Aew Uk Reit Share Discussion Threads

[2wild] 18/3/2020 10:36

I think you're on the wrong thread, current net LTV circa 20% on AEWU.

[tartshagger] 18/3/2020 10:03

This must be close to breaking it's lending covenants now. I'm surprised the directors haven't issued an rns, unless they are indisposed with the Wuhan virus like a lot in the City

[spectoacc] 18/3/2020 09:32

Seen my first Unit Trust suspend redemptions so yes - some truth there. But all depends how bad it gets. Paper at the weekend said one of the big problems is that in a large building purchase, up to 50 different professionals can be involved (far fewer at AEWU's sizes I'm sure). But if we go to lockdown, which we will soon, how do you send a surveyor out for eg? How do you view the building, speak to tenants, hold meetings with the lawyers? Not saying nothing can get done - but saying there's sand in the gears atm.

PS Not checked your cash assertion - at least £7m, how much more?

[lowtrawler] 18/3/2020 09:28

It feels overdone to me. Particularly as the recent capital raise will allow us to pick up distressed assets at a song when the time is right.

[spectoacc] 18/3/2020 09:25

@Lowtrawler - with a quarter in retail/leisure, you could possibly write off 25% of both rent and NAV in a blink. Say 40% off the remainder (falls were massively larger in the financial crisis). Add in the uncertainty of the duration of all this - 3 months, 6 months, a year, 18 months? That leads to a deep discount being warranted on top of the calc above.

Or - things may all turn out fine! But I strongly suspect the world will never be quite the same again. Globalisation, trade flows, free movement across borders, just-in-time supply chains, food production, NHS funding..

[jon123] 18/3/2020 09:19

who knows what the rental income will be reduced by thats the problem

[lowtrawler] 18/3/2020 09:17

We're about 40% down from peak now. Are the properties worth 40% less? Is rental income going to reduce by 40%? With the recent capital raise, we're effectively debt free.

[spectoacc] 18/3/2020 09:16

Sunak - "£350bn, 15% of GDP".

Market - meh.

Right from the get-go, they've not twigged that you can't solve a simultaneous demand and supply issue with monetary policy.

Some stunning bargains out there - if we were still in a normal world.

AEWU, if anything, suffering less than many others.

[spectoacc] 17/3/2020 09:30

@nikrl - even I'm quiet today, battling the MMs.

Totally different feel to the market today, all order (whether up or down) gone out of it.

[spectoacc] 17/3/2020 07:07

Got the calculator out again last night - my base case is a very broad 200k extra deaths over the next c.12 months, plus or minus 150k. Won't look pretty, but there's c.10k deaths a week in the UK each and every week normally. At the lower end that's only 10 additional weeks, tho obviously not nice if it's you or a loved one.

That includes the effect of there being no spare ICU beds - you don't want to break a leg, need a blood transfusion, or be in a car accident for the remainder of 2020.

Haven't bothered with a worst-case! 2.9m deaths stands as the "can't stop it going through the population" mid case.

The extended timescale is a big concern & unknown & economic hit.

[spectoacc] 16/3/2020 16:44

Many younger ones do need hospitalisation, look at the pictures from Italy. The difference is, they tend to get proritised for the beds, with the numbers relatively very low (eg 20k with it in Italy, so c.3k in total needing beds).

The assumption that it will go quiet in summer, or disappear altogether, or that there'll definitely be a vaccine, or that previously having it will provide immunity, is all so far unproven. There's no vaccine at all for several coronaviruses.

I agree shutting away the over-70's is wise.

[orinocor] 16/3/2020 16:41

You are assuming we don't quarantine the at-risk group. Most of the at-risk group are not working so they go into quarantine until summer, when hopefully it dies off, or next year when there is a vaccine. The rest of us either get it and go to bed for a week or don't get it at all. Most of under 70 age group will not need hospitalisation

[spectoacc] 16/3/2020 16:32

@orinocor - correct, when there's ventilators/staff to man them. Sadly, very different when there isn't. Most younger people who need treatment, and get it, will live. Govnt now estimating 7.9m will need hospital treatment. Sound dramatic? Well, if 80% get it (is highly infectious), out of a population of over 60m, and the 15% need hospital treatment as have needed it elsewhere, you're about at 7.9m.

There's 2.4 ICU beds per 1,000 here, perhaps that can be doubled. The staff can't, many of whom will be off sick with it (c.20%) at any one time, and others having to look after their kids who are no longer at school. [Edit - forgot to mention that those 2.4 beds already very much in use!].

For death rates, the calculation is c.500k extra deaths, and staggeringly that's on the 1% mortality rate, not Italy's 6%. What will it climb to when there's no hospital space? 6% is 2.9m dead - starting to sound like scare-mongering?

Heck, it may all end well. But so far it's going exactly as the virologists said it would, if not slightly worse. No wonder they've gone for economy-wrecking full lock-downs on the continent, even tho IMO it's completely daft (the virus won't go away for long - then what do you do, lock everyone down again?).

This is a game-changer IMO, tho I'd be very very happy to be proven wrong.

Edit - @chucko1, agree we won't starve. But we won't easily replace a 50% fall in total food availability. It will, at least, resolve the obesity crisis. (Actually it won't - we'll all be living on wheat, something we produce lots of. Unfortunately the spud crop is going to be a major issue this year due to the wet ground).

Markets aren't pricing the downside - there's chaos with just the relatively tiny number of cases/deaths Italy has.

[chucko1] 16/3/2020 16:29

The food is irrelevant. Either eat slightly less or eat more local food. Cheddar, not St. Felicien. Cox’s, not French delicious. Welsh, not New Zealand. Etc. Substitution switch might take time, but some food flows will easily gain permission under national lockdowns, anyway.

I just bought two chickens and they have already supplied me with 2 eggs. If we all do that ....

[orinocor] 16/3/2020 16:19

A 1% death rate is not armageddon. Elderly and infirm are at risk, everyone else of normal working age will be in bed for a week then back to work.

[nickrl] 16/3/2020 13:53

Specto spot on this is so severe people cant compute whats happening, cant believe its not going to be sorted its got well beyond a medical issue.

[spectoacc] 16/3/2020 09:35

Potentially far worse even than that. We import nearly half our food, who is going to be supplying it when every country is moving to lockdown?

It isn't that the worst-case is definitely going to happen (deaths, collapsing healthcare systems, fall in food production) - it's that the market still isn't remotely pricing it in.

The worst case sees indebted companies - ie most of them - no longer owned by their shareholders.

[lowtrawler] 16/3/2020 09:20

The panic still hasn't fully set in as the USA have yet to realise what is coming. Nobody has a clear view of how this is going to impact individual sectors but governments everywhere are going to have to step in and bail out companies. It is likely to be far more expensive than the banking crisis.

[spectoacc] 16/3/2020 08:32

@nickr1 - today very much making my point!

[spectoacc] 15/3/2020 11:29

I see we're house-arresting the over 70's next week - have to say, that seems considerably more sensible than the lockdown countries.

There'll have to be some sort of rent holiday/govnt help - and corresponding dividend holiday I'd guess. I think we'd all take that - miss a quarter or two of divis to keep the show on the road. Larger issues at stake.

[nickrl] 15/3/2020 10:47

Specto Propel have a news item this morning that "Carluccio’s to seek three-month rent holiday as operators ramp up talks with landlords over coronavirus impact" so not so sure that landlords with leisure can be assured to get this quarters rent or next for that matter. Short term AEWU aren't materially impacted by leisure but other REITs will be exposed.

[sleepy] 15/3/2020 09:57

March 25 is the quarter day and the 31 March valuations will presumably appear in April

[spectoacc] 15/3/2020 08:31

Agreed, even with business dropping to zero, rent will have been paid until the next due date.

Had forgotten AEWU nearly a quarter "Retail/leisure". But do prefer things where the NAV far higher to begin with.

Even having called it (*cough*), I'm amazing how fast it's moving - Spain/France's action is just ridiculous.

[skyship] 14/3/2020 14:08

All eyes on the RGL statement on the 26th. A very professional management group, so what they have to say on the regional propco Market and on Covid-19 will certainly set my tone for the sector.

Only problem is that the 26th is still 9 working days away...

[spectoacc] 14/3/2020 13:31

In reply to both:

@nickrl - after 20 years on here, I can tell you it always goes very quiet when the market falls. Sometimes feel i'm the only one posting ;) Not necessarily irrational - people switch off, don't watch, don't want to talk about it, because they don't want to panic themselves into selling. Generally, that's the right call (tho I could make a comment on what the FTSE 100 was on the last day of 1999).

Re bailouts - there'll be some, I'm sure, just as there were with the banks (wrongly, tho I have no counter-factual). But a Spanish/European/UK airline like IAG? What about eg Restaurant Group? Or every leisure, travel, tourism, events, bus, rail co?

There's going to be job losses and just about every company is going to get into difficulty, because just about every company is geared up to their eyeballs.

@chucko1 - "normal" likely a year away, post-vaccine. My concern is twofold:

1. Markets always over-react in both directions. This one has yet to even price it in!
2. This is wave 1, we relapse again in autumn - what will the markets/the companies that have survived do then?

The worst-case scenario may not come to pass, but just 17,000 cases in Italy have brought the country to its knees. America's slow reaction, expensive healthcare system, and dodgy health demographic could have millions of cases.

I've gone wildly off-topic - AEWU is at least moderately geared, and there's worse sectors to be in than commercial property.