Aew Uk Long Lease Reit Share Discussion Threads

[edinandy] 14/8/2019 15:26

Agreed in part but I think a new manager and strategy could be implemented. Key is getting started again; it’s hard but the principle of what the company is proposing is attractive. It’s delivery has been poor

[spectoacc] 14/8/2019 14:24

@Edinandy - at this discount to NAV, I'd suggest not. LTV already what, 35%? 40% seems top end for most of these property ITs, wouldn't take many more Meridians to test it. So they can't raise cash anywhere near NAV, can't borrow, and Board weren't interested in mergers etc.

AEWL should work as a partially RPI-linked, long-life, decent yield govnt bond alternative. Trouble is, can you see none of their tenants going pop in a recession?

[edinandy] 14/8/2019 14:17

I don’t think a new manager and rebased costs are such a bad thing here. Key for me is can they grow and get away from sub scale nature without taking risks.

[spectoacc] 14/8/2019 13:24

Lol @chucko1 - like doing nothing you mean? ;)

Looks like a new manager in 2020 then, but under what terms I wonder.

[chucko1] 14/8/2019 13:19

If they paid only £3.2k, they might have ended up doing something really stupid. Don’t be so cheap!

[spectoacc] 14/8/2019 12:18

I didn't get the impression any divi cut was coming - but rises certainly seem to be on hold until fully covered again.

Was also a comment about "if RPI inflation is higher, income will be higher". And a 1.375p divi declaration RNS on Thursday.

Also: "Looking forward, the 12-month rent free period granted on the Meridian Steel leases will adversely impact the cash dividend cover for the financial year to 30 June 2020. "

And the bloody review that went nowhere cost £32k! £3.2k, fair enough - but £32k?

And - embarrassed to say - I missed on the day that AEW are actually going to be replaced?
"The Board is exploring options to recruit a property manager to manage the Group's properties following the expiry of AEW UK Investment Management LLP's notice period. "

[chucko1] 14/8/2019 12:17

I could not resolve that ambiguity either then or now!

[skyship] 14/8/2019 12:12

Below are a few comments on dividend policy, the last two within the past week. Might the suggestion here be that we will see a slight dividend cut this year to, say, 4.75p; then hopefully restored to 5.5p for Jun’21 when the Meridian rent kicks back in.

==============================================

09/08/19:
“Without this accrual and non-cash adjustment, the cash earnings were 4.86 pence per share (unaudited) reflecting 88.4% cash dividend cover for the year.”

07/08/19:
“The Board of AEWL will implement a cost reduction exercise, with the objective of delivering a fully cash covered dividend, at or close to the original dividend target indicated at the time of the Group's IPO, for the entire financial year ending 30 June 2021.”

08/09/17:
“The Company is targeting an annual dividend of 5.5 pence per share paid quarterly, once fully invested and levered, with an ambition to grow in line with UK inflation thereafter.”

[spectoacc] 14/8/2019 08:19

AEWL are pretty open & forthcoming about their property:



The problem is, no one has thought to update it, particularly Meridian:

Investment Summary
Modern industrial unit located just over 1 mile from Junction 35 of the M1
Fully let to the strong covenant of Meridian Metals, as at January 2018
New 15 year lease providing 5 yearly RPI linked reviews
Investment value well supported by vacant possession value

As we now know - "..Well supported by vacant possession value" was utter b*llocks, and found out within barely a year.

As was "...The strong covenant of..".

Much of their property looks good - long leases, inflation linkage etc - but some of it you have to think "If that tenant went bust, how is that site worth multi millions?". The Audi site in Huddersfield for eg, £6.3m - what's that worth if/when vacant, with vacant car dealerships everywhere. One of the few with no mention of the lease terms either.

[spectoacc] 13/8/2019 07:25

78.6k dumped under the bid yesterday so maybe - if someone had say 500k to dump, no idea where they'd find buyers. I've enough already! But can see it going lower now the review has proven such a damp squib.

[badtime] 12/8/2019 22:20

Seller back?

[spectoacc] 08/8/2019 11:18

Sitting on the lot here. They are sub-scale and they need to prove they can hit the divi cover date, but when you look at what bond yields are doing lately, a "long lease" investment is cheap IMO.

Can certainly fall if seller returns tho.

[skyship] 08/8/2019 11:16

BT - sorry, but actually sold a few days ago when the Market did its collapse, so wanted to improve liquidity.

Also tended to think that good news comes fast, bad news comes slowly; though had thought that the minor weakness in AEWU signalled a tie-up.

Still, that said, the yield should underwrite the price here or hereabouts, so no great damage for holders...

[badtime] 08/8/2019 10:19

I'm surprised Skyship hasn't posted but then did he make a bolt for it yesterday:)

[cwa1] 07/8/2019 16:06

Hmmmm. Just short of big things then....

[chucko1] 07/8/2019 15:53

So clearly leading to some throwing in the towel today - cannot face the likely boredom of owning this! Great yield now, possibly almost covered (or will be post cost-cutting).

[spangle93] 07/8/2019 15:35

Update provided

But I don't think it will do big things



"The Board has concluded that none of the proposals reflect the true value of the Group and therefore the Board believes that none of these options are currently in the best interests of shareholders"

We've concluded the review, and frankly, not much is going to change, other than we're starting a cost reduction exercise, which begs the question why you haven't done that already

[edinandy] 06/8/2019 18:33

Seems very unprofessional not to provide any update. Expecting big things when they do announce!

[spectoacc] 29/7/2019 17:32

Expecting some in a few weeks.

[edinandy] 29/7/2019 14:33

Any news on this?

[spectoacc] 22/7/2019 11:19

Nibbled a few more, still getting inside the mid price.

[spectoacc] 09/7/2019 16:24

Quietly confident we'll go back to 85p regardless :) But get there quicker if you're right!

[skyship] 09/7/2019 15:12

hmm.....current share price c79p. My outcome would likely see the share price at c85p; whereas Specto's perhaps more realistic outcome would take us back to c75p.

I'll stay positive, but keep a cash reserve should the share price fall below 75p. At 75p the yield = 7.33%.