U And I Share Discussion Threads

[skyship] 28/4/2016 08:18

These need to be bought now. At 205p the Yield = 6.8% & the NAV Discount = 29.6%. Still mis-priced; and could well be up to 220p by the close!

[eeza] 28/4/2016 07:54

PBT - minus £9m
Eps - minus 9.3p
EpraEPS - minus 6.8p
Net Debt - increased by £36m
Missed their own target for the year.

Not impressive.

[hpcg] 28/4/2016 07:51

This all be one of those things where I don't understand the big drop in eps. I can understand more debt if there is more activity. Some of those late projects showing up in next year forecast.

[skyship] 28/4/2016 07:22

EXCELLENT...& there should be some share price vindication for all. Especially like the new dividend policy. The 13.9p dividend makes a 7.1% yield at the closing 197p; makes UAI the highest yielding propco. The yield would still be 6.32% @ 220p.

Financial highlights

-- Record level of development and trading gains - increased 11.8% to GBP51.1 million (2015: GBP45.7 million)

-- Continued NAV growth - EPRA NAV per share increased by 5.4% to 291p (2015: 276p)

-- Total dividends of 13.9 pence per share declared in respect of FY2016 including a supplemental dividend of 8.0 pence per share to be paid on 17 June 2016 (2015: 13.9 pence per share)

-- New dividend policy to align shareholders better with U+I's value creation strategy of delivering gains through regeneration and to provide greater visibility on returns

[mad foetus] 28/4/2016 07:20

They look a good set of results. I bought in last week and am pleased to have done so: thanks Sky in particular for the research and tip off.

[spob] 28/4/2016 07:17

Dividend and changes to dividend policy

As a result of our positive performance and the strength of our Balance Sheet, the Board of U+I has recommended the payment of a final dividend of 3.5 pence per share, payable on 19th August 2016 to all shareholders on the register on 22nd July 2016. In addition to this, we will pay a supplemental dividend of 8.0 pence per share on 17th June 2016 to all shareholders on the register on 13th May 2016. This is the second supplemental dividend that we have declared in the last two financial years, taking the total dividends declared in respect of the financial year ended 29th February 2016 to 13.9 pence per share (2015: 13.9 pence per share), paid from the strong cash flow generated from our regeneration activities.

Going forwards, we are proposing a new dividend policy which we believe better reflects our approach to value creation: delivering gains through regeneration. The reasons for this change are twofold: to enable shareholders to participate more directly in the tangible value created by the business; and to provide shareholders with greater clarity on the potential for future income streams.

Our revised dividend policy will consist of two elements as follows:

1) An ordinary dividend, fixed at its current level

2) A supplemental dividend related to the level of net free cash flow secured in the financial year


Net free cash flow represents the surplus cash generated from development and trading gains after deducting the Group's net finance cost, net operating costs, corporation tax charge and the ordinary dividend. The quantum of supplemental dividend paid as a proportion of net free cash flow will be decided by the Board following the end of each financial year and announced alongside its full year results. It is expected to be of a similar proportion to that paid in April 2015 and June 2016. The Board's decision will be influenced by considering the Group's future working capital requirements, the economic cycle, the Group's current risk profile and its position in relation to its target gearing level.

This evolved policy will enable the business to maintain an efficient Balance Sheet whilst delivering sustainable returns to shareholders.

[spob] 28/4/2016 07:08

I doubled my holding at just over 180p

I regret not buying more

[my retirement fund] 27/4/2016 23:29

Goodluck all fingers crossed and that any rise gets bought rather than sold.

[kramch] 27/4/2016 11:50

I have had a look at the 2-15 Report & Accounts, all 170 pages!
They list c 38 projects, and part of the directors' (complicated) bonuses is based on the profit from each project. They seem to get a share of 10% of the surplus over a hurdle rate.
It strikes me that this is a company run by bean counters, not that it stopped the previous CEO being paid £1m when the share price has markedly under performed the sector.
They mention several times how the acquisition of Cathedral has strengthened the management, clearly it was needed. Lets hope the new property guys simplify the structure and start delivering.
K.

[skyship] 26/4/2016 16:50

Rathkum - thnx for posting that - makes an encouraging read for tired bulls!

[mad foetus] 26/4/2016 14:38

the last few days the share price has started up and then drifted down throughout the day, closing about flat after a sudden 4pm slump. Interesting to see whether that pattern holds today, or if people start holding for the results.

[skyship] 23/4/2016 18:02

Looking for a 1/3rd Retracement to c217p on Thursday's upcoming Finals. Would actually put me in profit!


free stock charts from uk.advfn.com

[speedsgh] 22/4/2016 13:45

U+I's Marcus Shepherd on our approach to creating value, far beyond the figures -

[simon gordon] 21/4/2016 19:12

SKY - click on 'Most Recent Newsletter' top right corner.

[skyship] 21/4/2016 18:39

Simon - incidentally, where did you pick up that Ennismore piece? Is it freely available? I seem to be able to get to the link below, but no further:

[simon gordon] 21/4/2016 15:05

Twice in one day!!

What Investment - 21/4/16:

The UK small cap property share I'm buying for income right now, by manager with a 4 per cent yield

Clive Beagles, manager of the £2.6 billion JO Hambro Capital Management Equity Income fund has revealed the UK smaller company property stock he has bought more of on recent share price weakness.

Beagles’ fund has returned 53 per cent over the past five years and has a yield of 4.29 per cent.

He began his comments with an overview of the conditions prevailing in the wider equity market.

The veteran investor said, ‘Market conditions continued to remain difficult, with significant volatility at an aggregate market level, coupled with significant changes in mix under the surface. The mining and the oil sectors continued to make progress, albeit our largest overweight in this area, BP, was sluggish versus the sector. In contrast, elements of the financials sector were weak, particularly the banks.’

In terms of what this meant for his investments, he commented, ‘We made a number of changes in the financial sector during March, with the largest being the decision to sell Old Mutual. This has been a frustrating investment, undermined by a combination of continued weakness in the rand (in part because of political issues in South Africa), management changes and a weak Solvency II position due to capital trapped in the company’s South African subsidiaries. The latter has led to the strategic decision to separate the group into its constituent parts and also to cut the dividend. Given the latter, the time it will take to execute the split (three years) and the proximity to the sum-of-the-parts valuation, we decided to exit our position. The low valuation we acquired the stock at meant that despite all these negatives the position had a neutral effect on relative performance over the period held. We used part of the Old Mutual proceeds to add to our existing position in Standard Life, which has been weak.

The small cap property stock he has been buying more of is U&I Group.

We continued to add to U&I Group, which was weak as it fell out of a property index.’ He added that the company’s share price has been weak despite good company results.

The largest investments in the JO Hambro Equity fund include Royal Dutch Shell and HSBC.

[speedsgh] 21/4/2016 11:30

First Look at Sheppard Robson’s Brunel Place, Slough -

For client U+I, Sheppard Robson has released images of the major new commercial quarter, Brunel Place, which is a key part of the wider £450m Heart of Slough regeneration project...

[mad foetus] 21/4/2016 10:55

well, I've had a nibble
at the back of my mind, I look at the slew of director's buys at 220-230p. I spoke to the directors of LXB, a not dissimilar company, and they said it was very difficult to ever buy in development companies as you usually had inside information.
I suspect the directors bought at 220-230 for 2 reasons: a ) because they could (for once) and b) because this company is undervalued and has a lot of potential

Brexit could be a spanner in the works, but that risk is price in imo.

Looking forward to results next Thursday

[skyship] 21/4/2016 10:36

Likewise - thnx Simon.

[spittingbarrel] 21/4/2016 09:53

Thanks Simon, nice find.

[simon gordon] 21/4/2016 09:26

Ennismore - April 2016:

U & I Group – UK property developer (2.1% of NAV)

U & I Group, previously named Development Securities, is a property owner and developer with a bias to Greater London and the South East. The company has three segments: development & trading properties (valued at GBP 180m and GBP 80m, respectively), an investment portfolio (over GBP 200m) and investments in various small joint ventures (GBP 90m).

For its development assets, U & I targets returns of two to five times its equity over two to five years, with a maximum equity size of GBP 15m. For its shorter term trading assets, it targets a return on equity of 50%. It can generate these strong returns partially because it operates in an attractive niche: the GBP 50m to GBP 100m gross development projects are too big for individual investors and too small for many of its peers. After working through some less successful developments made before the financial crisis in 2008, it is now benefitting from strong investments made since then. Given the company’s policy of valuing its investments at cost until a project completes, much of the profits from these investments are still to come, although the timing can be somewhat volatile. It expects GBP 55m of gains in the year ending February 2016, GBP 23m of which was recognised in the first half, and a further GBP 115m over the next two years. We assume a total gain of around GBP 150m, rather than GBP 170m, to be conservative.

Regeneration projects are a core part of U & I’s development business. These involve developing areas in conjunction with public bodies, such as local government, to help regenerate an area. In 2014 it strengthened this division by acquiring 100% of Cathedral at just over net asset value for an implied GBP 40m. This added nine projects and a number of high quality managers, including Richard Upton who is now Deputy CEO. We like that U & I is not just focussed on maximising profits in the short-term but delivering on behalf of all stakeholders. This, we believe, will help it become a long-term winner and stand it apart from peers that come from a residential background with a more standardised approach. We also like the lower capital intensity, and therefore higher returns on capital of these projects, with the land typically being put in by the public partner. It is a market with huge potential: public bodies in the UK own over GBP 160bn of real estate, much of which needs to be redeveloped to help alleviate the housing shortage and have a positive regeneration effect.

The investment portfolio has a net rental yield of around seven percent. These assets are nationwide, heavily biased to retailers such as Waitrose and Matalan, and have occupancy rates of over 95%. The rental income gives a stable earnings stream to cover the operating costs of the development side of the business. Over the long term it wants to increase the return profile of this portfolio by recycling out of ex-growth assets and into assets which have more rental development potential. This makes complete sense to us.

We like that management’s long term incentives are based on NAV per share growth, although the full pay out at 12% growth per annum over four years is on the low side to us. We also like that the Deputy CEO owns over 2% of the shares. The company’s net debt of circa GBP 215m implies a loan to value of around 45%. The average interest rate is currently 6% but we would expect this to move to below 5% over time. With a market capitalisation of GBP 230m, it trades at only 0.6 times book value, less than 10 times earnings and a healthy dividend yield of over 3%, all estimated for the year ending February 2016. This is far too cheap in our eyes, especially given the opportunities in public-private partnerships and the strong track record it has in this area. Putting the stock on 0.9 times book value, we see upside of over 90% in the shares over the next two years.

[badtime] 18/4/2016 09:49

Eeza..ye it was lolHP..fair comments

[skyship] 17/4/2016 13:43

hpcg - someone may have said that; I didn't. I DID say in P. No.284 above:
==========================================================================

....They have been affected each time by large institutional trading activity.

# The Jun'11-May'12 sell-off was due to liquidation of underwriter's stock from the 2010 placing

# The 2013 rise was down to The Quantum Fund purchase

# The 2014 sell-off was down to the Quantum Fund exit

# The 2015 sell-off is down to the BlackRock exit

[hpcg] 17/4/2016 13:15

bt - we manage our own money because of institutional charges, that generalist long only funds are closet trackers, that long only funds have restrictive rules around asset allocation and sector allocation, not because the people who run them are all idiots who make irrational decisions. The argument Sky has been making for the last couple of months is that a fund is liquidating because of a change of manager. This gets negated when other funds are doing the same.

In some areas I think fund managers are much better equipped than a PI - biotech and EMs in particular. When it comes to commercial property development, unless one has specialist knowledge then I would expect a well rounded institution to have more insight into trends.

I think we do need to be cautious about mixed developments. For example yesterday I walked past Dungannon House near Fulham Broadway, which I sometimes do on a match day. The commercial space underneath the flats , has never been occupied. The development completed in June 2013 and the residential space was pretty much pre-sold. Some U&I developments are mixed use with a retail element and that does look to be more risky than it used to be.