Pactolus Hungarian Property Share Discussion Threads

[slapdash] 13/1/2009 11:55

scandelous change on compensation terms... company appears very dodgy to me... and run for insiders....

Bish100 - you think they are overestimating their asset value 10 fold???

Slap

[bish100] 13/1/2009 10:39

'The Asset Manager believes the aforementioned value per square metre remains in
line with current market values in central Budapest which appear to be selling
in the range of Euro 2,250 to Euro 3,500 per square metre for renovated and
refurbished property.
For the sake of reference, assuming the Group's estate was valued at an average
of Euro 2,250 per square metre (which the Asset Manager believes would be a
pessimistic and unwarranted valuation due to the individual size, quality of
renovation and location of the Group's properties)'

LOLOLOLOL - My view for what its worth is these assets are worth around 150 -200 EU per sq metre and will be for another 4 - 5 years when they 'may' appreciate by around 3% per annum.

[slapdash] 16/6/2008 11:08

Bish100 - agreed... one has to be careful in interpreting the NAV as the company picks its valuer... Also I think Budapest has seen a bit of a building boom so there is oversupply... Actually I think the NAV has FALLEN if one takes into account that the Hungarian currency has appreciated due to higher interest rates...however, at the same time taxes there have gone up (austerity tax) and so have interest rates and inflation...

The selling point on a stock like this is a potential joining of the Euro for Hungary but that looks very far away indeed... also it is all very well saying property in Hungary yields more than the UK but Pactolus have massive administration costs as management take a huge cut each year for themselves...

they also appear to trade properties a lot which triggers bonuses for themselves...

So I think this is probably not a great company to own... at some point it might be but not in the near future...

Slap

[bish100] 16/6/2008 10:55

LOL

Simple supply and demand -
There are literally thousands of 'high end' apartments with not enough 'ex pats / to fill them.
Also to avoid confusion there is very limited turnover of these thoudands of flats (Most have been waiting to be let for 12-18months plus).

A fairly disappointing NAV - LOL - If these guys had to sell this business they would be lucky to get 25p per share....

[slapdash] 15/5/2008 12:17

fairly disappointing NAV as is barely changed from last year!!!!

Slap

[slapdash] 30/4/2008 14:04

I've heard Budapest is very cold in winter... plus why buy somewhere with no beach!!! And wouldn't want to learn Hungarian..

Also I think off-plan buying is a big risk....

the fact that foreigners are willing to do it in a country in which they can't even speak the language on massive gearing must in itself show we are at the top of a property boom and prices will fall..

The pics of the one you showed me look nice but what if the river floods??? That may sound ridiculous but the UK government is building loads of houses in the Thames Gateway on a flood plain. Also do you trust the rental estimates given by the property companies - I think not!!

This is not to dismiss the concept as buy-to-let or property in general can make someone rich.. the issue is finding a market which will increase say 5% a year in real terms over 10-15 years and getting in early... I'm not sure Hungary is that place but who knows membership of hte Euro if it ever happens might help things..

Slap

[williebiz] 30/4/2008 10:29

Slap - there are some really good developments at the moment, Marina Park springs to mind as being one of the best in terms of location and concept plus the construction company is highly regarded.




We looked into buying an apartment there but thought it too expensive, this was right at the top end in HUF/sq metre plus heavily loaded (more expensive) the higher up you went in the apartment building - nicer views etc.

There were loads of Irish investors amongst others. We calculated that rental income required to give minimum acceptable yield was not achievable plus not likely to see much real capital appreciation - so it has proved to be the case.

My advice would be to wait until the prices come down, eg Marina Part is still being developed, if you wait about 3 years there'll be quite a few disappointed owners wanting to release capital even at a real loss.

If you wished to buy something near Budapest that stood a real chance of going up, there are a string of villages about 20-30 kms away that have family houses sitting in about 1000sq m of garden for a lot less than you'd pay for a 100 sq m apartment in the nicer parts of town. Driving into town is no problem outside the rush hour and easy in August too.

Top tip - the M0 (M zero) orbital motorway is being worked on with a new North Bridge opening this year then motorway getting extended to Üröm

The M0 will eventually be completed as a circle - currently 75% complete, eg with the bridge open you could already drive to the airport from Üröm purely on the M0 - but that'll take a few years more. The family houses in the villages on the Pilis hills side - that's near the Danube bend - are way underpriced IMV, particularly given the new commuting possibilities with the new roads/ bridge.

Open then click on M0 Északi Duna-híd (északi szektor az M3 és a ... and you can move the Google map to see the villages I mean near to Üröm.

Great climate!

Added - here's a good map showing the motorways under construction, most is already open

[slapdash] 30/4/2008 08:13

williebiz - interesting stuff... I don't know if you have ever been to a property show in London but the rubbish they come out with is unbelievable..

I.e. 15% capital growth annually... emerging markets you can't go wrong... blah blah blah...

The same kind of mantra that is causing buy to let people who invested in Manchester, Leeds etc to go bust... i.e. the catch is possible oversupply as loads of apartment blocks get financed...

This is my worry with Budapest... loads of supply... a stagnant economy... and a declining population in Hungary... i.e. a bit like Florida... so why not buy after the downturn in property prices.... what does worry me is that all these buy to let people in the west are buying flats in Hungary and are driven by fee hungry promoters... there may well be no demand and a subsequent fall in prices...

Or am I wrong... Willibez would you advise me to buy into Budapest or Hungary today... there are some positives in terms of a growing more sophisticated mortgage market which may push up prices.... future membership of the euro which will push down borrowing costs.... but who knows... what you want is growth so I think I would prefer property in India or China... and when exactly can Hungary join the euro with its lousy finances...

Slap

[williebiz] 30/4/2008 07:30

There is certainly oversupply of residential and office property at the moment plus a surfeit of shopping malls with loads more of all 3 coming to completion. Prices have been pretty stable in nominal terms. Faltering economy and fun & games in the politics (coalition just fell apart but no general election yet). See portfolio.hu/en, bbj.hu, budapesttimes.hu, budapestsun.com.

[slapdash] 29/4/2008 21:59

do you live in Budapest?????

who knows... my concern is oversupply in Budapest... at the property shows there have been loads of people selling off-plan developments... loads of building.... and the Hungarians have been borrowing in Euros so will get massively stung if risk premiums increase and so weak emerging market currencies lose value against something solid like the euro...

also for strong property growth you need strongly rising incomes and Hungary's GDP is very weak.... my concern is that the eastern block are seeing falling populations given the low birth rate so there simply won't be the supply/demand imbalance that will see prices balloon..... Slap so I am not convinced... also see below from the DDC thread

williebiz - 29 Apr'08 - 20:48 - 1178 of 1178


The rental income is quite secure

You're wrong there. My first corporate let in Budapest was $3000/month in 1997, the same $3000 could get you a much better place now.

[williebiz] 29/4/2008 10:17

Currency move this year can only help for results reported in £. It's been quite significant.

Budapest property has not declined in nominal terms yet but slightly down on average y-o-y in real terms. A couple of percent.

Results could surprise to the upside, not a holder at the moment.

[slapdash] 29/4/2008 09:56

well who knows... as far as I can tell the Hungarian economy is blowing up bit time... currency will devalue etc.... property market will go down big time... but who knows...

Slap

[williebiz] 29/4/2008 09:54

Need a bit more time to fiddle the valuations? LOL

[slapdash] 29/4/2008 09:51

in any event results ridiculously late again... I am guessing they will be in May so at least four months after the year end... what a slack company!!!

Slap

[muttleyrules] 10/4/2008 08:03

Slapper not exactly a change of adviser:

Pactolus Hungarian Property plc announces that its nominated adviser has
changed its name from City Financial Associates Limited to Dowgate Capital
Advisers Limited with effect from 4 April 2008.

Still a good long-term story imho

[slapdash] 09/4/2008 08:20

change of adviser - i.e. wants to raise more money and dilute already suffering shareholders..

secondly, I see the company is yet again trying to win the competition for the latest full-year results... last year I think they came out in July...

what you would expect as this was tipped by Simon Thompson in the Investors Chronicle

slap

[williebiz] 03/3/2008 06:59

Did it mention currency and inflation risks?

[trustman] 03/3/2008 06:49

Good tip in the IC

[slapdash] 30/1/2008 18:24

"The countries of Central Europe look particularly exposed to a sharp slowdown in the euro zone: if growth in the single currency area dips to 1.5%, Hungary could slip into recession," said Mr Shearing.



slap

[p0lzeath] 24/12/2007 19:55

a) and b) they're Hungarian. Hungarians pride themselves on being a bit 'crafty'.

c) fair enough but gearing up through borrowing is often a great excuse to obfuscate.

d) why have such a big divi payout if it's not sustainable or justified by real terms earnings?

e) so you're in it for the capital gains, fair enough, and you hope the rest is OK. BIG gamble IMV. Capital gains unlikely for next few years IMV.

Happy to have got out breakeven in hindsight. Very happy.

cf share price action in DDC for comparison - looks to be a well (better?) run company in better spread of territories with similar issues.

f) for afters: inflation eating away value of investment/ income

[metaphysicalman] 24/12/2007 12:31

Thanks for your views p0lzeath.

Why do you think fraud is more likely here than any other company?

And why are management and their costs any more uncontrollable than in any other company?

PHU were cash positive at 30 June with no loans and had no loan costs. New loan facility will only be drawn down when acquisitions are to be made, on which, unless they are complete idiots, rental income should exceed interest costs (borrowing at euribor +1.6% so approx 6.3%, vs gross rental yield 8.5% average). So why do you think the rental income is insufficient to cover loan costs?

Regarding the dividend, you may be right, but I'm investing for capital growth not income so doesn't bother me.

Re capital appreciation, that's the key question, that's the gamble, and you may well be right - but so might I be.

Regards
MetaphysicalMan

[p0lzeath] 24/12/2007 11:27

Fraud etc will always be an issue. More of a worry than the fundamentals. However, I see rental income as being insufficient to cover loan costs; unsustainable dividend; no real terms capital appreciation likely in HUF; management & their costs completely uncontrollable by shareholders.