Alpha Share Discussion Threads

[alphahunter] 13/3/2015 16:19

Can't short the stock anyway.
Can't buy it either on IG, closing deals only as at today it seems.


The press release raises far more questions than provides answers, with respect to the cause of higher vacancies, like-for-like value of properties down, investment/maintenance/upkeep required to keep value up / tenants in,...

The only vaguely positive is talks of "oderly realisation". But then what are the realisation cost? 10% of total portfolio? May be a bonus for the IM and Board for their hard work selling off?

It may be a spreadsheet buy but it looks like a real-life sell IMHO.

But then again I took a long punt three weks ago in a London-listed Ukranian mining company, which could just be that: a spreadsheet buy, a real-life sell.

Rgds

[mgalle] 13/3/2015 14:52

Maybe Alph should just ask Barc for the 6p per share and let them have it.

Strange no shorters posting today?

[senor_sensible] 13/3/2015 13:47

with 12 mil in the bank, a 3rd party REIT with adequate LTV headroom could buy this company using our own cash, it's not funny.

[mgalle] 13/3/2015 13:17

I am still hoping that Alph will be able to move away from Barc – even a shadow bank would be better (and that the loan will be in Euros).

I getting the feeling that Barc has looked through the books and came up with an interest rate that would stop any improvement (we had worse economic conditions than they thought) and even if property is sold they have found an extra charge that just counters the improvement.

[senor_sensible] 13/3/2015 10:58

Property valuation as at end of Dec 2014, when was the valuation performed. was this June 2014?

If alph sell all their property at book value and pay off the debt this leaves about 13 mil to be divied up between shareholders, approx. 11-12p per share.

if this is the route they are taking then hope they speed up, otherwise if they re-finance they can get rid of the punitive interest rates on recent debt which would improve the profitability. either needs to be a good short term play, or a good long term play depending on their strategy. One thing I am sure of is Barx would refer to provide commercial finance to a REIT than having property portfolio on it's books so I am pretty sure a shareholder beneficial resolution is more than possible here.

[cjohn] 13/3/2015 10:49

Yes, if they do manage a re-financing, there's obvious value in the long run.

[mgalle] 13/3/2015 10:37

Glad you made a profit CJohn

Not looking good at all. Not surprised about the property valuation down grade or the caveat that its based on Alph been a willing seller.

Will not help with getting a loan. There must be some hope or Alph would not have extended the loan.

[cjohn] 13/3/2015 09:38

Well, they obviously weren't going to be prepared on a going concern basis!

I should add that I've sold out making a 60% loss on my original buy, and a 100% gain on my top up. So a lot of heat for negligible gain.

[sleepy] 13/3/2015 09:05

Accounts not prepared on a going concern basis

[senor_sensible] 13/3/2015 08:39

12.4 Mil cash in the bank, market cap is 2.35mil

loans (which in include the 25mil hedge settlement) are less than the value of the property, at end of Dec 2014 using the valuation from June 2014. so as they are disposed or re-financed this 12 mil cash will increase.

Once the finance is sorted out with a more favourable interest rate we will see the fortunes here improve drastically. IMO this is the bottom, still risks but the potential upside is large.

Market overview

France

The French economy grew only marginally in 2014 with small increases in the third and fourth quarters. Gross Domestic Product ('GDP') increased by 0.4% for the year. In December 2014, manufacturing output was 0.5% lower year-on-year and the unemployment rate for mainland France in the third quarter of 2014 rose slightly to stand at 9.9%. Linked to the wider economic context, household spending showed signs of increasing towards the end of the year but finished the year with a marginal decrease of 0.2% overall. Inflation has moderated further with the growth rate of the Consumer Prices Index standing at 0.1% per annum at the end of December 2014. The economy is expected to remain generally subdued for the remainder of 2015.

Against this challenging economic background, the property investment market returned to pre-crisis volumes with approximately €22.6 billion invested in commercial real estate in France in 2014 representing a 40% increase compared to 2013. This volume was boosted by a number of large, prime asset transactions being concluded which represented 46% of the total volume. Traditional French investors increased to approximately 60% by volume of the market, with the next largest group being North American investors (14%) followed by Middle Eastern investors (6%). Office investment remained the highest volume sector and accounted for €14.6 billion representing 65% of the total investment in France and an increase of 40% in volume compared to 2013. Logistics and industrial investment totalled €0.9 billion and retail investment reached €6.1 billion.

Of the Trust's total property portfolio, 92% is in France, 84% is in the Ile-de-France and 64% is in Ile-de-France office and business park space.

The Economy of Ile-de-France

Paris and the surrounding region, better known as Ile-de-France, accounts for about a fifth of the French population but contributes nearly one third of French GDP. It is one of the main players in the global economy and is the largest European region by GDP. By population the Ile-de-France metropolis ranks twentieth globally, but ranked by GDP it is the fifth major metropolis in the world after the metropolitan areas of Tokyo, Greater New York, Los Angeles and Osaka.

In Europe, the only city that is comparable economically to Paris is London: taking the wider metropolitan areas these two regions can be considered broadly similar in GDP terms. It should be noted that the GDP of these two metropolitan areas far exceeds those of all other European cities, whether considering the Dutch Randstad, the conurbation Rhine-Ruhr and Rhine-Main, Brussels or Berlin.

With employment of over 5.3 million, Ile-de-France holds a prominent place in the national economy and many national and international companies have their headquarters in the region because of its high quality as a business location. The Ile-de-France has the world's third largest concentration of Fortune 500 head offices.

The Ile-de-France economy remains extremely diverse compared to other cities of its size with a large industrial base and one of the most important agricultural areas in France as well as being a pre-eminent global tourist destination.

Its economy is more diversified than London (with its emphasis on financial markets) or Los Angeles (film and entertainment) and Paris is not overly dependent on any one sector. Even categorizing Ile-de-France as predominantly a services-based economy, its industrial base which accounts for 16% of the region's GDP, remains very important as the region is a major European production centre, which has preserved its competitiveness by increasing its proportion of investment in research and development where it ranks as Europe's number one region for R&D expenditure and personnel. All of these activities are supported by an integrated freight and transport network.

The lack of economic growth at present, combined with the unclear business outlook means that occupiers remain cautious and negotiations with tenants tend to be long and drawn out. In this environment some companies have been reluctant to commit to new premises and many have postponed plans to move, instead opting to renegotiate leases with existing landlords. Nevertheless, after a disappointing third quarter, activity picked up in the last three months of the year bringing annual take-up in 2014 to 2.1 million square metres, an increase of about 13% over 2013 so there are tentative signs of an improvement in the market and this will need to be maintained for this effect to ripple out to more peripheral locations. The average office rent in Ile-de-France has remained broadly stable at €297 per square metre per annum and the office vacancy rate for the Paris region increased slightly to 7.2%. However, on the supply side there is little speculative development due to the difficulty in finding finance and the risks associated with the current market conditions which have made developers cautious of undertaking new schemes without pre-lettings in place.

National take-up in the logistics sector in 2014 reached approximately 2.4 million square metres, which was 13% below the level for 2013 despite the fact that 0.8 million square metres were transacted in the Ile-de-France representing a 46% increase over 2013 and the highest volume since 2011.

Spain

There have been six consecutive quarters of growth in the Spanish economy and this has resulted in an increase in GDP of 2% for 2014. The increase in economic activity combined with the government's efforts to reform the labour market have resulted in a 2% decrease in the unemployment rate from the third quarter of 2013 to the fourth quarter of 2014 when it stood at 23.7%. The near term outlook for the Spanish economy shows continuing signs of gradual improvement.

[senor_sensible] 12/3/2015 09:56

QE has started providing more liquidity to lenders and the £ to Euro rate might make Barx take a long term view of their position here rather than chipping out with a weaker bag of euro swag.

Personally I would sooner see a different finance company but I can see barx still wanting an interest here and think a re-finance from Barx is equally on the cards.

Risk Reward odds, as time goes by I see less risk and more reward. but that has not even factored into the pricing yet and this is IMO still on the very cheap end after taking into account all the known risks

[alphahunter] 27/2/2015 12:31

Partly so Senor.
Thanks anyway.

My point is that investing in ALPH on the basis of QE is a red herring and should be based on a pure risk/reward stock picking as you do.
It is only relevant, at best, to well financed large and growing commercial/industrial trusts with a low concentration of clients, and there are half a dozen listed on the French market, where a top-down investment view may be taken.

As far as rents are concerned, long-term lease are adjusted annually based on a particular quarterly-calculated index that has nothing to do with Draghi. I sold my position at a negligeable % loss when I realised belatedly that the index was turning negative at the time. It's only at time of vacancy that rents are based on market supply and demand.

As far as the announcement is concerned, it doesn't say whether there has been an increase or cut in the rent on the EXISTING footprint, and this is key.

As I posted a year ago, ALU shut down 2 of their 4 R&D centers in France and moved the staff to Nozay. An extension or better use of existing footprint was therefore expected. But even there I struggle to see the NPV of the extension after financing costs even on a 24 year basis. It would be interesting to se who provide the staged €9m financing for the extension? Barclays?

The only thing is that ALU either has confidence in ALPH long-term future, or more cynically has covered its back and made a framework deal to acquire Nozay off Barclays should the worse materialise.

I would love to make a 10x punt but unlike you, I don't have the guts based on the information that is publicly available.

Rgds.

[senor_sensible] 27/2/2015 07:52

Does this answer your question?

ALPHA PYRENEES TRUST LIMITED ("ALPHA PYRENEES")

VILLARCEAUX-NOZAY BUSINESS PARK ("NOZAY")

NEW LEASE AGREED WITH ALCATEL-LUCENT





A new 12 year lease has been signed with the existing tenant, Alcatel-Lucent, with a minimum fixed term of 9 years with effect from 29 August 2014.



The new lease represents an increase of almost 5 years in fixed term commitment from the previous lease which had approximately 4 years remaining.



The agreement includes a commitment from Alpha Pyrenees of €9m of staged capital expenditure towards creating new lettable area and building improvements at Nozay. This additional lettable area will generate an additional €487,000 of rental income per annum on completion.



This agreement increases the effective weighted average lease length of Alpha Pyrenees' portfolio as follows:



· the weighted average lease length to expiry will increase from 7.8 years as reported at 30 June 2014 to 10.4 years, and

· the weighted average lease length to the next break will increase from 4.0 years as reported at 30 June 2014 to 6.7 years.



Nozay comprises approximately 36 hectares of business park space located close to one of Paris' largest business space centres, Courtaboeuf business park. It is also close to Campus Paris-Saclay, a scientific hub of academic establishments including 2 universities, 10 "grandes écoles" and 7 research organizations. Nozay contains campus style offices together with business space and ancillary accommodation totalling approximately 82,000 square metres and 3,000 car parking spaces post completion of the works.

[alphahunter] 25/2/2015 12:13

Senor_Sensible, your post 1760.

Should we not make a distinction between new leases (e.g. with new tenants on a like for like) and renewals of existing leases with current tenants? The former may be based on prevailing market conditions (and possibly revised upwards) whilst the latter may be based on some reference index.
f
Have you got any opinion on that point?
thx

[senor_sensible] 25/2/2015 10:23

Greece kicked into the long grass later today, Eurozone will be able to focus on QE making the re-financing of this company a lot easier.....

[senor_sensible] 21/2/2015 11:27

QE Activities will be ramping up in March.

[senor_sensible] 20/2/2015 12:40

lol.
www.investopedia.com/terms/q/quantitative-easing.asp

just to help out the terminally confused.

QE = Higher inflation & increased liquidity of cheap debt. both of which are extremely good for this company

[red army] 20/2/2015 09:04

All of this could have been predicted by a board of directors that cannot seem to see the wood for the trees. To run a company at a loss is the easy route compared with formulating a strategy that enhances value.

SHARE PRICE IN 2006 115p
SHARE PRICE IN 2015 2p

What on earth do these directors do apart from destroy company value

[irnbru2] 20/2/2015 08:16

It looks like Paris and France have also bottomed on the rental price cycle. Yeilds should start to improve too.

-----

No.

Deflation has barely started.

It is going to get very bad,and it will be at least 5 years before the rental price cycle turns up.

[dogwalker] 18/2/2015 10:16

Senor_Sensible, Interesting post - thanks. Are you suggesting that news might be being witheld by the co because it's good & they don't want to share it while they're in negotiation over the debt refinancing? Your last 2 paras in 1758 imply two possible different reasons but in fact you mean they're the same?!

[senor_sensible] 18/2/2015 09:57

Corner turned.....

From another commercial property investment trust dealing in France:

Since December 2013 values increased by 3.7% in France, 1.7% in Italy and 2.2% in Sweden.

looking through their books most of that increase In property values was In the last 6 months.

Couple that with cash in the bank from disposals and rent, the new property commitment from ALU and improving cheap money from QE in Europe the prospects here are looking much better. and given the recent improved interest in the shares I would suggest market sentiment is improving here too.

Three things of highest interest at the moment that are still unknown.
a) What is the property now valued at from recent revaluation? is this up 4-6% as suggested
b) How much cash is in the bank, regardless of whether this is held as security for loans.
c)What is the real NAV as at Dec 2014, IS THIS ON THE WAY UP. I know the adjusted NAV was reported.

IMO the results of the above would infer a further improvement to the situation here, however the company are being very careful in not releasing this information whilst the debt is still to be re-financed.

They are unknowns and let's be honest, the company have been quite quick to report any bad news or degradation in the situation so it is fair to assume the company are not releasing this information because it is good/improved and their NOMAD is doing their job.

Strong Buy........

[senor_sensible] 17/2/2015 15:17

more buys going through, volume defo picking up here

[senor_sensible] 17/2/2015 09:41

trades going through at close to 3p now, once through that it should form the next support level.

[senor_sensible] 17/2/2015 08:38

rising again, just done a dummy sell and they will take substantial amount at close to mid point, looking good for another leg up