Abrdn Property Income Share Discussion Threads

[pavey ark] 14/5/2024 08:51

nexusltd,

"With the Greens out of the coalition will the “grant funding” be deemphasised?"

I take it that you are suggesting that the Scottish Greens care about trees and the environment......hmmmm !!.....think again !!....they have a completely different agenda.

I only checked over the last 12 months but plenty of rain in the Cairngorms...well above average.....well spread out.

A bit confused by the rest so will see if a second cup of coffee helps.

[spectoacc] 14/5/2024 06:53

Excellent post, thanks @nexusltd. I've a couple of comments but I'll PM them.

[skyship] 13/5/2024 20:27

nexus - looks like a lot of work; but seriously garbled presentation.

Do you have a summary view after all that lot?

[nexusltd] 13/5/2024 19:00

Wind-up proposal docs to be published tomorrow 14/05.

Diary notes. Review of FY24Q1 RNS & RCF estimate post #753
RCF 31.6mn v. 29.745mn estimate. Significant variances:
• Capex Knowsley, and other expenses: 1.8mn not accounted for.
• Merger costs: 1.1mn v. 2mn estimate
• Uncovered FY23Q4 dividend: adding 0.94mn to RCF v. fully covered estimate

Valuations
• FY24Q1 Industrial: +0.3% v. CBRE +0.1%
• FY24Q1 Office: -4.0% v. CBRE -1.7%
(Williamcooper recently posited a 10% haircut on office portfolio; on target.)
• FY24Q1 Retail: -0.6% v. CBRE +0.2%

Office 54 Hagley Rd, Birmingham
From FY23 AR. 4.5% of portfolio. Leasehold.
Note 16 “Obligations under Finance Leases” of AR informs ground rent liability. Valuation likely in right ball park.

Far Ralia, FY23 AR
Quotes. “Soft marketing commenced after the period end for the sale of Far Ralia, the Company’s natural capital asset. Timing of the exit is being influenced by changes to the grant funding submission period and strong progress on planting in order to maximise value for the Company.” “Indications suggest the capital value uplift on a sale will make this investment one of the Company’s better investments.” ” To date, the Company has completed approximately 80% of the detailed planting plans … ”
My reading & questions.
• Potentially profitable investment, testing the waters for now.
• Exit timing to maximise return unknown; paperwork problems, & hope that the exceptionally low rainfall in the Cairngorms region is not an impediment to planting saplings or a fire risk.
• FY23 AR Note 8 Land. So far we have spent 9.6mn-0.62mn grant, & written down by 1.3 mn.
• With the Greens out of the coalition will the “grant funding” be deemphasised?
• Is work progressing presently & if so how are the costs of labour, plant (digger) hire, and materials being funded?


Disposal difficulties?
• FY24Q1, 06 May 2024 “The largest vacancy is of a logistics unit that became vacant in November 2023, and had been under offer to sell to an owner occupier, but that is no longer progressing.”
• RNS, 1 February 2024 announced sales that have not completed. Odd announcements b4 cash in hand & during corporate action.
o “Sales have also been agreed of two industrial assets for a total of £24.4m (year-end valuation £22.4m. “
o “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%. -3.9% valuation discount” (Monck Street, London? 101 Princess Street, Manchester?)

Dividend
• Expect FY24Q1 proposed dividend to still be uncovered; another c. 0.9mn added to RCF?
• “Dividend guidance will be revisited after the wind-down vote.” Since FY22Q2 total 1.2p of dividend not covered by EPS, increasing RCF by 4.5mn + compounding interest @ 6.70% p.a.
• Dividend to be reduced to 2pps? Yield margin on cost of capital @4.8% v. EPRA NIY @4.8%, =0%. If dividend reduced to 2pps, cost of capital @1.4% v. EPRA NIY @4.8%, margin =3.4%, which is reasonable.
• Loan agreements, from FY23 AR P9 “The two facilities from RBSI are due to expire in April 2026 and incur no early repayment fees.” Incentive to scrub the dividend and focus on repayment. Is REIT regime terminated on a wind-up vote allowing discretion on earnings/capital allocation?

Other
• Vacancy rate 7.9% v FY23Q4 7.6%. “The vacancy rate of 7.9% excludes! the recently completed speculative development which represents 2.5% of ERV. That and the logistics unit in Swadlincote (3.3% of ERV)”.
• Rent collection FY24Q1 99%
• Lease incentives increased in FY24Q1 & reduced EPRA earnings by an additional 0.3mn.
• “Further strategic review costs of 0.5p per share will crystallise if the managed wind-down is voted for by shareholders.” = 1.9mn

[pavey ark] 12/5/2024 19:04

Grants were available and it caused a bit of annoyance over the time taken to get them arranged.
These grants were subsequently obtained and are probably now on a staged growth/development payment basis.....value remaining ??

"small turn" ....hmmm!!?? the company are suggesting more than that.

[flyer61] 12/5/2024 18:57

Always deeply suspicious that this was a wheese to give all the Abrdn boys a nice spot for shooting…..hope i’m comprehensively proved wrong.

[nickrl] 12/5/2024 18:33

@PaveyArk they have spent money on Far Ralia in readiness for planting it out but looking good to at least make a small turn on it.

[pavey ark] 12/5/2024 17:54

I suspect that there will be the announcement of a couple of large sales at a good premium between now and the EGM and if this is the case then a fairly certain outcome would become a certainty.

The much derided moorland purchase is looking good and it may get a mention
1/2/24 "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)."

30/4/24 "Indications suggest the capital value uplift on a sale will make this investment one of the Company’s better investments."
(good grief it's almost as though Jason Baggaley knew what he was doing)

I have been in and out here for over five years and things have gone well for me (here at least!!).
Even when not fully invested I have kept an eye on things and I consider the property portfolio to be of a high quality......there is no "junk".

I developed residential property for a number of years and if I "parked" a property the rental return was certainly less than that obtained by other landlords with lesser properties.... but I could sell much more easily and that was where the money was to be made.

Perhaps....just perhaps... we will see the managers pursuit of quality now being rewarded.

[rimau1] 12/5/2024 14:11

So that you can buy more before the nailed on vote Skyship

[skyship] 12/5/2024 13:48

So annoying that we have to wait all the way through to 28th May for the Wind-down EGM vote. Why so long!?

[spectoacc] 10/5/2024 14:29

The longer they state, the less they'll be seen as forced sellers within a timeframe - agree it'll hopefully be much sooner, albeit usually a few are hard to shift in any winding-up.

@markth - what co was that?

@SnArk - very boorish, give it a rest.

[skyship] 10/5/2024 12:14

Saw that Jason estimated 18-36 months for the wind-down; but suspect that was just to throw a bone at Chairman clifton-Browmn - who should surely have resigned by now.

I'm pretty confident that Jason will complete within 2yrs - so with earlier redemptions, the average GRY may be just 18months. That would certainly deliver a GRY of 20%+ pa...

[markth] 10/5/2024 11:02

Re: wind down. I got shafted in another one last year. They steadily reduced the NAV through special dividends, but the discount persisted. Then they declared the pot was too small to warrant a listing so they delisted with 'x' p on offer for the shares at a NAV of '2x' p the day before. Someone legged it with a few million worth of NAV.

[pavey ark] 10/5/2024 10:12

I would focus on quality assets being API's thing and the reduction in vacancies , the revisionary potential and recent sales would make the uncovered portion rather trivial in the wider scheme of things.....then again some like to hop aboard there favourite hobby horse...avoids thinking things out.

Interesting that Jason Baggaly's long term purchaser of the Scottish moorland has increased in value and looking like going for a good price......what was he thinking?...he should have listened to the bb experts ....the people who really know.

nickrl, I don't really expect a reduction and there is £32m of sales that can be set against the RCF and actually increase the overall yield (very slightly).

I expect the RCF to be paid of and perhaps the facility reduced to £10m or so (just to be safe)

RE: dividend cover.
The moorland sale plus RCF reduction should produce c. £1m reduction in costs.
The vacant industrial unit if sold should produce c. £0.6m extra savings.
We are not far from revisions making up the difference,

We are currently in a situation (at this share price) that has very little down side... whither the deal goes through or not.

[williamcooper104] 10/5/2024 09:55

For tax I'd prefer no divi now and just return of capital/B shares

[spectoacc] 10/5/2024 09:15

I'm 95% sure the vote passes. Threshold is far lower, and the many buyers from the recent seller aren't buying to block a wind-up, they're buying for it.

Plus the major blockers of the CREI deal were arguing for wind-up being a better option.

I expect API to hold the 1p's until at least the first distribution - uncovered divis seem to be API's thing. Agree beyond that, they may just pay out the natural income.

Roll on the vote, and getting the investment properties on the market.

[nickrl] 10/5/2024 09:12

@PaveyArk RCF is c32m now with recent sales and even factoring the lower interest charges till leaves divi at c85% covered but its now a convenient means to return cash so need to cut at this stage. Of course if the vote doesn't come through for wind down then maybe things will chnage.

[pavey ark] 10/5/2024 08:47

Ex dividend next week.

At the year end the RCF stood at £56m on which they are paying 6.75%.
As the overall portfolio yield is c. 5.75% ..... if paid off this increase net income.

The moorland is up for sale (very positive noises being made)and this is NOT currently producing any income.

There is a large industrial unit currently vacant but up for sale which if sold reduces vacancy rate to a very low 4%.

As with all property companies there will be a revisionary uplift in rental income this year due to inflation.

The point I'm making is that I can see no reason to reduce dividend ....certainly not this year....unless we are to be punished for rejecting their grand plans!!!

I do expect things to be very largely finished in two years and have included a total dividend payment over two years of 6p in my calculations.....generated from the current and remaining properties.

I appreciate that things could get rather complicated further in (share buy backs, special dividends etc) but I can see no reason for a dividend reduction this year.....but it is ABRDN

[essentialinvestor] 09/5/2024 14:51

It was available at .5197 as had a look earlier, but did not add.

[spectoacc] 09/5/2024 14:45

...But only posted now, when it's higher ;)

Bon chance.

[spittingbarrel] 09/5/2024 14:42

Topped up this morning at 51.

[spindoctor111] 08/5/2024 15:44

I do like a big seller to come along in these situations. Took a few more.

[essentialinvestor] 08/5/2024 13:37

Lots of shares available on the offer ATM, I can get a 200k online buy - without the need for a telephone trade.

[nickrl] 07/5/2024 13:16

@EI suspect that if the wind down is approved it will attract a lot more interest then