Abrdn Property Income Share Discussion Threads

[nickrl] 03/4/2024 10:22

So whats the most efficient way to transfer realised value from the wind down?

Will they hold the dividend or will they realign it and concentrate returns through buybacks or tender offers?

[essentialinvestor] 03/4/2024 09:57

I bought a few, gut call is it may be available a little lower, but who knows.

[spectoacc] 03/4/2024 09:55

Good point @EI - not seen that anywhere yet, from API, CREI, or SHED. Fingers crossed it's not too much.

[essentialinvestor] 03/4/2024 09:53

How much has the proposed merger die diligence and associated adviser fees cost API, has that been quantified?.

[pavey ark] 03/4/2024 09:50

RajK there are a couple of sales coming through (not necessarily due to wind-down) that will eliminate the RCF .....the recent sales have been planned as the RCF was used to complete Knowsley and buy Morrisons ....there was much foam flecked hysteria at the time but it was always managements intention to sell some properties and reduce the RCF ( as in long term, considered planning !!!???)

The term loan (£85m)has two years to run capped at 4% but costing 5.5%.....will fall if interest rates fall below 4% but that doesn't look likely ...any time soon.

By my rough calculations if the RCF is removed and this is taken from the property valuation I get a LTV of 21%.

At this stage the term loan will probably stay and any early redemption penalty will probably reduce.....they may just let it run.

Even if the RCF is reduced there is still a charge on the £80m facility so once they get a lump of cash in they may cancel the RCF totally.....if they can ?

There are people on here that will know more on these finer points than I do.

[stockstockham] 03/4/2024 09:36

That may depend on the lender, since the disposals reduce the remaining collateral. There will also be a requirement to maintain working capital.

[raj k] 03/4/2024 09:30

i assume the managers would pay off the RCF with the first disposals. Would they then pay - off the term loan they have (not sure if they can or if there are exit penalties etc) . Reduces all the interest payments while they try and sell of the rest of the portfolio?

[pavey ark] 03/4/2024 09:22

Skyship:(post 648) yes perspective is important (in life and trading) but I fear you may lose out when going up against obsession and the desire to appear all knowing.

We both have a fairly high regard for Jason Baggaley and his team (as do many others) so I would imagine that the Morrisons purchase which amounts to 4% of total assets (perspective !!??) isn't really worth focusing on and bringing up time after time.

EDIT: very well covered by KT as I was typing cover

However I do remember the API management saying that they liked the site and the current trading and were fairly confident that IF there was a problem another supermarket would take over.......the long lease and terms look attractive.
Another point was that the site was in a good residential area and they could see potential for the large site as a residential development (sold for housing )if push came to shove.

The trading levels, lack of competition , site value were examined by the professionals.

However as we move on I would suggest that at 50% the wind-up looks very likely to pass and as Dr Biotech pointed out Jason Baggaley spent 20 years building up this portfolio I can't see that he would want to see his professional reputation damaged in a mad write down/fire sale.
If the board gave an inflated time scale for this wing-up then this could be used by the management to ensure an orderly exit for the maximum return.
If they get say 90% away at good prices then by all means slash the price for the remainder (everything has its price) ......we will still have done very well out of it.

[killing_time] 03/4/2024 09:10

Yes it cost £18.29m with a yield of 6.35% CPI linked for 25 years.
Morrisons currently paying £1,252,162 a year

[spectoacc] 03/4/2024 09:07

Fair points, but it cost c.£18.9m & the yield (from memory) was about 7% - happy to be proven wrong.

[rimau1] 03/4/2024 09:06

Useful info thanks KT, maybe this is also why the yield was under 7percent reflecting a superior location

[killing_time] 03/4/2024 09:01

The Morrisons site is in a heavily dense residential area. It has the busiest petrol station in WGC and the easiest parking in the town.( over 300 spaces )
Before Morrisons took over it was a Safeway. If anything happened to Morrisons one of the other chains would just take over the site.
There is another 1500 homes being build in WGC to the South over the next 10 years with Morrisons the nearest supermarket, and you would need to drive.
Its also an Omnichannel Supermarket which SUPR rave about and as they say these types of supermarkets in residential areas rarely come up for sale. Just my view.

[spectoacc] 03/4/2024 08:57

Thanks, fingers crossed - albeit there's still a seller around atm.

[skyship] 03/4/2024 08:56

"I bought a lot yesterday below 50p as posted" - Ah, missed that. Good buys and should gain a plentiful reward.

[spectoacc] 03/4/2024 08:42

Took over a year for EPIC to sell their 3rd office, and only after the 3rd drop in the price, but fair point about early returns, which skew the calculation in holders' favour.

I bought a lot yesterday below 50p as posted, & more than happy to sit on them.

But c.£400m is still rather a lot, on top of what everyone else is selling - how many buyers will there be for that £18m Morrisons site.

[skyship] 03/4/2024 08:34

Specto - the final workings of a wind-down tend to delay the final 3%-5% of assets. We will already have had 95% of our cash returned, some far, far earlier.

As for that much property hitting the market - £400m is a rounding-up figure compared to the total annual trade; so no, not an issue.

Get some perspective; and get some API when you see big figure 4 again.

[spectoacc] 03/4/2024 07:24

@SnArk, why not filter me if I bother you so? Save your blood pressure.

@Boystown - not sure it is "too good to be true" in this market - similar returns around eg GABI. Potential downsides are whether the vote passes; whether that much property hitting the market at once affects price/timescale (the Industrial will be popular, but who has the cash rather than paying shares?). The non-Industrial, which the Board have said won't be easy to sell. And what the economy does - plenty of uncertainties.

For me, it's mainly timescale - yet to be involved with one of these that didn't draw out, in one case for 2 years beyond the deadline due to a minor VAT dispute.

But I'd say the risk is in the price.

[williamcooper104] 02/4/2024 22:13

Pretty much It's the market; REITs are an unloved part of a wider UK unloved market The discount to NAV isn't alarming This won't be the only reit that gets wound up

[boystown] 02/4/2024 21:53

So what do the experts think is achievable (guesstimates) over what sort of timescale (ditto). Thanks in advance, by the way, but I'm a bit out of my depth - and when "something seems too good to be true" etc etc - but to my simple logic, it looks like a 40% profit could be achievable over a couple of years even if they decide to sell things for less than they're worth for expediency???

[williamcooper104] 02/4/2024 17:09

My take is that it won't take 30 months unless possibly for some assets where you could spend 1-2 years on asset management - but in that case they should then be worth more than current NAV

[skyship] 02/4/2024 16:07

Jason B. confirms:

"The vote to wind up will be a 50% hurdle as it is a change to the investment strategy."

[spectoacc] 02/4/2024 15:37

You've been consistently off the mark on API. Perhaps consider why they're now winding up.

Spending c.£18m of expensive RCF on a Morrisons site, let alone then having to sell it barely a year later, is not a "..Measured long/md term outlook..". It was a daft purchase even before the winding-up proposal, probably again influenced by the abrdn view on rates.

[pavey ark] 02/4/2024 15:19

(There was quite a lot you didn't understand or appreciate about API.)

I bought more today but I had quite a few at an under 50p average so happy to add at under 50p this afternoon.

I have always appreciated the management here and their rather old fashioned view of assembling a quality portfolio of properties and taking a measured long/med term outlook which I rather naively thought matched the investment views of people buying high yielding REITs.

Even though I had a fair number I did add as I am in the happy position of appreciating that the quality and value of the portfolio will be realised at a fairly full price (certainly well above my average)........AND if the wind-down vote isn't passed then I am more than happy to hold.