Abrdn Property Income Share Discussion Threads

[nexusltd] 18/4/2024 18:11

Questions:
1. In light of WM Mattioli Woods’ significant recent disposals, it would seem that they, for one, were dissatisfied with the result of the merger vote. WMs using similar valuation & risk models tend to herd; so who voted against the merger proposal?

2. The ADVFN API community believes that the API wind up vote will succeed & that on a successful vote
a. the share price will move to c. 55p &
b. that on a two year view from a 48p share price @ merger proposal date, the GRY/IRR will be > 15% p.a.

Considering the Mattioli’s position sale, is it their view that the vote will fail?

3. What is the effect of asset sales in Q1 and early Q2, on the balance sheet and earnings?


A stab at question 3), analysis of asset sales effect on balance sheet and earnings.

Assumptions used in the calculations:
1. Cost of sales 2%; thanks @Williamcooper.

2. Exceptional merger expenses GBP2mn; estimate from this community.

3. Only asset sales that are named (location) and have been flagged as “completedR21; are accounted for.
a. Three industrial asset sales; of 27 now 24 in the portfolio.
b. One office asset sale; of 8 now 7 in the portfolio.

4. Where the NIY is not stated it is assumed the NIY=0, i.e. no current revenue as the asset may not be tenanted or may have a rent free period.

5. Loan facilities, due to expire in April 2026.
a. Fully drawn term loan for £85mn; interest 150bps + SONIA, with SONIA capped @ 3.96%.
b. Revolving Credit Facility (RCF) of GBP56.9mn as of 31/12/23; interest 150bps + SONIA.

6. Average of SONIA in Q1: 5.19%

7. No material change in working capital, running expenses, income due to re-gears or void % other than sales of non-income producing assets.

Effect on balance sheet:
Asset disposals total: £29.75mn

Estimated RCF on 17/04/24 = 56.9mn (31/12/23) – 29.75mn (gross sales) + 0.595mn (2% cost of sales) + 2mn (exceptionals) = 29.745mn

Effect on earnings:
Estimated reduction in rental income p.a. = 1.642mn
Estimated interest payable reduction p.a. = 8.446mn (31/12/23) - 6.63 mn (from 17/04/24) = 1.816mn
Change in earnings p.a. = 0.174mn = 0.046pps – no material change to dividend cover.

Stats of interest:
Estimated averaged sale NIY = 5.52%
Estimated weighted cost of borrowing facilities on 17/04/24 = 5.78%

With 85mn term loan not maturing until April 2026, current caped rate of 5.46% is an issue. Until SONIA reduces by > 150bps; running hard, up, on a down escalator.

[essentialinvestor] 18/4/2024 13:47

Nice if we could clise above 50 pence on the bud this week, expectation of Israel retaliation hanging heavy over markets atm.

[spoole5] 18/4/2024 11:38

They need to start buying back shares when the cash rolls in

[pavey ark] 17/4/2024 10:52

I appreciate that not all announced "agreed term" have completed it is highly unlikely that a management as experienced as this would announce a "sale" then have to come back and withdraw the announcement.

I have looked at the disposal announcements and consider that there is a large industrial unit sale about to be confirmed at a 10% premium (this is the unit vacancy/sale that caused the vacancy rate to go from the expected 4% to over 7% so it is a large unit).

The moorland looks like selling at a premium then we have Hagley Rd !!???

The markdown of Hagley rd Dec 2023 to under £20m looked very, very strange to me and I wouldn't be surprised to see it sell at a 15%-20% premium.

I have been in and out of API several times over the past 5 years and back in over the last year with 9 purchases ......I have alway kept an eye on developments here and I have NEVER seen management buy anything other than quality assets ......these assets should now sell well.

EDIT: Mark Blyth is very experienced and competent and has featured in investor presentation....certainly not a junior.

[garbetklb] 17/4/2024 10:30

At least one of the previous disposals was from the deputy; don't know if this means anything.....

[essentialinvestor] 17/4/2024 10:22

Note the RNS comment is from the Deputy fund manager - must be psychologically tough for JB, effectively dismantling his years of work.

[essentialinvestor] 17/4/2024 10:09

Lovely news - late on parade today ;.

[pavey ark] 17/4/2024 10:04

I don't even know what that means !!!

[nickrl] 17/4/2024 09:55

@pavey ark not all those sales have completed yet though but all give reassurance on potential value realisation for sure. What i don't know is all the portfolio deemed "family silver" category or are there some outliers in there?

[cwa1] 17/4/2024 09:45

50p on the bid. Should there be flags?

[williamcooper104] 17/4/2024 09:40

Yep Looking good for getting NAV less a few pennies for costs

[pavey ark] 17/4/2024 09:34

RCF almost negligible after today's announcement and cleared if the Dec £6m is included

1/2/24
"We completed the sale of a small industrial estate in Livingston Scotland in December for £6.25m. The sale price was £300,000 below valuation. Terms were also agreed for the sale of our City of London office and Manchester Office for a combined £14.75m (year-end valuation £15.35m) reducing office exposure by 3.5% to 13%. Sales have also been agreed of two industrial assets for a total of £24.4m (year-end valuation £22.4m). We are also exploring the sale of the open moorland at Far Ralia with encouraging indications of value above the year-end valuation (£8.25m)."

These sales have included offices, vacancies, short lease terms and obviously better units that sold at a premium.
My point is that these disposals of well over £50m were a mixed bag yet the total sale figures produced an overall premium.

[yump] 17/4/2024 08:51

Not difficult coding for advfn to separate form 8 rns’s from the rest in another list or put an optional filter in.

But they ain’t interested in users experience, just money.

[spectoacc] 17/4/2024 08:35

Interesting they're doing all this without bothering to have the vote first - or even set a date for it. But makes sense to sell assets to repay the RCF regardless, considering the yields they're selling at.

Still a good market for Industrial.

[nickrl] 17/4/2024 08:26

@frazboy the RCF was 56.9 at q3 NAV since then they've disposed of two assets on 20/3 (16.5m) and todays announcement of 13.2m gives c27m unless ive missed another announcements as we were rather bombarded with form 8.5s why they were in play.

[frazboy] 17/4/2024 08:07

Surely, that's the RCF paid off?

[cwa1] 17/4/2024 07:44

17 April 2024

Further asset disposals

abrdn Property Income Trust ("API") has completed on the sale of two assets for
a combined price of £13.2m, reflecting a 1.5% premium to the December 2023
valuation.

Unit 4, Monkton Business Park in Hebburn is a single-let industrial unit let to
Hitachi Construction Machinery Limited. The sale follows completion of the
asset management business plan with a regear of the lease completed last year.
The property was sold for £5.3m which is a 6% premium to the December 2023
valuation.

The sale of King's Business Park, Bristol completed for £7.9m reflecting a 1.25%
discount to the December 2023 valuation. The multi-let industrial estate has an
average unexpired term of just under two years, and the sale price reflects a
net initial yield of 5.5%.

Mark Blyth, Deputy Fund Manager of API commented: "Following on from the two
sales last month, we're pleased to have completed these further disposals at
Hebburn and Bristol at a premium to the December valuation. As with the previous
sales, the proceeds will be used to pay down the Company's Rolling Credit
Facility."

[essentialinvestor] 16/4/2024 14:33

Bought back pretty quickly today, sgainst a weaker sector.

[essentialinvestor] 16/4/2024 10:31

ME on the brink of blowing up, that's all we need, eh.

[nickrl] 15/4/2024 13:45

API and its various nominee accounts have sold down over 7% in the last few weeks. Its almost as if they told anyone in their wealth funds to get rid of them does seem bizarre behaviour verging on spiteful.

[spectoacc] 15/4/2024 13:30

Mattioli Woods - OPM. Amazing how inept almost all of them are - M&G probably take the prize for utter idiocy (buying HOME post allegations).

Does anyone who's in contact with API, know when the AGM will be announced?

"Further to its announcements of 14 March 2024 and 20 March 2024, the API Board will now take steps to implement a Managed Wind-Down subject to the approval of API Shareholders at a general meeting. More information on this process will be set out in due course."


In Due Course has plenty of wiggle room, but that was said 19 days ago - seems little point in delaying. "...Now take steps..." but subject to that vote.

[essentialinvestor] 15/4/2024 12:25

Cleared last week's high - at least stm, it does move around a bit.

[essentialinvestor] 15/4/2024 11:35

Yup, just about to say the same.

[williamcooper104] 15/4/2024 11:33

Likely carry on with the divi until they've sold a a good chunk of the assets down Divi cover doesn't really matter now; so long as there's cash then pay the divi