Abrdn Property Income Share Discussion Threads

[flyer61] 12/5/2023 15:36

Ghhghh….agreeon the replacemeny cost however I think any reduction in interest rates IMHO is more than months off…maybe a year from now.

Sky…you selling EPIC…spoiling my weekend, but I agree with your sentiment..

[skyship] 12/5/2023 15:09

Many recorded sales actually buys c51p...inc. two of mine!

51.1p = 38% discount & 7.83% yield.

Average purchase price now 53.4p; at which level yield on cost = 7.49%; and discount 35.2%.

Happy now to await events, falling inflation & falling interest rates..

Purchases funded by recent sales of EPIC as not really trusting the BoD to deliver value there.

[ghhghh] 12/5/2023 15:05

@speedsgh - I'm increasingly unconvinced REITs work, at least in the UK. Balanced against that is that the FTSE 100 has barely done much better.

But we recently had 14 years of ZIRP - if that didn't juice their returns, what will?

(Or - is the fact they've been buyers during ZIRP indicative of the poorer returns going forwards. Eg buying at office building at 6%, or 5% over Base, doesn't look so clever when interest rates move up to 4.5% & that same office building now needs to yield 9%, at a time of static/falling rents).

REITs have underperformed because 14 tears of low inflation!

We have had the kick in the gonads from rapidly rising interest rates knocking capital values.

Within months we should reap the reverse benefit of falling interest rates plus c. 25% cumulative inflationary pressures on replacement cost which must filter through to existing prime valuations. Happy days are just round the corner, subject to market meltdown

[flyer61] 12/5/2023 14:30

You have a point Spec….reminds me of the pension industry…..incredibly self serving.

[spectoacc] 12/5/2023 14:23

@speedsgh - I'm increasingly unconvinced REITs work, at least in the UK. Balanced against that is that the FTSE 100 has barely done much better.

But we recently had 14 years of ZIRP - if that didn't juice their returns, what will?

(Or - is the fact they've been buyers during ZIRP indicative of the poorer returns going forwards. Eg buying at office building at 6%, or 5% over Base, doesn't look so clever when interest rates move up to 4.5% & that same office building now needs to yield 9%, at a time of static/falling rents).

[hugepants] 12/5/2023 13:53

There would appear to be some volume being shifted. Narrow spread.51.1p to sell51.25p to buy

[speedsgh] 11/5/2023 14:58

And according to the AIC website...

5yr NAV total returns

AEWU: 63.5%
API: 20.1%
BCPT: -0.4%
CTPT: 10.4%
PCTN: not listed
SREI: 12.1%
UKCM: 4.7%


10yr NAV total returns

AEWU: N/A (launched May 2015)
API: 164.7%
BCPT: 84.3%
CTPT: 121.7%
PCTN: not listed
SREI: 113.1%
UKCM: 83.0%

[speedsgh] 11/5/2023 14:28

@Specto - I was going to label the data "NAV progress" but thought better of it :-)

EDIT - to be fair to API the majority of their peers have not fared any better. PCTN appears to stand out...

AEWU - 31/10/15: 97.09p - 31/3/23: 105.48p
API - 31/12/15: 82.2p - 31/3/23: 82.4p
BCPT - 31/12/15: 135.3p - 31/3/23: 118.7p
CTPT - 31/12/15: 99.9p - 31/3/23: 96.6p
PCTN - 31/12/15: 75.7p - 31/12/22: 102.2p (FY results to 31/3/23 to be released 25/5)
SREI - 31/12/15: 62.4p - 31/12/22: 62.0p (FY results to 31/3/23 to be released 8/6)
UKCM - 31/12/15: 86.7p - 31/3/23: 80.6p

[spectoacc] 11/5/2023 10:51

Not a fan of uncovered divis, and they appear to have achieved the better coverage by reducing CapEx. More CapEx to come at Hagley but if they can continue to pare CapEx back, perhaps they'll get close to coverage. But they'd have been better with a rebased divi IMO.

@speedsgh - enjoyed that, thanks.

@nickrl - they won't be too concerned about the RCF because they think interest rates are coming back down soon.

[nickrl] 11/5/2023 10:16

I was surprised how much the RCF has been loaded up already with more to come for the Knowlsey development. So given another 0.25% today seems inevitable that's another 100k on interest charges gone. That said they have boosted income by close to 2.4m less what they don't tell us has been lost from breaks/expires but i can deduce from the NIY that about 1m has gone so up a nett 1.5m. Also the benefit from the reduced mgt fee will feed through worth about 300k/pa. My forward view is cash cover is mid 80's for FY23 which if property prices were rising might just be acceptable but i will leave on the watchlist for the time being.

[speedsgh] 11/5/2023 09:00

NAV performance:

82.4p as at 31/3/23
84.8p as at 31/12/22
106.1p as at 30/9/22
110.7p as at 30/6/22
106.6p as at 31/3/22
101.0p as at 31/12/21
93.1p as at 30/9/21
88.3p as at 30/6/21
85.3p as at 31/3/21
82.0p as at 31/12/20
78.8p as at 30/9/20
79.6p as at 30/6/20
83.2p as at 31/3/20
89.9p as at 31/12/19
90.3p as at 30/9/19
91.1p as at 30/6/19
91.1p as at 31/3/19
91.0p as at 31/12/18
91.4p as at 30/9/18
90.1p as at 30/6/18
89.4p as at 31/3/18
87.6p as at 31/12/17
86.0p as at 30/9/17
83.9p as at 30/6/17
81.4p as at 31/3/17
81.0p as at 31/12/16
79.0p as at 30/9/16
81.8p as at 30/6/16
82.3p as at 31/3/16
82.2p as at 31/12/15

[skyship] 11/5/2023 08:27

Dividend cover massively improved already; personally had expected c85%:

Dividends

Following the dividend being maintained at an annualised rate of 4p per share
since December 2021, the dividend cover for Q1 2023 is 88.6%. The Board has
provided guidance of its intention to maintain the current dividend level which
it believes will be substantially covered in 2023 and 2024.

[spectoacc] 11/5/2023 07:59

Well, rates will go +0.25% today, and the market thinks another 2 rises are possible.

Also assumes Morrisons aren't run into the ground.

[skyship] 11/5/2023 07:49

"...Although initially the cost of servicing that debt is high the income from the asset is higher, and that differential is expected to increase as rates decline and the rent continues to grow."

Just a statement of fact surely!

[spectoacc] 11/5/2023 07:18

One of the poorer NAV performances. And they couldn't resist some economic commentary! Some of it bordering on bizarre, but they seem to at last recognised that interest rates are about to go to 4.5%.

This jumped out re the Morrisons purchase:

"...Although initially the cost of servicing that debt is high the income from the asset is higher, and that differential is expected to increase as rates decline and the rent continues to grow."

Can't help themselves.

At least that void rate is coming down.

[skyship] 11/5/2023 07:17

NAV reduced from 84,8p to 82.4p (Disc. @ 36.7%). Fall due to swap costs and office valuation markdown.

[ghhghh] 10/5/2023 16:27

I've bt more but main reservation is ESG. They are very vague re the specifics?

[pavey ark] 10/5/2023 15:47

Not a sector to go into with rose tinted glasses but perhaps wrong to go 100% with the posts above.

Healthy scepticism is fine but the market can/does over react ....money to be made in the short term and perhaps even long term.

[skyship] 10/5/2023 13:41

Specto - thnx for that.

[spectoacc] 10/5/2023 12:57

@Skyship - as well as API paying for the works (due for completion July), there's a 6-month rent-free followed by an (I assume) further 6 months at half rent. I only know for certain about the rent-free duration.

It's still a good deal for API if it removes the empty rates liability & secures a tenant, and I suspect (but don't know) that at least one further, smaller letting at Hagley Rd will be announced with the NAV.

Can recommend phoning the co - API aren't EPIC but they're not UKCM either (ie they do speak to PI's).

[pavey ark] 10/5/2023 10:18

Ammons, thanks for that.
The rent free period look very much tied to the value, length and strength of the lease (as you would expect)....small, short lease 3 month.....large, long lease (15 years), strong, index linked ...12 months.

[pavey ark] 10/5/2023 10:08

Hagley Rd was bought in 2018 for £24m and £2m spent on refurb, the target rental at that time was £20/sqft.....cost per sqft with refurb was c. £180

With this 21.5k sqft rental and the 11.3k let expected soon the building will be almost fully occupied.

Given the rather difficult times experienced in the office letting sector any attempt to downplay the significance and value of these developments looks rather strange.

Any rent free period should be set again the value of letting a vacant space to a government agency at your target rent, on a ten year lease, index linked (albeit at a 4% cap)

Times may be tough and may even get worse but investors should always try to evaluate (guess !!??)when the price is right.

[ammons] 10/5/2023 10:03

UKCM's RNS today states what the rent frees on the new leases are and the subsequent rental uplift.



Not API but an indication.