Alpha Share Discussion Threads

[senor_sensible] 29/8/2014 09:59

the stated NAV is 5p per share and Adjusted is 12p per share.
My calcs put this at 7.1p per share and 14.1p per share when valueing property on par with others in the area including the interest rate swaps and the hedge is now settled so all the really bad stuff in the past, just as shame the latest results were the ones to take it on the chin, but the hedge and IRS was already priced in at 5p

SP at 2.75p Implies this is well oversold IMO. There is nothing to fear but fear itself, to quote WB.

Good luck to all whether buying or selling or holding

[senor_sensible] 29/8/2014 09:40

Pugugly, most of the other players have seen property values increase, this has made the rent yield look lower. Alph dropped the value of their property by 4.x% compared to an overall appreciation in the area of 6.x% resulting in a valuation at least 10% below PAR.

My concerns as to why the property value is marked down are due to scenarios as follows:
1. Are the independent valuers on side with Alph and Are they doing this to make the rent yield look higher.
2. Are the independent valuers on side with Barx and are doing this to put pressure on the LTV which will affect the interest rate.
3. Are the independent valuers on side with the Mgmt company making it easier to sell property at perceived good prices.
4. The BOD and the Trust have their fingers in many pies, I would not be surprised to see Alph taken over by another property fund liked to Rose, in which case a drop in share price makes an offer at 5p-10p look very appealing.

Note there is no such thing as "independent" someone is paying the bill and therefore has influence.

On the upside- BOD all have relations with other funds and financial institutions, please do not think we are limited only to Barx. Infact, I Would be more surprised to see Barx re-finance in 2015, lots of EU institutions have taken cheap EU cash and are no being pressed to feed that into the market.

In Spain where there are lots of Bank owned properties(villas) the banks have taken cheap EU money and want to sit on empty property until they can sell at higher prices with better interest rates, they trickle them on the market to keep afloat. The EU has made it clear they will withdraw funds until they start to pass onto to the wider market. We are starting to see increase in property sales in Spain and have even seen 110% mortgages available. as an example

hxxp://www.murciavillas.com/search/1-apartment/1563-110-mortgage-offer-on-3-bedroom-ground-floor-apartment-in-condado-de-alhama

[pugugly] 29/8/2014 07:58

SS- Some most interesting articles. Thanks for the links - Some positive - some negative especially the pressure on rents (my main worry apart from the need to refinance from what seems to me to be the weak negotiating position)

Fully agree re your comments about BB posters - Very much a curate's egg -

[senor_sensible] 29/8/2014 07:43

Pugugly, Sleepy, I hope that anyone thinking of investing here takes with a pinch of salt anything posted on a anonymous bulletin board where all the posters including myself have an agenda. They should instead do their own research, possibly using some of the links provided by all posters and take their own view on whether to invest of not.

I am always dubious about posters who suggest potential investors should take notice of one poster or another, especially when 99% of what is posted is pure guesswork (by their own admission) or personal unqualified opinion.

The reason for these BBs is to discuss the pitfalls and merrits of a listed company, not to try and sway people to by or sell, encourage or put people off investing.

If I felt as bad about the shares as some of the posters on here I would have sold up and moved to pastures new.

[dogwalker] 28/8/2014 21:11

Given what you've all contributed - & thanks for it all - I think it's clear that things will go either one way or the other.

[sleepy] 28/8/2014 20:39

PUGUGLY - I hope anyone thinking of investing here will read and seriously consider your very sensible post

[pugugly] 28/8/2014 18:44

Continuing to dig but the more i did the less enthusiastic I become. The French economy is (imo) in very serious trouble and in spite of all the posturing by the politicians it is going to take too long to stop the downward drift to help ALPH.

The troll makes potentailly a killing point on the likely discount required on any loan to NTA and what I suspect will be a downward pressure on property values in France will not help. nor will the static or negative index adjustments to rents where these are applicable.

ALPH should be known to any potential property purchaser as a weak or forced seller so they will not be able to play hard-ball during any sale negotiations.

Agreed if the market changes there is considerable bagging upside but the margin of safety to prevent an implosion seems to me to be too low.

Best of luck to those buying at 2.55p - If the board can refinance then massive potentail gains. My guess on odds in the region of 1 in 5 chance.

Many UK banks are shrinking their asset base so it could be that Barc may wish to wind down their business in france.




e&oe. No deramping implied just by best attempt to calculate if this is a probable winning gamble.

[senor_sensible] 28/8/2014 11:58

hxxp://www.alphapyreneestrust.com/people/index.html

I have no doubt the team would be able to re-finance, their
individual experience is good, combined it opens up to lots of
opportunities on the re-financing front.

My biggest fear is selling out to someone like Hermes property
trust or A.N.OTHER on the cheap which might be part of the wider
network for the Directors here.

Also downside is qualifications and experience, including Rose with
his law degree might make it difficult to argue that the currency
hedge was mis-sold. which might be a benefit (safety net) for
shareholders if you know what I mean

[senor_sensible] 28/8/2014 11:16

buys going through at 2.55p, sells going through at 2.5p true
spread is very tight could be big buy or big sell at 2.5p.
whichever it is should see the price move once it is cleared.
Wonders if the fund manager is digging deep? this is oversold
IMO........... share price WAS 35P 5 years ago with good divis, won't take
much for this to return to 12p per share and track its NAV, 500%
profit from here so worth the risk IMO

[the troll] 27/8/2014 17:46

no more 'deep value' property companies for me I'm afraid,
both IERE & IMPT have managed to refinance their gargantuan
debts of late but so what, market still wants a c. 70% + discount
to NTA
( really infuriating );

I'm concerned that may happen here so won't
be investing today and I'm out.

[senor_sensible] 27/8/2014 07:28

I give a balanced view on this, the debt is 184p per share, higher
than you suggested, I am more than happy to discuss the 25m
additional debt due to settling a currency hedge and the punitive
rate of interest being paid on it. However I am more interested in
why the property valuation is marked down by more than 10%, I do
deal in French commercial property which has seen a 6.4% rise in
the last 12months, and it is not the same quality as alph own. Fair
play Spanish property is pants at the minute but even that looks to
have bottomed.

Most property is bought with debt, it is tax efficient and allows
you to leverage the purchase. The only problem with this debt is
barx are having their cake and eating it at the minute. They are a
bank, not a property company so while alph pay the interest barx
will meet their objective.

Foot shooters and self loathers abund, but it takes all sorts.

Debt on a REIT can only be discussed in the context of the assets
it is secured against. Banks do not give reits 200m in cash, they
loan them money to purchase property.

[sleepy] 26/8/2014 20:31

Señor,

I am not trying to scare investors but to inform them

Many investors, including myself, would, I suspect, very much
like
to think
that you were an investor in French and Spanish property and
had
recent experience of refinancing same.

I do have recent experience in financing commercial property in
the
UK and the eurozone though not in France or Spain

Much as I would like to think that what you suggest is sensible
I
regret that I have difficulty seeing it as a realistic
scenario.
The recent share price performance would suggest that I may not
be
alone

Bon courage, buena suerte,

Sleepy

[senor_sensible] 26/8/2014 19:39

assumption is Eurolibor is most likely to drop to 0 or below, and
some QE money will leach onto the markets, perhaps some of it will
find a home here.


As at 30 June 2014, the Trust has total borrowings of £215.5
million (€269.0 million) under its facilities with Barclays
which are repayable as at 10 February 2015. As at 30 June 2014, the
Trust holds cash of £11.8 million.

The Trust owns a diversified freehold portfolio of properties
totalling £222.8 million (€278.0 million) with an
average valuation yield of 8.2% at the June valuation.

keeping it in £ AND ASSUMING 117.63m Shares in Issue

Assets = 239.75m (204p per share)
debt (borrowing) = 216m (184p per share)

So the LTV is currently 90%.

But as I stated previously, the value of the properties is on the
low side, by as much as 10% and coupled with rental income should
put this at 80% LTV by the time the debt needs to be
re-financed.

The currency hedge cost 25m+ 2.5mil in interest = 27.5mil without
the currency hedge this would have been <78% ltv

Barclays really stictched the fund up, obviously the fund manager
cannot take legal action becuase they are in a pracarious position
whilst barx are financing the company. But if the fund manager
changes finance company it is possible they will pursue Barx for
miselling the currency hedge and all of the losses as a result,
including the interest paid to date and any capital losses on
property disposals. Not sure if juristriction is france of Guernsy
but I would imagine barclays will get no favours from either places
if it did go to court.

As mentioned there is a interest rate swap, currently showing as a
profit of 4mil, this could go negative or even double, the 25mil
@10% senior debt causes a headaches that no doubt favours barx.
Again a situation created by barx for the sole benefit of barx.

There are obvious risks with this investment, but the potential
rewards are very large too.

Talking about borrowing per share without putting into context of
the asset values is just quoting a few scary figures to try and
frighten investors.

All banks and finacial institutions want to make a good income to
distribute to their shareholders, they do not want to own and
manage property, therefore they will do everything they can to
pressure ALPH fund into the highest practical interest rate for the
next 5 years, but with QE and cheap institutional money they will
not want to push to hard because another bank might step up to the
plate and then suing barx is a real option

[sleepy] 26/8/2014 17:47

Is borrowing something over 170p per share?

[pugugly] 26/8/2014 17:07

Senor : thanks for coming back so fast. I had been using note 10
for the queries I raised above.

Agreed with your comments on note 10 but the valuation of interest
swaps is very volatile and could (imo) possibly swing (subject to
terms of the contract)and ECB (presumaby base rates) from a
positive £4million to the same negative which could wipe out
most of he current unajusted nav - hence my digging as to whether
anyone had anyknowledge of the terms of the contract and by
extension the potentail effect of changes in base rate on the value
of the swap.

[senor_sensible] 26/8/2014 16:11

The NAV was adjusted for Currency hedge (at punitive interest rate)
and deferred tax, as indicated in the accounts->

The net asset value and net asset value per ordinary share have
been adjusted for the fair value movement on revaluation of the
interest component of the currency swap (up to maturity in October
2013 at which point this element unwound), the interest rate swap
derivatives and 50% of the deferred tax provisions; full analysis
is given in note 10 to the accounts.

>Nav is 5.3P Per share, when adjusted for deferred tax and
interest rate swaps >this is 12p per share. see note 10 in
accounts, as below:

10. Net asset value per share






Net asset value (£'000) 6,232

Net asset value per share 5.3p

Net asset value (£'000) 6,232

Mark to market of interest rate swaps 4,849


Deferred taxation* 3,008


Adjusted net asset value 14,089


Net asset value per share (adjusted) 12.0p

[pugugly] 26/8/2014 15:58

Just popped in to have a look as hitting all time low.

Havingf read the accounts fully agree that the currency hedge was a
disaster. IMO the interest rate swaps could have a similar
potential. However without access to the full details of the
contracts I am unable to form an accurate opinion save only to note
that the swap accounts for 4.2p (approx) of the adjusted nav per
share - however according to the accounts this element has fallen
by 45% from 7.5p in December. Could it possibly fall by the same
amount in the next 6 months ?? All i know about interest rate swaps
is that they are like unexploded bombs - Very dangerous PLUS the
French economy is in a mess

So the share price could (imo) be suggesting that it has further to fall due
to uncertainty as to the real value of a forward adjusted value of
the assets -

Watching but too dangerous (imo) at the moment.

If any accountants on this thread able to comment on wheter I am
being paranoid and the levels of risks

thanks in advance.

[senor_sensible] 26/8/2014 14:12

FY2012 Property was values at 1159/m³
FY2013 Property was valued at 1134/m³
HY2014 Property was valued at 1112/m³

SO A 2.5% DROP IN VALUE IN THE 12 MONTHS TO DEC 2013
And a 2% DROP IN VALUE IN THE 6 MONTHS TO JUN 2014, (4.3% on a like for like basis)


However value of commercial properties in france have risen by 6.42% in the last year which makes me sceptical about the low valuation of the property portfolio and I would expect that when re-valued in Dec 2014 this will see a 10%+ increase in property valuation

If I am correct, then in Dec2014 the properties will be values at 305Mil Euros, and with available cash will meet a respectable 70-80% LTV and finance will be possible at much lower interest rate. once this is settled we could see a resumption of dividends in 2015/2016 IMO

[sleepy] 26/8/2014 12:31

How much is debt per share?

[senor_sensible] 26/8/2014 10:57

1m 3m 6m 1y 3y 5y
Alpha Pyrenees Fund -30.3 -42.5 -50.0 -42.5 -88.4 -87.3
Alpha Pyrenees NAV -0.4 -44.8 -47.1 -57.9 -50.9 -58.1
Property - Direct Europe -2.9 -3.3 -1.7 -14.2 -37.2 -4.8

Normally, Fund tracks the NAV, except during last couple of weeks where the NAV looks to have settled but the fund has halved. IMO oversold and as suggested the NAV has bottomed and will start to rise.

looking at European property the slide stopped about a year ago so the Hedge settlement affected the NAV at Alph in the past year. As suggested the NAV is worked out on a discounted property portfolio, the company is still covering debt payments with rent.

If we see a rise in the NAV next HY then this will very quickly rise.

Shorters should be aware that the AofA do not authorise the company to issue new shares, there will be no glut of cheap stock in the future allowing them to close their positions. I can see some shorters getting stuck in a bear trap costing them dearly.

All IMO of course, DYOR

[senor_sensible] 26/8/2014 09:33

lol, shorters always say it will go to Zero.

Cash in bank is worth over 5p per share, adjusted nav is 12p per share on what I consider a discounted property valuation.

Adjusted NAV was 18p per share 6 months ago after the settlement of the hedge, have commercial property values halved in price in the last 6 months?? seriously??. Only a small percentage of the finance is at a poor rate, the overall cost of finance is well below the income from rent therefore the company is turning a profit which adds to the cash position. the accrued cash will be used to pay down debt in 2015 when re-financed

IMO this is the bottom ~(or thereabouts) but WTFDIK, Suggest anyone thinking of buying or selling do their own research