Abrdn Property Income Share Discussion Threads

[skyship] 23/10/2023 16:33

giltedge - this is what I said 3weeks ago about the EBOX debt
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Nick – let’s dig down into your EBOX comment above, as it exemplifies the common misconception about EBOX – a propco holding a European, not a UK property portfolio.

Firstly, let’s look at the debt:

# E250m is the RCF which is only 44% drawn. With Capex that figure may slightly increase; but it is intended to pay that down through the sale of low-yielding assets. A E65m was announced recently. So we can forget that part of the debt.

# Another E200m matures at an average of 7yrs – Jan’31. So we can forget that too.

# The principal debt is the E500m Green Bond maturing in 2.7yrs time – Jun’26. Clearly that will need refinancing in whole or in part (depending upon asset sales) by mid 2025. SERE just refinanced their debt at 5.3% - yes, rates in Europe are lower than in the UK – a fact frequently overseen in the UK!

If they were to refinance the whole of the Bond at, say, 5.5% then the extra interest cost would be 4.55%, which would equate to a not insignificant E22.75m pa.

That sounds a lot. It is a lot. However it is a figure EXCEEDED by the suggested (not a f/c) income growth over the next 3yrs from E80.9m to E108m. That figure includes some development returns and capturing reversionary upside.

So the revenue gain is not a done deal; but it shows that when you dig into the stats from the Presentations, the concerns over what may in any event prove a relatively short-term hike in rates, are perhaps rather overdone.

[skyship] 23/10/2023 16:29

Giltedge - EBOX a far better prospect than similar business ASLI on your list. The latter's dividend is uncovered for a start!

[giltedge1] 23/10/2023 16:27

Thanks hybrasil my thoughts, others may disagree;

CLI - too much gearing & UK Offices, Mgt Good though.
SAFE - Excellent long term performer, Mgt have a big holding I believe, a big plus.
Whr - Yes ticks the boxes, but haven't researched.
BCPT - good but a copy of API but has good Westend holding, but debt refinancing soon.
Div should be safe. Wait & see.
SHED - have owned before, in right sector Logistics, wait for next report.
VIP - Unknown to me. I think owns pubs which I am wary of. Not for now.
BLAND - FTSE 100 a play on offices, so not sure much growth. Not for now.
EBOX - Has a lot of debt, have not researched. Not for now.
SUPR - Supermakets great, but in regions & a bit wary of Morrisons, ASDA exposure.
BYG - Like SAFE great but in past always expensive.
Have added SHED & SAFE to watchlist.

[flyer61] 23/10/2023 16:17

Giltedge1, why not take a look in the renewables and infrastructure space.

[skyship] 23/10/2023 16:15

Hi Both - surely has to be EBOX. Current price is rather absurd. At 44.65p they are on a cavernous 50.5% discount (Mar'23 NAV) and 9.72% yield. The Finals in early December will show an NAV fall, perhaps as much as 7% - but discount would still be an incongrous 46.7%. Yield f/c to be safe this year and next. The fact that their portfolio is in Euroland with lower interest rates and fixed rent rises makes the lowly price even more preposterous.

Once the seller dries up there is a rapid 10%+ upside in EBOX; and that great yield whilst we wait.

Highly recommend viewing the last Interims and Finals presentations.

[hybrasil] 23/10/2023 16:04

giltedge- while I would bow to sky I am currently looking at the following cli, safe,pctn,whr,bcpt,shed,vip,blnd,ebox,supr and byg. The only one I have at the moment is API

[giltedge1] 23/10/2023 15:49

Thanks for update, skyship which Reit normally reports first in Q3, good to know so I can get some feed back on current market. I sold most Reits beginning of year for great (in todays world) prices, unfortunately bought back too soon, so underwater,but hopeful maintain dividends as that is what I need next few years. Have sold my buy to let 300K as getting a bit old for maintaining, so looking to invest next few months, but need to keep my hard earned capital intact. On my shortlist PHP, TRY, SREI, ASLI any thoughts. (Have enough API entry point 51p)

[skyship] 22/10/2023 16:49

giltedge - Q3 NAV & Update 3rd November last year - so not long to wait.

[essentialinvestor] 22/10/2023 11:46

Hi gilt, last week I bought a small amount of BOOT, LMP
and a very small holding in GPE.

Everything is getting cheaper ATM, but the best value may be in cyclical sectors.
Obvs if the wider Middle East blows up all bets are off.

[giltedge1] 22/10/2023 09:14

Yes agree essential investor. I have commented as well conditions have been very accommodating last 10 to 20 years should be well up with their capital value, instead most have lost capital value up to 50%. Is a difficult one now for holding investors, ride out the storm, average down or take a hit. I am waiting for Q3 results & make my decision. API dividend looks safe & low gearing, high occupancy spent a lot upgrading so looks a hold.

[essentialinvestor] 21/10/2023 15:39

What's utterly shocking is following a decade plus of a property bull market,
with asset values boosted by ultra low interest rates, many sector share prices
are near the GFC lows - a time when it looked as if the world as we knew it was ending.

This will not have gone unnoticed and may be one reason why investor confidence in the sector is shot through.


There are some notable exceptions, Segro, Grainger, etc.

[cc2014] 21/10/2023 14:17

1. Sticky institutional investor (Matteoli Woods etc.) sells shares at perceived good price to non-sticky PI's in a benign market

2. Share is tipped very many times resulting in significant non-sticky PI's on the register

3. At first sign of market weakness, non-sticky PI's start selling noting cleverest and brightest PI's who probably have the largest pots sell first.

4. Very weak market for PI's to sell into, as the few PI's brave enough to buy into a falling market are looking at very many bargains elsewhere too.


Or put another way how many non-sticky PI's sold their API which was holding up relatively well at 49p and switched into EBOX or whatever which was having a difficult time? It's all about the opportunity cost of what else is available.

[giltedge1] 21/10/2023 00:06

Why the fall?, presumably due to negative press re Unit Trusts liquidating. Still I expect a good report Q3, 95% let, 4p dividend most cap ex completed. Low gearing. Problem is no buyers. Property trusts need to consolidate, ro reduce number of listing.

[yump] 12/10/2023 10:53

Putting economic woes aside, presumably there will have been permanent reduction in office space needed since Covid.

I guess the real estate pundits won't mention that - they'll always talk it up.

However, is it possible that reduction in use of office space is a longer term structural trend ?

For starters, I wonder how many businesses on longer term leases are looking forward to a size reduction when the lease expires. Doctors surgeries - seeing as they are for some very debatable efficiency reason, doing phone consultations instead of face to face. Any IT business. Any business where the value of face-to-face meetings is unnecessary.

Invest in your local interior design builder. More home working = more internal mods. More younger people returning to house of mum and day because of rent and mortgage increases = more internal mods.

[cc2014] 11/10/2023 14:51

It's all pulling up now Sky. Seems to be a reaction to the idea that interest rates may have peaked.

[hindsight] 11/10/2023 14:30

From Evening Standard. Understand dont like resi till fully corrects but they should look at reits alongside direct commercial

London landlords eye shift into commercial property

London’s volatile private lettings market is pushing landlords into investing in commercial property instead, according to new research.

Leases for shops and offices can often be longer and the turnover of tenants lower, making them look appealing in a difficult time for housing after a series of interest rate rises.

Findings from specialist financial services firm Shawbrook — seen exclusively by the Standard — show almost a third of landlords in the capital who intend to add to their portfolio are considering a switch from residential to commercial property.

Retail space is in the lead, with 39% of those looking at commercial property thinking of buying larger shops; 38% are considering smaller shops. Office space is just behind that on 37%, with industrial space on 29%.

And more than a third of investors already in the commercial property sector are planning to expand their portfolios.

Emma Cox, head of real estate at Shawbrook, said: “As cities and towns adapt to changing post-pandemic dynamics, people are once again frequenting local businesses and returning to offices. When compared to residential properties, commercial properties often feature longer term leases at higher rental yields.”

The research also found that investors keen to buy into shops saw it as a chance to help the high street evolve, with a rise in tenancies from local, independent, and experiential stores.

[skyship] 11/10/2023 14:08

Good to see these breaking up through 50p. SREI also recovering and breaking up through 42p. Now just need EBOX to wake up...

[spectoacc] 29/9/2023 15:34

Hi Johnwig.

What shrinks the trust is paying the dividend partly out of capital. Capital raised either by increasing the RCF or by selling assets.

[spectoacc] 29/9/2023 10:56

Thanks @nickrl. I thought the office commentary new, and the desire to sell some.

Problem with vacancies & re-lets is that as we know, there's potentially 12 months on a quarter of rent (6 months rent free, 6 months half rent). Much better than having it empty, but there's still voids and still not all rent collected.

At some point, exceptionals (ie rent-frees, incentives, capex) have to be factored in as not one-offs. The more churn there is, the more of them there are.

Good spot on the £0.7m.

80% or 90% divi coverage is still some that's being paid out of capital - a good reason to shrink the trust by making some sales.

If you don't think a recession is coming, API look reasonable value. I do, so don't.

[pavey ark] 29/9/2023 10:16

A few fairly random points.

Dividend cover will be well above 80% by the year end.

Not a high percentage in offices and with Hagley Rd now almost fully let their position here looks sound.

The rise in RCF was almost entirely down to the supermarket and development land purchases.

The supermarket purchase was obviously looked at closely by management and they decided to go for it (a fairly detailed summary was given at the time).

The development at Knowsley is almost complete and the expensive redevelopment at Rainhill should now be complete.......I don't think they have other major development projects.

I suspect there was a time element in the recent purchases and they went for them so they are now looking to sell some properties to balance the books.

The recent lettings and existing rental revisions should work through so happy to hold.

I have always thought highly of the management here and they have done well for me in the past......the only complain I have is that they don't seem to consult with our resident commercial property guru !!!???

[nickrl] 29/9/2023 09:46

@Specto nothing new revealed here that hasn't been said already. They do have a reasonable handle on op costs and with further lettings "in the bag" as previously reported so will have improved rental income although of course none of them ever update on what tenants have walked. Maybe the fact that vacancy costs which were 0.7m this half already higher than previous 12mths is an indicator but with the lettings coming that should reduce. I'd say the language on divis is saying we committed to the 4p for 23/24 but after then all bets are off. My take is even with increased NRI divi will be c90% covered with minimal capital gain to fund it so the extra will end up on the debt load.

All in all though the spate of lettings they achieved has transformed their credentials now so it goes back on my watchlist but mkt is very fickle at the moment and it doesn't seem to take much to reverse any gains and more.

[spectoacc] 29/9/2023 08:25

No commentary?

The plan to sell down offices seems sound - if a few years late. Be interesting to see if they succeed/what prices they get.

The description of LTV as "moderate" at 28% stood out. "Rising" might be more apt.

The 80% covered dividend, which they again commit to maintaining for two years, acknowledging how important it is to shareholders.

" Dividend cover for the first half of 2023 was 80.6% which
is lower than in the past due largely to the increase in finance costs;"


"With the
Bank of England base rate currently at 5.25%, and inflation easing in June, July
and August, the general belief is that the peak of base rates is perhaps 25 or
50 bps away. "

Please API, don't make predictions. You were running the Trust based on 2.5% for this December. Beyond belief.

"During the six months to 30 June 2023, the Company completed the purchase of a
supermarket let on a long lease with CPI-linked rent reviews. The purchase price
was £18.3m, reflecting a yield of 6.35%"


Neither rent collection nor occupancy look brilliant, but neither do they yet look too bad.


"The level of discount is of great concern to the
Board and we continue to explore ways that will reduce it in the longer term. "

I'm sure you do.


"The manager is exploring targeted sales of assets in order to pay down the RCF."

Not sure I'd have bought that 6% Morrisons.


Edit - difficult to argue with this:

"The office sector remains under structural pressure as evolving working habits
and economic uncertainty weigh on the sector. Rising supply levels and weakening
demand are forcing vacancy rates higher, with the Central London vacancy rate
now in excess of 9% according to CoStar data. This scenario is expected to
dampen rental growth prospects and expedite the bifurcation in sector
performance. In response, investor demand for UK offices remains weak amid a
poor outlook for the sector. Headline investment volumes hide a lack of real
liquidity in the office market and anecdotal evidence suggests that secondary
office assets are coming to market at material discounts to previous valuations."

API's ESG'd offices ought to be an advantage here, but sounds like they're prepping expectations.

[skyship] 27/9/2023 20:59

View the latest corporate presentation - see Header. Make up your own mind and let us know!

[121spa] 27/9/2023 20:50

Is this a fundamentally sound REIT?