Uk Commercial Property R... Share Discussion Threads

[skyship] 26/10/2008 13:23

Anyone know whether this company has a website - must be one surely, but darned if I can find it!!

[not manu] 22/10/2008 15:41

It's about time the discount to NAV is increasing. Do like the ungeared balance sheet.

[chopshs] 22/10/2008 11:53

I accept that lower interest rates are good for property but until such time as the banks are prepared to lend then it's a little academic. A few months ago I was also of the view that there could be a quick rebound as someone switched the light back on. However, I now believe the recovery will be slow. From a political point of view I expect the banks to be under more pressure to lend to the residential sector rather than the commercial one.
I monitor the sector for short term pricing anomalies and for the forseeable future reckon the only way to make money out of these things is to trade them (which isn't my normal investment style). I actually use UKCM as a proxy for the markets expectations of future valuation declines. As it's ungeared it's very easy to see and then provides a reasonable comparison for the attractiveness of the geared funds.
As a long term holding I'm sure you will be okay with UKCM at these prices but I suspect you will be getting an opportunity to top up at a lower level in the next few months.

[skyship] 22/10/2008 08:41

CHOPSHS - I accept all you say, but believe that the bear story is already reflected in property share prices across the board - in many cases excessively so. Property sales are still achievable - see IERE today. The bull point is that interest rates are falling again - inc. LIBOR. As the trend is confirmed so the asset class will again be identified as attractive; and the light will switch on overnight, perhaps with the appearance of a large deal from one of the vulture funds.

As for UKCM in particular; my purchase is for a long-term holding in my SIPP and initially just with a 3% weighting. I will increase that should we see a fall back to the low 50s.

[skyship] 21/10/2008 17:20

Bought into this one today - thnx to Nickduk for reminding me of its existence!

I assume the dividend will have to be cut after disposals, however still expecting perhaps as much as 6.0p, ie a Yield of 10% @ 60p. Frankly an 8% yield (4.8p) would still be highly satisfactory.

Sure the property market may have further to fall, however further falls are IMO unlikely to be more than an additional 10% max; as the falling interest rates will again make property an increasingly attractive asset class.

Of particular interest here is whether Pearl, the Apr'08 buyers of Resolution, will decide to buy-in the minority stake. There doesn't seem to be much point in holding 73% of this - why not 100%? Certainly provides another upside slant. Views anyone?

[topvest] 10/10/2008 14:02

Bought some today. No debt. Excellent yield. Cheap as chips.

[trustman] 10/1/2008 08:05

Figures just out NAV 90 p after deducting accrued income for div.Will be interesting to see how geared and Euro stocks perform.
In meantime maintained yiels =7.8%

[jdung] 21/11/2007 10:23

this company net ass= .. P ?? can some one tall me, thanks,

[trustman] 20/11/2007 12:20

Company buying, listed as up 8% although that's from the very low close......yield at 67p would be c 7.8% on maintained div

[trustman] 19/11/2007 23:17

Was there something funny in the auction?Good turnover, bid /offer around 64, but ADVFN quotes sudden drop to 61.5 at close.Spooked by Wall St, or an anomaly?
This mkes yield about 8.5% and share buybacks on a big discount can help offset asset value decline.
Background awful but this begins to look like good value.Need a catalyst like Asian or petrodollar buying somewhere in the real estate sector!

[trustman] 19/11/2007 23:03

Did the same checking not manu.
No bebt, no mortgages and even a bit of cash.Rents steady,maybe rising slightly, and a share buyback programme.
The point NTV makes is borne out by the use of gearing.....one fund(un-named as I dont want to deramp)60% geared reported NAV down 17%
UKCM I believe is different kettle of fish.
The point I am trying to make is when do you say stuff the crowd, this looks great value over the medium term.Maybe still too early, but this stock steadying should be an early pointer to value in the sector.A decent asset sale at around book value would show there is a huge range of quality in this sector.

[not manu] 17/11/2007 21:53

UKCM is currently unique amongst the closed ended investment cos (CEICs) in having no debt.

Under a worse case scenario being a further fall of 25% in gross assets and applying a discount of 35% to NAV per share, gives a share price of 49p. At 49p gives a yield in excess of 10% if the dividend is not reduced. Assumes that UKCM will remain debt free.

Many of the other CEICs have high gearing and a few even have off balance sheet debt. You also have the nonsense of management fees on the gross property assets rather than on the much lower net assets.

[ntv] 17/11/2007 09:29

trustman
an email i sent out recently

all
here is an example of things can go wrong rapidly
company has £2bln worth of property
it puts up 30% as deposit to buy and therefore has £600m of assets and £1.4bn of debt
it finances the debt from rental income
it therefore has a mkt cap oof £600m if it trades at nett assett value
now the problem lies if nett assets have to be written down as yields in the sector begin to rise to match the recent rises in interest rates
just a small fall in nett assets of say 4% over the current half which is not out of the question can cause problems
this becomes an exaggerated fall because of the borrowings
so a 4% fall on £2bn worth of property is £80m
this is taken straight from the nett asset side of the equation so instead of having £600m pounds of nett assets the company only has £520m and it still has £1.4bn worth of debt
the 4% fall has caused a 13% fall in nett asset value
now you can see why the sector is in retreat
a 10% fall is not out of the question at the moment to bring yields in to line over the next year
a 10% fall on the above £2bn property portfoliois £200m and therefore nett assets are down by 33% and thats nasty
from these falls in nett assets comes the problems that banks don't like the gearing and the changes might break the covernants of the loans and of course WE ALL KNOW WHAT HAPPENS NEXT
worth watching for write down % as property companies begin to annouce the results to the end of sept 07
bear in mind this is a crude example of a property company and lots of companies out there are more highly geared than this including stuff in highly geared off balance sheet vehicles
the better ones have fixed interest rates and extra room on their borowing facilities
most likely saviours of the uk property mkt are those from asia or the oil/mineral barons from other parts of the world
atb
the grim reaper

[trustman] 17/11/2007 00:34

Appreciate the caution NTV....and that's partly why I wrote the note.HoweverI dont think this is Northern Rock as the fund has its financing.My guess is that several of the tenants signed in earlier years and that the fund was floated on a c5% yield, i.e.a revaluation on yield compression.
I agree asset values are falling....3% in last quarter alone, but rental will be upwards only (some hope!)
However have rentals fallen enough for tenants to walk-somehow I doubt it.Inertia and litigation are powerful disincentives and their tenants are strong enough to be taken to court and cough up.
In any event current valuation permits a 20% asset writedown -would have been worse if geared.I suspect xd hasn't helped.However I read the thread on Anglo Irish before spotting your reply and that seems much more like Northern Rock than this one.
Still "never catch a falling knife" and I probably wont buy till these stocks steady.Anyway thanks for your input.

[ntv] 17/11/2007 00:04

in otherwords they want you to buy property with a 7%+ yield
now this lot bought property with a 5%yield so how far will nett assets fall on that valuation
none of the deposit is left and if they lose a tennant or break a banking cov
what is left for share holders same as northern rock in principle

[ntv] 17/11/2007 00:00

be very careful trustman
mkt value of property is getting hammered
no big property going on cos the banks won't lend the money til the yields exceed the interest payments

[trustman] 16/11/2007 23:20

Securitised property funds of the big life offices now seem to offer pretty good value, and maybe some decent mid term capital appreciation if you can hold on.As far as I can make out UK Commercial is very lightly geared,has average lease period of 10 years on institutional quality properties;good occupancy;and the confidence to keep buying back its own shares.
I hold Alpha Pyrenees and see them edging forward from the lows,as is Axa Property,so its not all bad.These aren't trailer homes but seem affected indiscriminately by such sentiment.I dont suppose its likely but does anyone have a view on the prospects for corporate action as discounts widen?
Finally these are closed end funds which dont have the pressures of open ended funds-where sentiment is sometimes dreadful and redemptions postponed.My suspicion is that some open ended funds hold stocks like UKCM and as liquid assets are there only realisable funds-so they keep selling regardless.This is what creates a genuine bargain......or am I missing something?