Schroder Real Estate Inv... Share Discussion Threads

[skyship] 24/4/2013 09:28

I think the investment dynamic has changed here somewhat. Whereas before it was heavily PI influenced, now it is far more institutionally controlled. The result may be a less rigorous valuation, ie a lower yield and a lower NAV discount may be acceptable - as per the examples of FCPT, IGRE & UKCM for instance.

Those companies usually appear over-valued by our (certainly my) PI metrics; but institutions are less picky and work to longer timeframes. They are also investing Other People's Money rather than their own!

Ergo, we may see SREI hold up better than those low/mid 30s suggested. 37p/38p would be my guess; but certainly no need to hurry back in...

Elsewhere - pleased to see PCTN making progress; and still waiting for DSC to gain traction ahead of next week's numbers.

[speedsgh] 24/4/2013 09:03

Ditto. Many thanks to Skyship + others for flagging this.

To be honest I wouldn't be surprised to see these fall as far as the low 30s over the next few months. Even at 32p, you are looking at 7.75% yield which, despite the insatiable demand for income out there, would be a fair reflection on SREI + its recent performance imho. I suppose the question is whether they can improve their performance going forward.

[asmodeus] 24/4/2013 08:25

Many thanks for your warning, Skyship. You were absolutely right about the div.

[cwa1] 24/4/2013 08:21

Hasn't fallen back as much as I had expected, yet. Possibly further to go? Will keep an eye on for a re entry level around the mid 30s. Hopefully it stabilises around the current level for existing holders.

[elmfield] 24/4/2013 08:18

Yes, I suppose down to mid 30s then.

[mirandaj] 24/4/2013 08:13

Depends what price you paid for them in the first place. Still gives a really good return for some who hold and no buying and selling charges to take into account.

[skinny] 24/4/2013 08:02

Extended auction.

[lord gnome] 24/4/2013 07:59

I think we all predicted a cut, but I didn't think it would be that deep. Things must be worse than I thought. The NAV figures are a tad disappointing as well. I can see these dropping quite a bit over the next few weeks. 35p might tempt me back in, but other than that I wouldn't be interested.

[skyship] 24/4/2013 07:50

So, a slashed dividend from 3.52p to 2.48p per annum; and the NAV also now reduced to 45.1p.

Frankly, far worse than most of us thought, so share price likely to be back down below 40p pretty quickly IMO.

At 42p the yield is 5.9% and the NAV discount is a mere 6.9%
At 38p the yield would be 6.5% and the NAV discount would be 15.7%
At 37p the yield would be 6.7% and the NAV discount would be 18.0%

[jonwig] 24/4/2013 07:26

The dividend cut has arrived: to 0.62p per qtr (against 0.88p). Whether or not this will satisfy the market will soon be apparent.

Since the 0.88p was around 60% covered, it would have taken a cut to 0.53p to reach full cover on that basis, but I suspect income will improve after poorly-performing disposals and cheaper debt.

But the void rate looks on the high side at 14.4% and despite a low-is retail weighting the portfolio isn't performing too brilliantly.

[skinny] 24/4/2013 07:21

Dividend policy

Post-tax dividend cover over the quarter to 31 March 2013 was 57% which compared with dividend cover for the year to 31 March 2013 of 60%. Dividend cover over this period has been supressed partly as a result of property disposals in order to optimise the refinance terms.

Following the completion of the refinancing, the Board and its advisors have undertaken a review of the longer term sustainability of the dividend, currently 0.88 pence per share per quarter. Considerations have included current and anticipated future market conditions, on-going capital requirements and property specific factors such as the recent planning refusal at Reynards Trading Estate in Brentford.

Following this review the Board has concluded that a sustainable dividend, based on the Company's portfolio and business plans, is 0.62 pence per share per quarter, representing a reduction of 30% from the current level of dividend. Coupled with the new financing arrangements, the new dividend policy is intended to put the Company on a stronger financial footing in an economic and market environment which remains challenging.

The Company announces an interim dividend of 0.88 pps for the period 1 January 2013 to 31 March 2013. The dividend payment will be made on 24 May 2013 to shareholders on the register on 3 May 2013. The ex-dividend date will be 1 May 2013. The adjustment to the reduced level of dividend will take effect from the quarter ending 30 June 2013.

[nil desperandum] 24/4/2013 07:19

Cut to 0.62p per Q
And crystallised all swap costs - over £15m ...
If I read correctly then NAV not affected by above since exchanging cash for M2M liability?

So trading close to NAV with a divi of ~6%?

[colonel a] 18/4/2013 11:23

They are clearly considering a dividend cut, but it is not likely to be too drastic.
If they cut to .75 {as PCTN} that will still be just over 7% return and they are now very solid.
As a gamble I'd bet on a drop to .8p

[asmodeus] 18/4/2013 11:15

Anyway, price is rising, now I've sold mine, so presumably most holders are not convinced of a dividend cut, or not bothered!

[speedsgh] 17/4/2013 14:48

Thanks for the link, Skinny. Trades not showing up there either. No doubt they'll pop out of one of the systems at some point.

jonwig - i concur that a cut in the dividend is sensible. i don't have a problem with it, however i do expect the uncertainty over the ongoing dividend level to have an effect in the share price in the short term. the share price action at PCTN during the corresponding period of uncertainty provides a pointer as to the possible scenario here imo.

[skinny] 17/4/2013 14:41

ADVFN stopped showing PLUS trades a couple of years ago - I believe they can still be seen .

[jonwig] 17/4/2013 14:33

speedsgh - if your trades don't show, could they be coming through PLUS? I use TDD and my contract note often shows the trade done on PLUS, not LSE.

As for dividends, how much does it really matter in total? If the dividend is uncovered and maintained, you're drawing cash from the company which it hasn't earned (or, indeed, it's borrowed to pay you). If covered, you're getting your slice of income.

Personally, I'd prefer a cut so that cash can be used for refurbishment and - ultimately - capital appreciation. But many holders (OEICS, say) will want the dividends to prove they can maintain their yield.

[elmfield] 16/4/2013 16:29

Have a glance at dsc, that is where my 75 and more went from here.

[speedsgh] 16/4/2013 15:09

Likewise I have just offloaded my entire holding which was of a fair size (trades not yet showing). Was pleasantly surprised at the price I got. Sold to preserve capital while uncertainty of level of re-based dividend persists. I hope to be back relatively soon however. GLTA

[lord gnome] 16/4/2013 15:02

It may not be too bad. PCTN shares dropped initially on the news of the divi reduction, but recovered quickly. IC reckoned SREI's cover was 70%, add in the management enhancements and the reduction in interest costs and we could be close to full cove. Even so, at the very least, I expect a cut to 0.75p per quarter.

I have just sold my holding in anticipation of a drop when the cut is announced. This could be as early as next week when we are due for the next dividend announcement.

[specuvestor] 16/4/2013 13:44

Picton Property went down the same road last year: Long term refinancing arranged with Life companies then a cut in dividend to 100% cover. Last time I looked dividend cover for SREI was around 65% with planned management developments due to increase that to 80%. So at least 20% drop on the cards.

[skyship] 16/4/2013 12:38

Cut inevitable - no longer a distinct possibility.

Reynards is a disgrace. Should be reversed upon appeal to Government. Many Labour councils view development as profiteering by capitalist Rachmanns; and vote down even the most sensible of proposals which would benefit their electorate directly and indirectly through later taxation.

Well timed switch Elmfield.

[specuvestor] 16/4/2013 12:32

"The successful refinancing of the loan will allow the Board, in turn, to consider the longer term sustainability of the dividend. The terms of the new loan will be taken into account alongside other factors, including the recent planning refusal at Reynards Trading Estate in Brentford. The Board will update shareholders in due course."

Sound ominous. Winterflood reckon "dividend cut is a distinct possibility"

At least long tern financing has been sorted on reasonable terms.

[elmfield] 10/4/2013 10:28

Took profit at over 42p, happy with that.