found it interesting that (a) the new facilities run to 31 Dec 2019, & (b) any sales from those two pools have to go toward repaying the loan.

Incidentally there's amortisation for first 24 months of 1%/qtr, reducing to 0.25%/quarter, so I'm guessing the ability to distribute via dividends is restricted for the next two years. No idea what previous borrowing costs were but +2% over 3m Libor seems pretty reasonable, notwithstanding the 0.5% arrangement fee that they're also forking out for.

When properties are bringing in 10% it's all fine; when there's a few voids, capital costs & running costs of company/BoD/fees, isn't apparent how much value is left. Feels like any payouts will be in a lump at the end, assuming all properties roughly equal & it's not just the good stuff being sold off first. At least the loan amortisation (effectively 8% in next two years) should reduce risk a bit.

Good luck holders. No position here.

[ntv] 22/11/2016 13:49

are the board of LSR prepared for a 65% collapse in the the commercial property prices? thats what has happened to oil, could lsr cope with a 2% rise in the base rate?
thal is a survivor whatever any one says
if it means real business here i don't understand why it is not picking up more stock down here

notice the board has got lending linked to them staying in charge
surely this is against the shareholder charters DTB

[strathroyal] 22/11/2016 13:45

SpectoAcc - As the previous banking facilities were not due to expire until April 2018, this revision at first appears unnecessary and it would be interesting to know if the intention to revise terms was under discussion before DS arrived. The debt at 30/11/16 will be £10m less than at 31/03/16 and cash in hand will have reduced by £8+m so the company is cash generative.

Proceeds of property sales are to be used to reduce the loan so rental income, after expenses, should be available to shareholders. I point that out because during the last financial year, Nos 4 carried out a share conversion scheme whereby it converted £68,500,001 shares to distributable reserves. I'm not an accountant but presumably this paves the way for the company to resume dividend payments. If so, perhaps HSBC demanded these changes, we will no doubt see shortly.

[gfrae] 22/11/2016 13:35

The person who sold the stock to Thal was the person who created the mess Grahame something. It is unlikely Thal have the dosh to make a full bid. See previous posts.

[andyr0503] 22/11/2016 13:28

My first ever post. Would a tactical approach be to reject THAL this time round ? Then see if THAL will make a formal bid for LSR ? Might get a lot of us to a value worth having much faster than what now sounds like a longer term alternative ? As THAL have bought at 34p, a bid would probably be their best bet if they lose the AGM vote.

[spectoacc] 22/11/2016 11:51

Who sold him the stock at 34p? Those are the people to invest in ;)

Once again I put the question - what do shareholders make on the revised debt terms, announced this morning before the Notice of GM?

[cockerhoop] 22/11/2016 11:33

I could also add the company loaning the EBT trust millions to buy shares off Duncan at £2.70.

Duncan was certainly prepared for the oil crash, THAL less so :-)

And don't start me on the country house!

[cockerhoop] 22/11/2016 11:31

This is an example of a Duncan Soukup THAL deal with excellent commentary from Stemis


SteMiS12 Aug '16 - 08:33 - 3386 of 3512 2 0


So let me get this. The Russians (SMG) owed us a load of money ($4.4m) for work we'd done for them. To get them to agree to payment, we offered them a $1.1m discount. For completely inexplicable reasons, rather than offset that discount again payments, we (rather Soukup) paid it to them!!. They then banked the cash (thank you very much) but failed to honour any of the payments.

Now we've agreed that, as long as they return $0.75m of that discount (effectively to Soukup) we'll let them off the debt. Effectively meaning we've paid them for the privilege of doing work with them.

Amazingly we are now exploring new opportunities with the Russians.

I can only hope there is something about this that isn't clear because at the moment it looks like utter madness...

[rcturner2] 22/11/2016 11:03

They were ready for the collapse, that's the point.

They can't magic revenue out of thin air. If their clients pull work they have to do the best they can.

[orinocor] 22/11/2016 10:40

No. If you are in the oil business its your job to make sure you are ready for a collapse in the oil price. That's the business you are in. All the oil companies are blaming the oil price because they all assumed 100$ oil was here to stay. Rude awakening for them and they've been caught with their trousers down but they have to take responsibility. Take out hedges whatever but if you leave your business exposed like that then you need to take the medicine.

[rcturner2] 22/11/2016 10:34

I think a comment like that is very childish and does not reflect well on those putting their name to it. THAL is an oil services company and like many others got hit for 6 by the oil price fall. The fact that they raised money at that high price probably saved THAL from going under. Soukup is a very smart guy who has a very good track record.

[orinocor] 22/11/2016 10:31

SKYSHIP22 Nov '16 - 08:44 - 1637 of 1644 0 0

Seems to me that valuation-wise we should assume a worst case scenario of 31st Dec’19 for the completion of liquidation. That date would provide Gross Redemption Yields as below from 28p to that stated:

38p would deliver 10.33%pa
39p would deliver 11.26%pa
40p would deliver 12.17%pa


If Duncan Soukup bought at 33p on average he's going to get a much worse return that that. I ask again what was he thinking when he paid up to 34p for his shares? Maybe he was just bored but I'm beginning to think he did not do his homework. I think he'll lose the vote. Most of the bigger shareholders will not trust him or even rate his competence!

[orinocor] 22/11/2016 10:27

LOL. The board of LSR must be thinking this guy has a cheek criticising their performance.


4.5 The credentials of Mr Duncan Soukup

Mr Soukup has set out his credentials in the Thalassa statement. On 30 October 2013 Thalassa announced that it had raised £18.1m by way of an equity issue at £2.50 per share. It should be noted that at the close of markets on 21 November 2016, Thalassa's share price was 43p, a reduction of 83% on the equity issue price for the October 2013 placing. The Board will not comment further on Mr Soukup's credentials, but shareholders will no doubt wish to carry out their own research.

[maiken] 22/11/2016 10:09

I am encouraged by the statement that the mgmt are now focused on selling properties individually,and that October's realisations were at a small premium to NAV [2.8%].
I think that way forward offers the prospect of a reasonable return from the current share price for the patient amongst us.I am happy to hold and await Soukup's response with interest.