Picton Property Income Ld Share Discussion Threads

[speedsgh] 18/3/2014 15:39

Trying to compare current value offered by the main comm prop inv trusts. Pls feel free to point out any errors. Pls forgive poor formatting.

Premium on PCTN seems to be considerably lower than peers. Why?
SLI yield considerably more attractive than peers. Why?

EPIC >>> NAV (31/12) >>> Current offer >>> +/- to NAV >>> Forecast div >>> Yield

FCPT >>> 105.3 >>> 119 >>> +13.0% >>> 6.00p >>> 5.0%
PCTN >>> 53.8 >>> 56.5 >>> +5.0% >>> 3.00p >>> 5.3%
SREI >>> 47.3 >>> 52.5 >>> +11.0% >>> 2.48p >>> 4.7%
SLI >>> 65.5 >>> 72.25 >>> +10.3% >>> 4.52p >>> 6.3%
UKCM >>> 73.1 >>> 79.8 >>> +9.2% >>> 3.68p >>> 4.6%

[skyship] 18/3/2014 14:55

I agree with all of that.

[redsonning] 18/3/2014 13:47

The indicators do indeed seem to suggest that the price is a full one in the short term, so maybe there will be some retrenchment. The issue is the usual one for investors in this situation - do we really believe that the upward run is substantially over, or do we think that this is just a retrenchment from a price which has got ahead of itself?
Those questions are much the same as the ones we are faced with in the wider market too, and indeed the pull back in propco prices is partly linked to the wider uncertainties.
My own view remains that, in the longer term, commercial property still remains an attractive asset.

[skyship] 18/3/2014 09:27

Well done those who held on; but the indicators are providing pretty clear signals that it is time to bank profits:

[redsonning] 22/1/2014 11:51

I again agree with you Lord Gnome! Those who sold out early have not fully appreciated the immense structural improvements made by this company, together with the impact of the recovering property market. It is hardly now surprising, yielding in excess of 5% with a more than covered dividend in a rising property market, that these shares trade at a premium. I shall also continue to hold.

[lord gnome] 22/1/2014 08:27

Decent update with good progress made. NAV rising as expected and a lot more to come as the property market recovers. The share price will track higher ahead of the NAV as the market will anticipate further NAV increases. Good market reaction this morning. Happy to continue to hold.

[kavnish] 10/1/2014 13:19

Chaps , it's not so difficult a lot of private investors have considerable portfolios built over time. mine is a small one built over time.

I generally wouldn't suggest doing something unless I did it myself. The fear of doing it is why managers charge ridiculous fees. The PCTN mgnmt presided over a disaster in terms of share price move. notice not a single cent of their own capital was at risk.

Any investor can pick either private or public markets and their is a time to do this. I also do this with SME businesses so have a good idea on this but as always people need to DYOR and manage their own capital themselves.

Public equities are only for my pension pot, I don't like the incentive structures for public equities. anagers carry no downside risk.

[lord gnome] 10/1/2014 08:55

Nope - for me to get involved in commercial property a a direct investment would mean putting all my eggs into one rather illiquid basket. I'll stick to my shares thank you.

[redsonning] 09/1/2014 23:40

Yes thanks davep4 - I've followed the whole thread and I am well aware of that comment. Just because he says it doesn't mean he's actually doing it! The risks of trying to manage a commercial property business yourself are huge, and whilst it's easy to point out the theory it would be potentially foolish to try it in practice. It is significantly less risky to take your interest in property through these kind of property trusts, which are well spread in top class properties and have experienced management and the clout to cope with this kind of market. Indeed just today we have seen FCRE report strong asset growth in the last quarter, with a consequent further rise in share prices filtering throughout the sector.
If one wants to be in property then residential buy-to-let is a more practical option for a small/medium property investor - I do that myself as it happens. But I would not get directly involved in the commercial property business.
I doubt whether anyone on this thread is doing so either, no matter what theory they advocate.

[davep4] 09/1/2014 18:58

redsonning see post 296:

"cash in go along to your nearby auction and pick up the real thing with no mgmt fees"

[redsonning] 08/1/2014 21:56

If I have it right, Kavnish is primarily saying that he finds equities other than Propcos more attractive right now. I presume he is not actually spending his time and money on direct commercial property.
By the way these particular managers have deserved reasonable reward "on the way down" as the management of Picton through the downturn has been extremely good. That is why they are still here now and why their shares have performed so well over the last year. A company of this size (nor any other in fact) does not run itself, especially when things are tough!

[davep4] 08/1/2014 00:42

physical market -v- collective vehicle

I guess it depends if the investor has the time, capital and skill to invest in a portfolio of properties Kavinish!

If needs be, you can always sell equities which is not always the case with physical assets.

[kavnish] 30/12/2013 17:59

Hi redsonning

My rationale is simple all investors have the option of private or public markets, issues is timing and also as you point out there are costs to doing this.

The argument over assets and enterprise value difference is a simple one, I put little value to the " managers skill" , they are rewarded on the way down as well as on the way up.

The mkt holds better value elsewhere , good solid growth cos selling for 10 times earnings.

The time for listed prop cos will come back until then the private mkt is a better bet , I have been doing this for 20 years the cycles never change , but the " it's different this time , gets louder

[redsonning] 26/12/2013 18:08

The story is not as simple as you make it sound Kavnish. Essentially you are simply saying set up the kind of debt PCTN has set up and buy the right kind of commercial properties privately, then manage it and keep all the money yourself. If anyone thinks this is really simple then go ahead and try it - but I don't think you will find many that want that kind of risk and commitment! If commercial property assets are going to attain significantly higher values in say 2-3 years time than they are now, then it is still rational to hold well managed propcos.
And by the way most kinds of businesses sell at a premium to their underlying assets because the management of those businesses itself has (intangible) value. Using your investment logic almost the whole market is a sell almost all of the time! Whilst there are many listed companies whose businesses are not well backed by tangible assets, commercial property is an example of a sector which is at least very largely so backed.

[bscuit] 24/12/2013 21:46

I'm now primarily a "buy and hold" investor and have had a number of Property shares in a wide definition and have done well. My number one gainer in the last year has been GPOR [+109%] but also DLN, PCTN, NRR, QED, GFRD] I reckon one just needs to watch the market for an exit. Happy to let PCTN run--
up 50% since February.

[kavnish] 23/12/2013 19:22

Guys a simple story, when the public market prices assets above the private market. You sell the public and buy the private.

A bit like the mgmt team are doing by issuing equity.

It's just not that complex

[carterit] 23/12/2013 14:16

My thoughts exactly redsonning

[redsonning] 18/12/2013 14:28

Apologies - I missed this discussion about the relative merits of holding or getting out of the property investment companies, but I will add my comments anyway.
Those who have followed my views in the past will not be surprised to hear that I agree with the sentiments expressed by Lord Gnome. As it happens I also like buying assets at a discount to underlying value, but this does not mean that is the only parameter to note. The last few years have seen generally falling NAVs as the propcos have struggled to get their overall finance situation in balance. Despite this, the levels of discount available meant judiciously choosing where to invest has paid significant returns to the brave.
However, the position is only recently turning to a more encouraging environment where there is expectation of rising NAVs into the future, and in a sector which still pays attractive dividends. Indeed it is those rising expectations which have pulled in other buyers and pushed prices above NAV - it has simply taken the wider market much longer to see the merits of this sector. The upward momentum in NAV could well be much more significant over time than the NAV discounters give credit for, and my view is therefore that this remains a sector to hold for a lot longer yet.
The issuing of modest amounts of new equity at a premium to NAV is logical in providing further balance sheet flexibility and lowering gearing. The only reason one should be against that, would be if one expected a near term decline in commercial property values. My view is that this will not happen - the market is now going in the other direction, and the share prices and the quarterly published NAVs are continuing to tell me that.
There is money to be made.

[nickg2] 29/11/2013 09:35

Picton Property Income Limited Director/PDMR ShareholdingTIDMPCTNRNS Number : 2748UPicton Property Income Limited29 November 201329 November 2013PICTON PROPERTY INCOME LIMITED("Picton" or the "Company")Director/PDMR ShareholdingPursuant to Listing Rule DTR3.1, Picton Property Income Limited announces that the following beneficial holding of ordinary shares was acquired by Mr Roger Lewis, Director of the Company, on 28 November 2013.50,000 ordinary shares at 54.42p representing 0.014% of the Company's issued share capital. The shares are registered under Hulton Pensions.100,000 ordinary shares at 54.37p representing 0.028% of the Company's issued share capital. The shares are registered in the name of Mr R St J H Lewis.Mr Lewis is the beneficial holder of a total of 400,000 ordinary shares representing 0.112% of the Company's issued share capital.-ENDS-For further information:Northern Trust International Fund Administration Services (Guernsey) LimitedDavid Sauvarin 01481 745529, [e-mail] to EditorsPicton Property Income Limited ('Picton') is an income focused, internally managed Investment Company listed on the London and Channel Islands Stock Exchanges. It was established in 2005 to invest both directly and indirectly in commercial property across the United Kingdom.With Net Assets of GBP180.2 million at 30 September 2012 and approximately 860 investors, the Company's objective is to provide shareholders with an attractive level of income, together with the potential for capital growth by investing in the principal commercial property sectors. www.pictonproperty.co.ukThis information is provided by RNSThe company news service from the London Stock ExchangeENDRDSKKLBLXFFLFBX

[rcturner2] 28/11/2013 09:45

Skyship, thanks for your comments on the thread, very useful for someone like me who does not know the sector.

Could I ask what else you hold in property and why you prefer these other stocks?

[skyship] 28/11/2013 09:23

red army - we appreciate that fact. However many of us were holders a year ago, so by looking at the Header you will appreciate the long and profitable journey.

For the more active investor there comes a time when you cash in and move on - especially as the shares now trade at a premium to NAV and the Board has quite sensibly decided to increase their firepower and start issuing equity.

The point is we've all benefited from riding the propco boom; but I just have a personal antipathy against holding shares at an NAV premium when they spend 90%+ of their time trading at an NAV discount! They are more likely to revert to the median IMO.

That said I'm more than happy to see these make further progress as it would mean a similar or better performance elsewhere in the sector - perhaps where I hold!

[red army] 27/11/2013 20:54

I don't think you guys appreciate that the trend is up and so are the NAV's

[kavnish] 27/11/2013 20:29

Sky ship completely agree with you, when the retail market is willing to pay more than the assets are worth you know which way to go.

The nonsense about valuations is irrelevant , cash in go along to your nearby auction and pick up the real thing with no mgmt fees.

But still who are we to reason why .

[skyship] 27/11/2013 11:46

Well there we have it - not a very wide sample, but as ever it is different views that make a Market. 2 have sold; 2 hold...

[alanji] 27/11/2013 09:36

I am still way overweight in property and agree that prospects for the sector still look encouraging. However there is a fair bit already built in to some of the share prices - quite a few, including PCTN standing at a premium, a sure warning sign that now is the time to consider selling.
I sold PCTN at prices from 48p to 54p at profits of up to 48%, incl divs - there is better value elsewhere. My holdings now, in descending order, are MCKS, ERET, FCRE, LSR, TEIF, CIC and IERE