Abrdn Property Income Share Discussion Threads

[skyship] 01/11/2023 09:34

giltedge - thnx for that - a good summation.

Looking forward to the Q3 Update - any day now (3rd Nov. last yr).

[spectoacc] 01/11/2023 09:33

Thanks both. Suspect it's the difference between being a holder, and not, because I see recession, CVAs, voids, empty rates. May not happen of course - have been predicting it a while.

Always worth remembering - whether a holder or not - that all these REITs love to RNS the good news, but never RNS the bad news (eg UKCM losing OCDO). You hear the lettings, you don't hear the exercised breaks (until much later).

API over-distributing but agree that in a Goldilocks scenario, they can keep going with the same divi.

[giltedge1] 01/11/2023 09:05

Hello Specto,
Agree with nickrl, 2023 not covered by earnings, maybe cashflow. (operation cash flow less interest, excluding cap ex). Actually covered at interims, but one offs credits, working capital, swap receipt, so not representative for whole year. 2024 definitely covered by cashflow. Signed some great leases in last 3 months, void dropped from 8.4% to 4.4% & new unit in Knowsley expected to be completed & let end of 2023. All in all about £2M extra (assuming Knowsley let) + savings in void costs as well. Signed some meaty 15+ year leases, Washington, St Helens, Morrisons (25 years CPI). Also upgrades to 'A', Industrial, doing great most cap ex behind, maybe a £5m buyback on the cards?. Offices obviously worry with any REIT, but managed to let in all buildings, some now full & exposure 18% of portfolio, Office Leases more to 5 years, can understand tenants have a lot of choice. Also if you read quoted data article in RNS gives all details + increase ERV another £2M odd on top!. So expect 4p next 4 years at least as LTV low & interest rate capped. I will add wating for funds, hope doesn't rise too much while I wait.

[skyship] 01/11/2023 08:53

frazboy - agreed - seems a reasonable scenario.

I have no problem topping up the dividend out of capital. It is after all what the supremely well-managed AEWU does on a regular basis.

[frazboy] 01/11/2023 08:39

Specto - think where we were two years ago and compare with now. Trying to predict what API will do with its near covered (at the current moment) dividend in 2 years time is brave. Maybe a P50 scenario will be that they'll cover it from capital using gently appreciating asset values in a gently declining interest rate environment? Surely, that's a likely as any scenario?

[spectoacc] 01/11/2023 06:53

I'm also a no. Next question would be - will they hold or cut after the two years.

Cover needs to be c.111% for any REIT's divi to be 90% of earnings - very few manage it & the outlook is negative IMO.

[nickrl] 31/10/2023 18:53

@specto - NO but ought to be low 90's and certainly in a better place than it was at start of year.

[spectoacc] 31/10/2023 07:58

@giltedge1 - stick your neck out - divi fully covered at next report, yes or no?

[giltedge1] 30/10/2023 22:20

Great to see more offices let, Pinnacle building, Reading almost fully let. Elizabeth Line opening has greatly helped. Looked on Reading website have done a good job on refurb, same at Bracknell. Looks like most office refurbishments completed, which is good for reletting & not much Cap Ex going forward Washington industrial unit ready to start paying & new unit in Knowsley looks like will be let prior to completion. Great Result at 107,000sq ft, maybe 1million? Hagley Ave rent increases 30%, Loan capped, so all in all 4p dividend secure.

[spectoacc] 30/10/2023 15:21

@Flyer61 - 6-12 month rent-free I bet. They'll likely tell you if you email.

Reducing voids is always good, particularly since voids may be rising rapidly soon if recession kicks in.

[skyship] 30/10/2023 10:23

Personally I have no problem with using rent free periods to do the deal, lock in a tenant and lower voids. Voids are a doubly expensive liability; so pleased to see them now down below the former 5% target.

[garbetklb] 30/10/2023 09:59

Anything to read into Mark Blyth rather than Jason Baggley giving the commentary?

[flyer61] 30/10/2023 09:16

OK update....wonder just how much of those lettings have rent free periods. Headlines look good but would like to see the detail...

[nickrl] 30/10/2023 08:43

@Sky didn't see that on my skim read! so thanks. Some of this is reconfirming previous info but certainly shows there is still demand out there although of course they never tell you about the negative asset mgt side of the equation!! Anyhow Q3 NAV update should be soon to get the rest of the info.

[skyship] 30/10/2023 07:36

Impressive Asset Management Update inc. voids down to 4.4% - see Header.

[yump] 25/10/2023 10:47

Adae

Putting earnings/cover aside…

What do you think would be a justifiable gap between income stock yields and a new norm for gilts/safe income yields ?

Eg if we settle around 4% interest rates ?

[hybrasil] 24/10/2023 16:29

Day in Day out I look at the 52 week lows and highs

The lows for the last 6 months outweigh highs by about a factor of 30!!

[adae] 23/10/2023 16:55

Was ZIRP the aberration, or is now? All these prices are a reflection of the normalisation of interest rates. API is a REIT stung already by debt costs, paying an uncovered dividend they've promised to hold for two years only.

Don't look at yields, look at earnings. Stress-test those earnings against higher borrowing costs and a downturn in the economy. Most of all, don't use Net Asset Value as a benchmark.

[skyship] 23/10/2023 16:55

Thnx Hybrasil.. We are blessed by having quite a few knowledgeable posters on the REIT threads.

[giltedge1] 23/10/2023 16:54

Hello Skyship, yes thanks about info EBOX debt, I am willing to look once next report published. Unfortunately already have ASLI which has been one of my biggest mistakes ever.
Anyway live in hope as they have modern buildings, CPI rents mainly uncapped & low debt interest. will take a long time to recover or taken out.
I have invested for 30 years & 2023 has been my worst year, did better in 2007/2008.
in hindsight should have invested 100% with Terry Smith & done nothing!.

[hybrasil] 23/10/2023 16:49

Thanks Sky (who in my eyes is No.1 in this area)

Giltedge I think we will all look back at this period and pricing and reflect on how stupid we were not to buy.

Yields were like this when I first started on Advfn over 20 years ago and I made a lot of money then thanks to Sky's suggestions.

I think at these very low valuations you will start to see corporate activity.

Yes prices could fall and a global conflict wouldn't help but I think prices are very low at the moment

[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.