Aew Uk Reit Share Discussion Threads

[spectoacc] 08/5/2019 07:29

Agree on KIDs - even for equity funds they're deft. When times are good, they show good times continuing. As soon as we have a bear market again, they'll start showing doom & gloom.

Been thinking more on RGL's performance fee but a discussion for another thread.

[chucko1] 07/5/2019 18:00

What seems to concern a number of contributors on another RGL board are the “sky-high̶1; costs involved in running this REIT. They cite the KID which appears to show annual costs as high as 6% or so. It is similar for some other REITs. Performance fees appear to be a part of this, and I think it is that issue which is concerning people.

All I can say is that these KIDs are worth less than used toilet paper. Under a fairly recent EU directive, all funds have to estimate the all-in costs of a fund as well as giving an idea of potential upside and downside outcomes over certain timeframes. They use a purely formulaic approach which works acceptably for most funds (usually pure equity funds), but is laughable for a number of others. For REITs, it looks as though they assume the entire value of the portfolio is purchased each year, and hence SDLT is regarded as an annual cost. That actually makes more sense than the assumptions they employ to work out the potential losses in an adverse scenario.

Please, just use your own common sense!!

[spectoacc] 07/5/2019 17:29

@chucko1 - had to look it up, and once again I'm going O/T, but RGL:

"In accordance with the management arrangements, the Asset Manager and Investment Manager are each entitled to a 50% share of a performance fee of 15% of total shareholder return in excess of an annual hurdle rate of 8%. The initial performance fee period ran from 6 November 2015 to 31 December 2018 resulting in an inaugural performance fee crystallisation of £8.9m. Further details of the performance fee can be found in the full Annual Report and Accounts 2018."

So 15% of everything over the 8%, which they must be most of the way to with income.

[chucko1] 07/5/2019 14:50

@Spectoacc, it’s only after a further 8% from high water mark that performance fees are deducted, if my memory is good. That does not worry me, although it would become a potential issue in a higher interest rate environment.

[spectoacc] 07/5/2019 14:38

@nimbo1 whereas I've sold RGL today ;) Not particularly negative on them, but had a good run & never been comfortable with their performance fee scheme, which has the potential to make costs look very high (tho only if they're successful of course).

AEWU is solely income/discount for me. WHR has potential to improve NAV from here, & SHED is my dark horse NAV riser.

[nimbo1] 07/5/2019 14:05

Im not negative on AEWU - 9% income is fantastic - for me it was a short term trade which looks like it may backfire.

[nimbo1] 07/5/2019 14:04

My thought process was out of all my reit holdings this is probably my least favourite - I hold the same amount in £ of WHR and Regional Reit - I like the fact they have specialist strategies and appear to be able to create NAV growth. I don't see AEWU generating significant NAV growth - so for me it was always about the discount moving around.

Looking at level2 I was hasty to sell as there is now only one mm selling on 95.8...so it will no doubt move higher.

[chucko1] 07/5/2019 13:47

I’m not sure I’m bothered what the seller is doing. It seems a little hamfisted to sell at 90.3p when there is clearly buying interest at higher prices, regardless of how much is known to be sold.

Here we are at over 94 bid, and it’s not as though the buyers at 90.3p are rushing to exit here. Yes, taking a profit is fine, but how long do you want to risk being out of this market for at 9% div yield? Plus stamp duty.

But then I’m in this for the long term income, so I’m just one constituent of this market. Respect all strategies.

[nimbo1] 07/5/2019 12:20

you may well be right - in which case I'll kick myself ; )

[spectoacc] 07/5/2019 11:56

Good luck all, can't go wrong taking a profit, though I find it tends to not work as often as it does work, when trying to nick a few p! If the seller's done, we're going back to a quid ;)

[bhafcseagull] 07/5/2019 11:32

I have also decided to sell 20,000 shares in 2 batches which both showed as buys. I have another 10,000 at a slightly higher price to see if they shift but will keep the remaining 20,000 for a while and see what goes. I have bought a load of Centrica today just to see if i can make a few quid out of the dividend but i will look to offload as soon as i can.

[nimbo1] 07/5/2019 11:16

Not sure where this liquidity has come from but I've taken the opportunity to sell my entire holding and will aim to buy back lower after ex div, I would need a price lower than 92.75 to benefit. May not work of course.

[bhafcseagull] 07/5/2019 10:04

Nothing to do with the xdivi coming soon?

[spectoacc] 07/5/2019 09:03

@LG - quite possibly - however, as noted above, there's no RNS to suggest they'd actually sold another 1%, which is odd. There had to be a seller there, could buy almost at bid for a while.

At some point, the seller has to stop (inevitably).

[lord gnome] 07/5/2019 09:00

Back down to 90p then?

[eeza] 07/5/2019 08:59

The seller here is a bit more canny than the usual blinkered 'dump at any price'. They always take the foot off the gas and let the share price recover before selling more.

[spectoacc] 07/5/2019 08:41

Nice small dcb in AEWU - seen no Holdings RNS to suggest previous seller filled, but as soon as they stop/pause, the buyers send it back up.

[spectoacc] 03/5/2019 16:48

@Sleepy - INTU's recent deal suggests NAV may be not far off.

The issue is: where is NAV in say 2 years time? ie will the High St stage a miraculous recovery? There's signs some retail can be successful - just (generally) not the legacy stuff, the tired shopping centres, anchored by the likes of Debenhams. Once they start getting vacancies, the empty rates kick in, the rents fall, the footfall drops away....

Without debt, you'd still be buying some of these REITS on c.50% NAV discounts. With debt, you have to wonder who survives the carnage.

Perhaps a good example of why you'd never buy based solely on NAV, and also never ignore it. And also why you've got to look very carefully at cashflow/yields, and not trust that much either. A lot of the legacy portfolios are on rents that aren't going to be seen that high next time. (Upwards-only rent reviews are no use when the tenant CVAs).

[Edit - at risk of going OT again, today's MoneyWeek has some very interesting comment about HMSO, INTU, BLND & LAND, basically pointing out the extent of their exposure to CVA/distressed tenants. The co's quote their exposure based on rent %, but on % of shopping centre occupancy, it's way, way higher.
Back to earlier point about what happens to footfall when the anchor tenant disappears].

[skyship] 03/5/2019 15:42

Sleepy - you have to look at the sector allocation: Office, Industrial, Retail, Retail Warehouse, etcetcetc. The majors have a major allocation to Retail; whereas the secondaries most of us are following and are invested in (RGL, AEWU, HCFT in my case) are not so exposed and the NAVs are tested by active management, especially in the case of RGL.

[sleepy] 03/5/2019 14:51

Thank you Spec. If the NAV isn’t believed for the majors why should it be believed elsewhere?

[spectoacc] 03/5/2019 14:32

To be fair, INTU's recent JV (Cale St/Kuwait buying in to Derby shopping centre) was at around NAV. But also horror stories of eg shopping centres being sold for £1 - empty rates can create negative worth.

Bottom line is - who'll survive. Again, if you've (for eg) £150m of property, £75m of debt against it, 70% max LTV (as per CAL), & that property NAV falls on CVAs, vacancies, lack of investment, death of High St, no alternative uses, at say 10% a year, in 3 years you've breached your LTV covenants. Not saying that means you're definitely bust, but good luck getting RI's away.

Edit - perhaps the wrong thread for it. These aren't problems AEWU has, or is likely to have. But maybe the travails of the class has given us some reasonable bargains. Hope so, because I seem to hold a long list of them! (AEWU, NRR, SHED, WHR, RLE, AEWL...).

[skyship] 03/5/2019 14:09

"Property Week reports that Cerberus are to sell off the Leopard portfolio of shopping centres. The six malls are expected to fetch significantly less than the £81.5m paid for them almost five years ago."

Will be interesting to see the outcome of this attempted sale.

[rcturner2] 03/5/2019 10:41

Stockopedia's report on INTU makes grim reading, I would not touch it.

[spectoacc] 03/5/2019 09:50

@Sleepy - or INTU, or CAL, or even the giants (BLND/LAND). Isn't just that NAV isn't believed (valuers behind the curve, High St retail only going one way). If you take a fairly comfortable-sounding 50% LTV, then assume say a quarter off the valuation a few years down the line, you've a serious problem.

From memory, CAL's LTV is around 50%, and headroom up to 70%, which sounds great. But that's only a relatively small drop needed to risk wiping out shareholders. Isn't hard to see say a 15% drop in valuations come through after a few more CVAs etc.

The more the REITs are Hammered (excuse the pun), the fewer buyers, and the lower the future valuations. And that's even if you assume current valuations are accurate.

Warehouses/industrial more of a sweet spot - benefitting from demise of High St, not suffering from it. Active managers (eg NRR, RGL, UAI) also seem able to do well, and most (perhaps ex RGL) on low LTV's. And they're holding assets likely to revalue up rather than down (as indeed RGL has demonstrated).

It's the "legacy" portfolios that look nasty - the likes of CAL, INTU & HMSO in particular. Tired shopping centres that if they're not half empty now, you can imagine being half empty in 5 years time. And little money spent (or available) for tarting them up. Witness RDI's recent standstill with Aviva.

HMSO/INTU potentially suffering from the John Whittaker effect too - an interesting potential overhang on the INTU stake he's borrowed heavily against.

Quite a few getting into "cheap if they can survive" territory mind.

[sleepy] 03/5/2019 09:41

Anyone care to explain the difference between NAV and market cap in Hammerson?