Aew Uk Long Lease Reit Share Discussion Threads

[mcgrimes] 18/4/2019 06:42

According to HL, AEWL is currently under a ‘bid situation’.

[orinocor] 15/4/2019 16:04

are you ill?

[jonwig] 11/4/2019 07:57

Spec - yes, Meridian could be bought out. (Reduced rent?) If you look at Google images, there's a lot of kit inside that property of theirs.

[spectoacc] 11/4/2019 07:22

In an offer period as they've said they're looking at all options, but not had (unsurprisingly, in less than 24 hours) any approaches.

I'm in for the NAV gap - don't forget @Jonwig, Meridian may yet turn out to be OK, if a buyer is found. But I'm assuming the 4p comes off the NAV for vacant value.

[spangle93] 11/4/2019 07:17

No longer in offer period



Further to the Company's announcement on 10 April 2019 regarding its strategic review, the Company is now considered to be in an "Offer Period" as defined in the Code.

The Group is not currently in talks with any potential offeror and is not in receipt of any approach with regard to a possible offer.

[jonwig] 11/4/2019 07:15

Technically in offer period:



Latest nav was 97.46p, Meridian takes 4.9p off that, leaving 92.56p. Probably worth a punt on the gap, but I'll just watch.

[littleweed1] 10/4/2019 14:43

I certainly agree with you there wiggy. WPCT is a much likelier winner than this and is simmering under ready to blow. Of course there is no divi there, but I don't care.....

[jonwig] 10/4/2019 14:41

SKY - LXI are pretty active - dispose, acquire - suggesting some out-of-box thinking and off-market dealmaking.

The relatively low yield is surely down to the premium, but also maybe some cash drag from annual fundraising: October seems to be their choice.

More to the point, Meridian Metals ... can anyone explain why they folded? I've looked at the accounts on CH and the main feature (latest 2017) was £65m current creditors vs. £21m net equity. Net cash (but not enough), no bank debt. Then in March 2018 they notified a charge over assets which looks to have been pretty onerous. Accounts to 31 May 2018 are 6 weeks overdue. I guess the bank or creditors foreclosed, but that's no more than a guess.

[johnwig] 10/4/2019 14:34

This reminds me of WPCT. All the silly small investors including me piled in at 100p and now are holding on for grim death at 83p exactly the same as WPCT is currently. WPCT, of course has far brighter prospects for the future.

[skyship] 10/4/2019 13:29

jonwig - well done for still holding your LXI. But with a yield of just 4.3% and a 12% NAV PREMIUM (!) - time to cash that one in I would say...

Incidentally, I've added LXI to the CP+ Header, not sure why I hadn't picked up that omission. Perhaps because it has a low profile and no-one requested it.

[spectoacc] 10/4/2019 12:02

Fair point @Jonwig :)

[jonwig] 10/4/2019 11:39

A reasonably close comparison would be with LXI REIT which has been a big success. But after due diligence, would they want the buildings? And if they took the whole company (on an all-share basis) what discount to offer?

As a happy holder of LXI, I hope they don't!

[belgraviaboy] 10/4/2019 11:25

True price discovery for these assets lies ahead

[spectoacc] 10/4/2019 11:00

There's not many focus on the same very long length lease (long unless the tenant goes bust ;) )

MMs still got plenty of stock, to judge by the quotes.

[belgraviaboy] 10/4/2019 10:34

I see it merging with another larger REIT...

[spectoacc] 10/4/2019 10:10

Interesting! Board not asleep on the job after all, tho my guess is that they end up sticking with them. A lot of costs involved in amassing the portfolio (stamp, legals etc), can't see them wanting to sell it off again, nor perhaps anyone else wanting to take it over.

Having said that - gone long at decent prices, for the gap to NAV. Clearly all options are open.

[speedsgh] 10/4/2019 10:08

Notice Served on Manager and Strategic Review -

In view of the sub-scale size of the Group, its performance since IPO, and the recent news in respect of Meridian Metal Trading Limited, the Board is reviewing the options for the future of AEWL.

The Board will seek to achieve value for shareholders either by expanding the Group's equity and asset base to achieve full dividend cover, considering offers from interested parties, or by selling the Group's portfolio and returning funds to shareholders.

To ensure that all options can be considered, the Board has today served protective notice of termination of the investment management agreement with AEW UK Investment Management LLP (which will expire on 9th April 2020). Ultimately, after all options have been considered, the Board may decide to continue to pursue the Group's existing strategy with AEW UK Investment Management LLP.

[spectoacc] 05/4/2019 15:29

That's the best Liberum can do? Far more informative on here, with no access to management.

Meridian may turn out fine, who knows - either a buyer agrees to keep paying the same rent, or it re-lets relatively easily. But the fact remains - they didn't purchase it that long ago, clearly weren't too concerned at the covenant (isn't as if Meridian have gone under 5 years later or during a recession), and were happy to make it the largest holding in the fund and pay c.37% over vacant value.

That potentially now uncovered divi was never much to write home about either. AEWL is no AEWU (for @Chucko ;) )

[davebowler] 05/4/2019 09:54

Liberum;
Potential 4% NAV writedown from tenant administration

Mkt Cap £67m | Prem/(disc) -14.8% | Div yield 6.6%

Event

Meridian Metal Trading, AEW UK Long Lease's largest tenant, has entered administration. Meridian occupies two industrial assets within AEW UK Long Lease REIT's portfolio and accounts for just under 10% of the annualised portfolio rental income. Meridian is up to date on all of its rental payments including a recent payment made for the quarter to 24 June 2019.

The two properties occupied by Meridan were valued at £10.75m at 31 December 2018 (9.4% of portfolio value). The vacant possession value is £6.8m. The potential impact on AEW UK Long Lease's NAV is 4 pence per share assuming no buyers for Meridian emerge.

Liberum view

The administrator is seeking a buyer for the business and has stated that a number of interested parties have come forward. Dividend cover in Q4 2018 was 1.03x and we estimate recent acquisitions have increased it to c.1.1x. We estimate the potential loss of the £0.66m of annualised rental income from Meridian would reduce the pro-forma dividend cover to c.0.95x before the impact of void costs.

[chucko1] 05/4/2019 08:37

I’m on the ball this morning - sharp as a pillow!

[spectoacc] 05/4/2019 08:20

Thanks @chucko, edited ;)

[chucko1] 05/4/2019 08:06

SpectoAcc, agreed!

[spectoacc] 05/4/2019 07:40

As an aside, re SHED above (out this morning):

"At the same time the Company has purchased a logistics property in Thatcham for a total consideration of GBP3.4 million. The purchase price represents a net initial yield of 5.9%. The site has a rent of GBP7.97 per sq ft and a reversionary yield of c. 7.0%"

Can't say the yields are that sparkling, and having to take what they say as being true, but a good example of "no matter if the tenant goes bust, we'll get more rent if they leave". Not the case when you're buying on RPI-linked long leases.

Also - everyone points out AEWL fails the size/diversification test, which is true, but - with relatively few properties to manage, surely a year ago they could see that Meridian weren't the best covenant?

[spectoacc] 04/4/2019 07:20

Can only hope the vacant valuations (c.40% below what they paid) are too pessimistic. Or more likely, that they re-let easily. They (at least notionally) sound & look fairly good buildings.

What would certainly concern me is that industrial has been going gangbusters lately, both in rents and capital values, yet this vacant valuation is c.40% less than they paid barely a year ago. What happens when a few leisure, car showrooms etc go? Or in the inevitable recession?

Very long leases and RPI-linked rent increases are only good if the tenants remain solvent, and/or you've bought cheaply enough in the first place. Compare to eg SHED, who buy at low £/sq ft and with high reversionary values. You almost want the tenants to leave in those situations!

May yet be an OK resolution with Meridian of course, but shows where the risk lies.