Aew Uk Long Lease Reit Share Discussion Threads

[jonwig] 18/7/2018 07:55

Why am I suspicious?

A NAV increase of 4.56% in one quarter (19.5% annualised) seems wrong in the current climate. But then the huge fall in NAV in January and April was a surprise. (Even without the expenses.)

Was the earlier one a mistake of some sort? Maybe they changed their valuer? Since I no longer hold I'm not too bothered, but these huge swings don't look quite right.

[belgraviaboy] 18/7/2018 07:17

Happy with that update. They exactly hit my EPRA ESP of 1.25p for the quarter.

The nice surprise was the uplift of 4.15p in NAV to 94.94p.

[mcgrimes] 15/7/2018 17:59

Good to see some comments on here, unfortunately I invested in the IPO with a 0.7% bonus; that with any dividends to date doesn’t make up for the 12% loss unfortunately

[spectoacc] 11/7/2018 13:18

Ha ha we're in all the same things @Belgraveboy - not sure if that's good or bad ;)

Re GRIO - everything is at risk with a Labour govnt, but fair point. I think for GRIO it's more that the ground rents gravy train has hit the buffers - no longer an expanding market, and deserves to trade at a discount.

RGL - the unknown atm is why they're thinking of issuing a bond (which I don't think they'll get away). Gearing already on the higher side. But that yield.. And they've done what they said they'd do thus far.

EBOX - higher fees than BBOX too, but argument is the market in EU is behind the UK market. We'll see. Isn't a LTBH for me, will try to time an exit at a decent premium.

AEWL's risk isn't so much a single tenant going bust, it's another downturn - not only several tenants disappearing (Motorpoint & a gym, if I was taking bets!) but also impossible to re-let in a market when everyone's retrenching. It'll happen at some point: I just think we're nearer the top than the bottom. They promote themselves as having these massive long leases but as the retailers have shown, one CVA and it's goodbye lease commitments.

[Edit - the other big risk is the interest rate when they next reschedule their debt. They seem to be buying on 5 or 6% yields, geared]

Couple of big trades at 84.5p on AEWL, fwiw, sending some MMs blue.

[spectoacc] 11/7/2018 09:15

Fair points, but:

1. GRIO, despite regulatory risk (which has so far largely failed to materialise due to Brexit taking up Parliamentary time, and which GRIO themselves aren't greatly exposed to - they've very little of the "bad" stuff, ie the doubling ground rents, and have given tenants the option to move to RPI), are notionally significantly safer than AEWL. In a downturn, or recession, or credit crunch, geared commercial property is always a bad place to be. I don't care that AEWL have long leases - if the tenant goes bust (be it a nursing home, gym, car showroom etc) then the long lease means nothing. Whereas ground rents are always paid, under threat of forfeiture. Which doesn't mean they can't be revalued downwards of course.

2. Agree that AEWL finally on a discount - but what discount is warranted? GRIO is on a much larger discount, and some sort of discount seems warranted on AEWL, be it 1%, 10%, 20%.

3. BBOX performance suggests EBOX has significantly higher to go - they're tapping into a growth area, not one which may soon be in decline as interest rates rise (I'm not a long-term holder of EBOX mind).

4. Not ruling out buying into AEWL at some point, but there's clearly stock around, as there was with GRIO (which I bought into too high, at the time at bid price on a 3p spread).

5. GRIO & AEWL both suffering for being possibly sub-scale - GRIO less so, but the discount has still ended the "raise more cash/buy more assets/make more money" gravy train, and costs end up disproportionate for both.

Edit - other problem is how much value there is elsewhere - already too exposed to the "interest rates will stay low/ no recession coming" property trade with ESP, SHED, EBOX, RGL, GRIO, WHR... Wouldn't sell any of those - apart from EBOX at a sufficient premium - to buy AEWL. Eg why have AEWL when RGL is yielding over 8% on a larger discount, and certainly isn't sub-scale.

[belgraviaboy] 11/7/2018 09:01

Must be the old contrarian in me, been adding over the past couple of weeks. However, only at 2% so far.

In comparing to GRIO it is worth pointing out 1) the yield is significantly higher at around 6.4% once they hit 5.5p 2) it does not have the regulatory issues faced by ground rents driving values lower.

Also I will put a pint on that they are now trading at a discount. I also estimate income should be around 1.25p for the quarter.

I would rather be buying this here than say EBOX where you are paying 103p for 98p of cash and all the costs of asset aquisition to come and little in the way of income this year.

[spectoacc] 11/7/2018 08:36

Reminds me of GRIO's relentless grind lower, also a semi-RPI divi payer.

[4wingrove] 09/7/2018 10:09

They have performed rubbish sold out and re invested in EBOX

[riverman77] 06/7/2018 16:23

I hold LXI which is similar and seems to be doing well. Not sure what the problem is here, need to look into this one a bit.

[belgraviaboy] 06/7/2018 16:01

Hi Specto

I am anticipating an improving situation.

Last quarter (to 31/3) they managed EPRA EPS of 1.01p. During that quarter there were four properties purchased which I estimate to be worth 0.45p per share per quarter in rental income (pre any finance costs). These would have had limited input to the 1.01p.

Also, they are close to fully invested and the purchases have slowed, therefore the aquisition costs should be significantly lower which have been the main drag on NAV.

That said they are sub scale, however, if they can pay 5.5p covered they will probably be able to get a capital raise away sometime over the next 12 months.

So, not perfect - but at 88p a much better entry point than at IPO.

[spectoacc] 06/7/2018 15:26

Cheap, or fair value? ;) Presumably the 1p XD in May comes off the 90.7p NAV (all things being equal) so is trading at around NAV here.

Tho at least holding a divi-payer means the share price fall isn't quite as bad as it looks on the chart. Not a holder & like @Jonwig, will probably miss the turn when it comes.

Edit - just looking back through the RNS's, it's a pity they couldn't get that £35m capital raising away at 99p in Feb. Don't see them getting another chance to raise at a premium - or possibly even at - NAV. In which case, is c.£80m a sub-standard size for AEWL? Doesn't sound like they want to (or should) increase gearing & now money (& £28.7m of the £30m debt facility) is spent. Could be some thumb-twiddling ahead.

[belgraviaboy] 06/7/2018 15:05

Going cheap....

[belgraviaboy] 12/6/2018 07:23

Great results from Motorpoint this morning - the initial yield of 5.85% on their £8m site looks pretty positive for AEWL

[belgraviaboy] 11/6/2018 14:38

Specto - don't disagree. Paid a smidge over 91p so close to quoted NAV. The yield differential should be addressed by the gearing with debt fixed around 3% until 2025. Elsewhere in my portfolio I am seeing the quality end move out to premiums around 10% e.g. BBOX, SIR which creates its own concerns

[jonwig] 11/6/2018 14:36

@ Spec - at least "retail" not in your list! But neither care homes nor car showrooms are particularly favoured at present.

Pleased to be out. Will probably miss the turn, though.

[spectoacc] 11/6/2018 14:00

Had taken off watchlist - 6% yield maybe, but still trading above NAV (c.90.79p?) and the things they're buying, although on long leases eg 15 years, aren't going to be worth much should the tenant go bust.

"The sector weighting, by value, of the property portfolio as at 27 April 2018 was: Hotels 24.0%; Car showrooms 14.9%; Student accommodation 11.4%; Residential care homes 10.8%; Industrial 20.0%; Leisure 9.9%; Power stations 5.0%; and Petrol stations 4.0%. "

Also, the sort of yields they're buying at are generally at or below the yield the shares are offering - so either paying a little out of capital, or else the gearing (admittedly only 30%) is working for them. Should interest rates rise much, that beneficial effect goes into reverse.

Not been too impressed with costs - over £6m, tho they claim much of that is SDRT - or valuation uplift (generally nowt). Several others beat them hands down with some effective management/sweating of assets, most available at a discount to NAV.

Picking hairs tho - good luck. Will put it back on watchlist but no position yet - think it would have to be on a discount for me, or some indication they've made good purchases in spite of the low yields.

[belgraviaboy] 11/6/2018 13:00

Bought back initial position today. Should give an inflation 'linked' initial yield of over 6% assuming they hit their 5.5p target. Purchase costs already in the written down NAV. However, they are sub scale and will struggle to get a financing away in the near term and the chart is a shocker. Peak pessimism?

[tyranosaurus] 04/6/2018 15:24

Glad I got out of this dog last year.
Hasn`t performed since then.

[speedsgh] 26/4/2018 16:32

Couldn't agree more, Specto.

[spectoacc] 26/4/2018 16:04

Jeez - they're doing what they said they'd do, can't knock them for that, but they'd have to be at least 10p cheaper before I was interested.

[speedsgh] 26/4/2018 15:43

NAV Update and Dividend Declaration -

Highlights

· At 31 March 2018, the fair value independent valuation of the property portfolio was £93.46 million (31 December 2017: £71.42 million), following four acquisitions during the period totalling £21.99 million. On a like-for-like basis the valuation of the property portfolio increased by £0.03 million (0.04%) over the quarter (quarter to 31 December 2017: £0.13 million and 0.76%).

· NAV of £73.09 million or 90.79 pence per share (31 December 2017: £74.28 million or 92.27 pence per share).

· A total of £6.19 million of portfolio acquisition costs have been incurred since the inception of the Group. The main element of these acquisition costs relate to stamp duty, and together with agents, legal and other fees, have led to a reduction in NAV of 7.68 pence per share.

· EPRA earnings per share ("EPRA EPS") for the quarter of 1.01 pence per share (quarter to 31 December 2017: 0.36 pence per share).

· The Group today announces an interim dividend of 1.00 pence per share for the quarter ended 31 March 2018. This follows a dividend of 0.50 pence per share for the quarter to 31 December 2017 and a dividend of 0.50 pence per share for the period since inception to 30 September 2017.

· Utilisation of £28.64 million of the loan facility with Canada Life Investments.

· Portfolio activity during the period included:

o The acquisition of Gazebrook Industrial Park, Dudley and Provincial Park, Sheffield for £10.14 million on 23 January 2018. This acquisition comprises of a set of two industrial units and provides a net initial yield of 6.0% and a weighted average unexpired lease term of 15 years to expiry.

o The acquisition of Mercure City Hotel, Glasgow for £8.03 million on 23 January 2018. This hotel, situated in central Glasgow provides a net initial yield of 6.5% and a weighted average unexpired lease term of 18.5 years.

o The acquisition of Applegreen Petrol Filling Station, Crawley for £3.82 million on 20 February 2018. The acquisition provides a net initial yield of 5.3% and a lease term of 15 years to expiry (no breaks) with three-yearly rental uplifts linked to RPI, capped at 3.5%.

· Post the period end, the Group acquired 500 Chiswick High Road, Chiswick for £2.2m on 4 April 2018. This gymnasium is leased to Snap Fitness for a term of 15 years to expiry with no breaks and provides 5 yearly inflation linked reviews. The transaction reflects a net initial yield of 5.5%.

· A further 2 assets are currently under offer, which would take the Group to fully invested.

[stemis] 26/2/2018 08:16

Yes, 5.3% initial yield is going to struggle support a 5.5% dividend yield on cost of money, even after gearing up, once central costs are taken account of...