Prospect EP. Share Discussion Threads

[jonwig] 26/8/2008 14:05

Thanks for that, ISA23.

On a quick scan, it looks as though TGR are increasing their rental income quite nicely.

[isa23] 26/8/2008 13:46

Detailed info & latest financial statements of underlying Reits are available online. As for PEJR's largest holding, 8975, we were told gearing is about 36% and will reduce to 28% by Oct. The second largest holding (8963) has a LTV of 58%. Here's the link to their latest financial results

I have not researched the other companies, but with 8975 & 8963 accounting for 41% of PEJR, I have a feeling they are more a victom of indiscriminate selling in smaller cap property stocks. 8963 states in their results that all their debt is long dated, so hopefully they won't have the refinancing problems that has led to the bankruptcy of developers like Urban in recent weeks.

[joan of arc] 26/8/2008 12:33

That all seems to tie in pretty well. So we only have to figure where the bottom is to get a nice income supported geared play! If what you say is right J then I would only expect the divi to be diluted in propotion to the share dilution - given the rquirements to pay out nearly all their profit in divis.

Hi Tia!

[jonwig] 26/8/2008 12:16

The 17/07 quarterly update gave a good summary of pros and cons here.

The larger REITs have borrowing costs of (typically) 1.25% and rental income covering that quite comfortably. However, developers are going bust as they can't sell completed blocks on to the REITs who can't raise further funds. I'd guess that the financial position of the larger REITs is reasonably secure.

Also from the quarterly update, they do state that gearing is being monitored closely and has been reduced from 113% (31/12) to 82% (30/06).

As far as the next dividend is concerned, it might well be reduced, since they raised about £13.3m in a share issue back in May. That would seem to account for the reduction in gearing as a %.

[timanglin] 26/8/2008 12:10

I should have said 'hello' JofA, as we have posted on the GVC thread. For me, at the moment this one is a bit opaque, although could be one of the high divi payers that i tend to go for. WNER is alot less opaque, in the sense that the risks are more obvious, however paying a good divi.

[joan of arc] 26/8/2008 11:58

Well I've done a comparison in how things have changed between 26 June and 21 Aug. The sterling adjusted TSE Index is down 6.7% but PEJR is down 12%.
So either something is wrong with PEJR's portfolio or there is an additional gearing factor at play. Can anyone cast any further light on this?

[timanglin] 26/8/2008 11:52

difficult one to call - very difficult to ascertain actual borrowing as gearing fluctuates from quarter to quarter and the numbers for borrowing are not clearly shown - really the NAV statements, although informative about the holdings, should also be more specific about borrowings, giving a better idea of overall value. It does seem as if the present income is being used to reduce the gearing, hence generating questions about the next dividend payment imo, dyor.

[joan of arc] 26/8/2008 11:36

Unfortunately I did buy in at more than 50p! The risks I see to this now are :

1. The underlying REITS going bankrupt, breaking covenants or suffering severe share dilution
2. End clients defaulting on their contracts.

The exchange rate I see as the least of the problems.

I haven't checked in detail but I get the impression that the NAV is going down faster than the sterling translated value of the TSE REIT index, which would be worrying.

[jonwig] 26/8/2008 11:15

NAV of 31.46p on 21/08. If dividend of 6.5p can be maintained, that would be a yield of 20%.

Since dividend comes from a rental stream which I'd assume is pretty secure, the exchange rate might be a determinant. But only adversely significant if the Pound were to strengthen much against the Yen.

EDIT: in fact, £1 = Y201, down from Y218 at the beginning of the month. An 8% fall equating to a 7p dividend if the exchange rate movement translates across.

J-REIT index has fallen recently.

[hosede] 26/8/2008 11:03

Ptolemy
Re your post 179 Sorry not visited this thread for a while. Barclays stockbrokers bought my Eurobonds. I opened a Euro bank account and used Hargreaves Lansdown Currency department to change the money from Sterling to Euros. You can buy the bonds and then pay in Sterling but I suuspect you would get shafted on the exchange rate. I keep all the interest payments in Euros and have them deposited in my Euro account
PS glad I resisted Moneyweeks advice to buy in here at 50p

[jonwig] 19/8/2008 17:57

You'll find that in the portfolio updates (1 – price book), such as:



FC Residential is their largest holding I believe.

[rbcrbc] 19/8/2008 17:21

But what is the NAV of the underlying REITS ?

[jonwig] 19/8/2008 17:09

NAV 34.2p on 14/08. share price 34p.

[jonwig] 13/8/2008 12:47

The Tokyo Stock Exchange REIT Index is a capitalization-weighted index of all Real Estate Investment Trusts listed on the Tokyo Stock Exchange, and is calculated using the same methodology as the TOPIX. The index was developed with a base index value of 1000 as of March 31, 2003. This is a price return index.

[jonwig] 13/8/2008 09:42

Pound vs Yen, hard to envisage whether this is a change of trend:

[jonwig] 13/8/2008 07:37

Wolstencroft ... found it - many thanks!



The company's RNSs are admirably clear and complete. It doesn't take long to appreciate the mire that Japanese REITs are stuck in.
No quick reversal, I suspect, but a decent yield whilst waiting.

[wolstencroft] 13/8/2008 07:29

there was an article in yesterdays (I think) FT about Japan REIT - not very detailed but essentially a few developers have gone under, but REIT market seems to be fully discounting bad news, vacancy rates still low

[jonwig] 13/8/2008 06:58

Hello, Hectorp.
I'm just looking at this as I type.
Some queries ...

ISA-able and REIT status needs confirming: that should enable collection of full dividend. (6.5p is fat.)
EDIT: AIM listing, invests in REITs, not itself a REIT. Therefore not ISA-able.

Will dollar strength drag sterling up against yen? If so, could be a trimming of the dividend.

Japan likely to fall into to recession, putting back recovery in property market. Even so, a lot of commentators are reasonably positive on overall Japan stockmarket outlook (ratings cheap, banks avoided subprime losses) which might be helped by a declining yen. at least among exporters.

Any comments gratefully received!

[hectorp] 12/8/2008 21:05

oh the posts stopped .. Mary Celeste?

[wolstencroft] 15/7/2008 21:40

hosede: I just have a little money in property, all EUR or YEN based. Yen assets might not depreciate in GBP terms. I am also short GBP long Yen BTW, I think being in "cash" meaning GBP might be the worst of all things (remember FTSE rose 24% I think in the months after sterlings Euro crisis devaluation)

[ptolemy] 15/7/2008 17:07

Hosede,
Do you have any andvice, what is the best way to deal in government bonds issued by EU members?

The low cost dealers (TD, selftrade etc) don't offer such a facility.

Thanks

Edit: Should add I don't mean iShares Euro denominated bonds but bonds issued by seperate EU states.

[hosede] 15/7/2008 09:52

Wolstencroft
Yes I guess there are ETFs for everything now, but I'm still staying out of all property. If this crash is going to be the deflationary one predicted by the Elliot Wave crowd, then all assets are going to devalue and cash is going to be kIng. I have a big hunk of mine in Eurobonds (Northern - no PIGS) and Swiss Francs.

[wolstencroft] 13/7/2008 07:54

hosede: There are also ETFs design to offer basket exposure to other currencies. However, I note that RIT Capital Partners has recently gone into Japanese REIT. As part as a diversified portfolio, I will keep my exposure here despite being caught out on European REITs bought for similar reasons (yield, non-GBP exposure). However, any more rises to underlying NAV and some top-slicing would be apporpriate in the current markets, I think.