Abrdn Property Income Share Discussion Threads

[pavey ark] 23/9/2022 09:17

I've been in and out here three times since my initial buy Nov 2018 and this has been a lucky share for me (if I'd been as lucky with all my share dealing this would be coming from my private island....it isn't !!).

My most recent exit was early April at 88p NB: not particularly insightful...just wanted the money for something else.

Obviously I started to think about buying back as the price made its way down through the 70s and definitely very interested now.....but!!

Pre covid the dividend was 4.79p so at the current dividend 4p a price of 75p would give a 2018/2019 yield but the inflationary picture was very different then and interest rates were certainly lower so if not 75p what?

It could be that the silly old market does work....who knew?

I agree that the current price does look safe/attractive but it may actually be correct.

(nickrl: thanks for that ...just about to do it myself )

[spectoacc] 22/9/2022 12:58

Thanks @nickrl

[nickrl] 22/9/2022 12:45

Yup 110m term loan and 55m RCF both expire April 23 was undrawn at FY but at Q2 its partially drawn so are they using this to finance buybacks. They've got them fixed through a swap at 2.725% on an LTV covenant of 55% with it sitting at 21% at last NAV so may have worsened slightly come Q3 but well below that. So reasonably favorable to refinance at a lowish LTV to keep a lender happy so guess would be 3.5-4% range and that certainly wouldn't cause them any dramas on covering current divi.

[spectoacc] 22/9/2022 12:06

I've lost track, but is API the one with some debt to roll over in early 2023?

[nickrl] 22/9/2022 12:03

API down 20% over the last month worst of all the REIT/propco's somebody doesn't like them.

[panshanger1] 22/9/2022 11:30

Think we might hit this point sooner than later

[spectoacc] 22/9/2022 08:30

Reminded of what API said at last results:

"•aRI expects the Bank of England to continue to hike interest rates over the next few meetings, with the terminal interest rate reaching 2.25%, despite the predicted slowdown in activity. The BoE is then likely to pause its hiking cycle, and reverse the hikes with a cutting cycle starting in Q4 2023"


Should hit - or top - their 2.25% prediction at Noon. With almost no chance of a "pause" beyond that, particularly not with the FOMC going strong, and Trusseconomics coming.

[nickrl] 20/9/2022 22:37

spoole5 even being a ready buyer didn't arrest the share price decline so makes sense for them to sit on the sidelines and then move back with a much lower share price will be able to hoover up even more shares.

[spoole5] 20/9/2022 22:07

Hopefully they'll start buying back again. Seems to have stalled.

[riverman77] 20/9/2022 22:06

Obviously a sector wide sell off, but I'm convinced the Abrdn rebranding hasn't helped - just doesn't have the gravitas of the old Standard Life brand and I've noticed a few of their other rebranded trusts have also fallen more than than I would have expected.

[hugepants] 20/9/2022 21:13

Yikes. 6.1% yield and a 40.5% discount now. To think this traded at NAV before covid.

[hugepants] 15/9/2022 16:59

Keeps trending south this one. Discount now up to 38.5%, yield 5.9% and LTV 21.5%. Looks very good value down here.

[spectoacc] 14/9/2022 17:21

Noticed same at CTPT & BCPT, no idea why, whilst SREI going gangbusters on buying back.

All a little strange.

[spoole5] 14/9/2022 16:55

Seem to have stopped buying back

[nexusltd] 12/9/2022 21:36

Expecting interims for six months to 30 June this week.

[spoole5] 07/9/2022 14:16

Hopefully they're buying back today

[skyship] 05/9/2022 17:13

They like buybacks in 1.2m instalments:

# 12/08 - 1,2m @ 78.75p
# 19/08 - 1,2m @ 79.22p
# 24/08 - 1,2m @ 78.75p
# 01/09 - 1,2m @ 76.93p

That little lot = 4.8m @ 78.41p avge.

No calculator near me - but that's c£1m profit on c £4m invested.

RAM will give us the figures :)

[rambutan2] 22/8/2022 14:13

A £237k uplift on a £950k investment. A no brainer. imho

[spoole5] 22/8/2022 07:06

This is some chunky buyback.

[spectoacc] 04/8/2022 16:23

@nickrl - yes, fair point, the sales we're seeing now were agreed at least a month ago, and API are amongst the first to say things have now finally slowed (albeit it is August). SREI cautious too.

Still - to base their outlook on aRI's guesses seems a bit much - they've no particularly insight that I can divine. Interest rates have just gone to 1.75% today, are they really saying we're only going to get another +0.5% in total? They've absolutely no idea. 3% has always felt the top in this cycle, but Truss's tax cuts may yet change that - Minford said 5% - 7%! That'd certainly put the cat amongst the pigeons - "here's your tax cuts, now pay 3x that on your mortgage payments, whilst watching your house price tank".

If API believe aRI, they ought to be selling more properties, and not buying back their shares, even at this discount. Doubt either will come to pass.

10% vacancy rate is too high, but at least they go on to explain it.

@spoole5 - agree re divi for time being. However, what API/aRI seem to be ignoring is that if the value of money is falling this fast, rents could have some nice uplifts in time.

[spoole5] 04/8/2022 16:06

So the discount had widened. Keep buying back then.

[nickrl] 04/8/2022 09:40

Specto many sales of course had an agreement on price several months although im not sure the economic outlook has materially changed in that time to have not been influencing buyers assessments. Now with many forward looking indicators turning down now it must start having some bearing on property pricing.

I concur that aRi way off on forecasting inflation but my take is BoE will remain cautious on rate rises. £/$ has recovered 0.04 off its recent low which BoE will potentially see as a positive and part contribution to supressing inflation. Ultimately they don't want to (or can't risk if truth be told) blowing up the housing market although with majority on fixed rates it will have slower impact than previous cycles.

Edit: got IR one wrong this month! aRi inflation forecast way out of line with BoE!!

Anyhow back to API and what we see at individual asset class level a different set of metrics to others so im never convinced there is that much read across to other REITs outturns on their NAVs.

I like the way in the headlines they tell us this positive news

"Lease renewed on logistics unit with a 40% increase in rent passing, to £448,454pa"

Then later on qualify it with

"We also completed a lease regear on a logistics unit where a new ten year lease was signed at a rent 40% above the previous rent. As part of the new letting the Company made a financial contribution to the cost of the building upgrades to achieve an EPC A rating"

How much of future rent have they given away though??

All in all steady as she goes and not feeling they will upping the divi anytime soon.

[spectoacc] 04/8/2022 08:21

It's aa interesting read. The "aRI" has no more of a crystal ball than anyone else - their 2.25% rate peak is off IMO, particularly if Truss follows through on tax cuts - as are their inflation calls going out years, and US recession date way out in 2023.

But good to see them put it in writing, and the comments on the property market starting to slow I'd be more inclined to believe, in spite of some recent stonking sales across all sectors:

That & much more is arguably in the discount already of course.



"Executive summary
•The UK economy is now facing multiple headwinds and a US led recession towards the end of 2023 is now the abrdn Research Institute's ("aRI") base case. With an increased risk of a UK recession in late 2022 in response to the cost of living crisis and tightening monetary policy by the Bank of England aRI are forecasting a peak-to-trough decline in the level of GDP of around 1.4%, although the growth in GDP in May reversed the declines seen in March and April this year.

•The UK Consumer Price Index (CPI) rose from 9.1% in May to 9.4% in June, a level last seen in 1982. Inflation is likely to move higher from here as rising food and energy prices take hold, before falling thereafter as challenging base effects and slowing economic growth weigh on headline inflation. aRI are currently forecasting UK CPI to end the year at 8.5%, before falling to 5.2% and 1.7% in 2023 and 2024 respectively.

•aRI expects the Bank of England to continue to hike interest rates over the next few meetings, with the terminal interest rate reaching 2.25%, despite the predicted slowdown in activity. The BoE is then likely to pause its hiking cycle, and reverse the hikes with a cutting cycle starting in Q4 2023. Rising interest rates have had a material impact on the cost of debt, with very volatile swap rates. This is beginning to feed through to the investment market.

•In the first half of 2022, UK real estate recorded the strongest H1 investment volume since 2015. According to Real Capital Analytics, a total of £31.2 billion was transacted over this period. However, approximately two thirds of the activity occurred in Q1'22. In Q2'22 investment volumes totalled £10.2 billion, down on the Q2 10 year average of £13.5 billion.

•Whilst the UK commercial real estate market had positive performance in H1 2022, the abrdn market outlook for the next 12-18 months has been revised downwards. We expect an impact on pricing and capital values across all UK real estate sectors, driven by a rate revaluation, the increased cost of capital and a narrowing margin over other asset classes. The extent and duration of this price correction is unclear, however API has a portfolio that has focused on affordable assets that meet the needs of tenants, and we believe that will help mitigate against the initial yield shift being seen on the prime low yielding assets currently."