Alpha Real Share Discussion Threads

[pavey ark] 26/2/2021 09:39

Cerrito, agree with your basic sentiment but not sure about "dead money". I have a reasonable number of these and like you I have other free cash sums that I'm not absolutely sure what to do with. The main point is to look at the 5 year+ record and trust that these guys are just waiting for the Covid dust to settle. I'm sure they are looking at options to invest but I'm happy to leave my holding here at 2.5% while they do. When things start moving again this will out perform any warehouse owning REIT that is currently yielding 5% and is at a premium to NAV. Perhaps our real "dead money" is our cash at under 1% Given the cash held here and the considerable discount to NAV then 2.5% looks a very good (risk adjusted) yield.

[cerrito] 26/2/2021 07:28

I hope that the directors and senior management are not getting too bored. I see no reference to fresh loan commitments but that may reflect little demand. I see my investment here as dead money with the lack of liquidity for the shares. As I have plenty of cash and a dearth of ideas where to invest it, this does not inconvenience me that much.

[pavey ark] 05/2/2021 10:25

Not difficult to see the logic of these buy backs as I calculate the discount to be between 23% and 28%

[pavey ark] 16/1/2021 11:06

I would suggest that people are missing the main point here. The question shouldn't be about how they are getting such good returns on their loans....they are.... and if that stops they will simply move on to something else. This management have a fantastic record of simply being ahead of the curve and getting things right....that is what people should be buying into. People should look at the 5 year performance which is greatly distorted by 2020, for obvious reasons. The Spanish shopping centre aside there has been little damage to the company and I would suggest there is little reason for the price at this level. The dividend will rise and that will interest some but I've never been able to see why a dividend is preferable to capital gain. This is trading at a considerable discount and I am certain this management ....like every other...has their own interests front and centre but they certainly know what they are doing ....just look at the deals they have done and their very nimble approach to all aspects of their business.

[skyship] 29/12/2020 11:01

Out again. Sold some @ 153p then today @ 159p. GLA & I hope you get a management buyout in the New Year.

[m_kerr] 23/12/2020 23:02

thanks sky ship. they say they get the returns they do because 'The demand for debt remains unmet by supply – further improving the opportunity for RECI’s lending programme to improve returns and capture market share.'. this is obviously in contrast to lending against residential and even commercial property at moderate lTVs as banks are willing more than ever to lend at fixed low rates. it seems at least some of the risk is because it's development finance. they also say 'the returns it has achieved and can continue to achieve, for this risk, have improved considerably with the continued acceleration in the withdrawal of traditional bank sources of funding and also from the limited inflow of alternative capital into real estate lending in Europe'. does anyone know why this is? if there are high risk adjusted returns available, why are the banks not interested?

[skyship] 14/12/2020 21:11

m_kerr - take a look at the RECI detail on loans

[m_kerr] 14/12/2020 15:09

anyone got any idea why the returns from their debt portfolio is so high? with lending, in general higher interest rates is going to mean higher risk. according to their annual report 'The portfolio has an average LTV of 55.7% (with an average approved LTV between 58% and 76% for mezzanine loans whilst the highest approved LTV for senior loans is 73.1%).' which means prices against which their loans are secured need to fall by 45% on average before their capital is under threat. which seems unlikely to me, but then i see they are charging 9% on senior loans, and 14% on mezzanine. one site i went to says 'Interest rates from 4% per annum' for senior loans.

[skyship] 07/12/2020 15:34

Simon Thompson re-visits ARTL in his IC Online column today: ============================================================ Alpha alert for share price gains ■ Likely windfall gain on land sale ■ No defaults on secured loan book First-half results from Alpha Real Trust (ARTL:153p), a company that invests in high-yielding property and asset-backed debt and equity investments, highlights a compelling and low-risk investing opportunity. etcetcetc

[pavey ark] 27/11/2020 19:14

If this management are saying they are holding fire on investments it is because they are uncertain of current conditions or they expect the conditions to be even more advantageous in the near future. I doubt if people as experienced as this team would make the wrong investment just because they have the cash....they are much better than that. As far as a buyout goes... that has been bounced around for some time and may have its origins in a comment by a guest contributor in Investors Chronicle a few years ago. If a buyout takes place there will be little that private investors can do about it but it will be at higher price than 145p. Whatever happens I have no means of objectively judging the current rate of investment but if this management are "accepting a mere 0.1% on deposit!" then there is a good reason for it. I have no way of knowing whither this reason is to the advantage of the management or the investors or both but it isn't done by accident or lack of thought.

[belgraviaboy] 27/11/2020 17:58

Just to add my 2p's worth. I have also been buying back here. I rate the management, however I suspect they may want to take it private. I thought the results were (unexpectedly to me) downbeat. Either they start investing which is my preferred choice given their track record (40% chance imo) or they buy the company out (60% change imo). If you strip out the cash - the discount to NAV to what they actually have invested is around 50%. I suspect patience and a firm constitution will be required to see a decent return. However, for spare cash, earning nothing elsewhere, this is pretty safe place to park it provided it is medium/long term.

[skyship] 27/11/2020 17:26

Pavey - yes, I admit to being somewhat of a trader in these, as in other propcos. I'm back in here in 2 tranches at an average of 148.5p. At this level they look to be fair value; but I stand by my comment that in my view they should have been investing some of that cash rather than accepting a mere 0.1% on deposit!

[hugepants] 27/11/2020 13:07

I hold both ARTL and RECI. ARTL certainly safer with 100p cash per share and at 30% discount to NAV. A much lower yield of course. Agree with Pavey. These guys are not idiots.

[pavey ark] 27/11/2020 10:46

SKYSHIP, we are obviously looking at this from different angles. Nothing wrong with your quick "turn" on your (recent?) investment here but I view things rather differently. I have been invested here for some time and unlike other shares I hold I feel no urge to trade or fuss over prospects, although I added a few thousand when the price got really silly this year. The management have shown themselves to be outstandingly agile and always ahead of the game so it is my opinion that if they are holding back on investing their cash there are very sound reasons for doing so. The decision was made to go into this particular form of financing simply because they saw an opportunity....cash was raised and all systems were go... then Covid. I have little doubt that (based on my experience here)this ventures will prove to be very profitable and if the circumstances change they will get out and move on. I recommend people go onto the graph/overlay facility on ADVFN and compare the performance against almost any property company over the last 5 years.....these guys know what they are doing.

[cerrito] 27/11/2020 10:35

It seems back to sleep time for ARTL. I see that in the last two months the amount of loans advanced has decreased. An interesting idea Skyship. Perhaps this lack of activity by ARTL is a prelude to a corporate restructuring.

[davebowler] 27/11/2020 10:23

Compare Liberum comment today on Real Estate Credit Investments Strong returns and attractive pipeline Mkt Cap £302m | Prem/(disc) -11.4% | Div yield 9.1% Event RECI's NAV per share at 30 September 2020 was 148p (previously reported), reflecting a NAV total return of 4.7% for the 6 month period. This strong performance has been a result of both robust interest collection and a modest amount of mark-to-market gains on the bond portfolio. The portfolio is diversified across 53 positions in loans and bonds. Senior loans and bonds make up the majority of the portfolio (77%) and 80% of the portfolio is self-originated bilateral loans and bonds, providing greater control and security. The underlying borrowers are typically well-capitalised institutions with significant operational and financial resources. The weighted average levered yield is 9.% and the average LTV is 62.7%. The portfolio remains focused on the UK and France. The company's flexible gearing enabled the manager to reduce leverage swiftly in April and it has remained low throughout the period. Net gearing was 6.7% at 30 September (March 2020: 13.3%). The manager recently reported an increase in loan repayments with £41m received since the end of June. This includes £32m from the full repayment of a mixed use senior loan to a UK developer at an uplift to carrying value (10.5% IRR). The company is also expecting more than £15m of further repayments before the end of 2020, mostly from a London office/residential loan as the development is complete and the project is significantly de-risked. The manager has also reported a strong pipeline of potential transactions. Liberum view RECI’s portfolio has performed resiliently in the period, despite the challenges posed by Covid-19. Prudent loan structuring and the 63% LTV offer significant downside protection. We believe there is also the potential for considerable further re-rating in the bond portfolio as European real estate debt has lagged the wider credit rally. The bond portfolio is secured on core and core+ assets (weighted average LTV of 51%) owned by institutional borrowers. The dislocation in real estate debt funding markets is creating attractive opportunities for RECI. The recent uncertainty caused by the outbreak of Covid-19 has accelerated the withdrawal of traditional lenders. In the recent company update, the manager outlined a pipeline of seven loans that are mainly in senior positions at lower LTVs and offering high returns (58% weighted average LTV and 9.7% IRR). RECI’s share of these loans is expected to be £52m. The higher returns available and potential quick redeployment of cash should enable the company to grow dividend cover. We regard the 11% discount to NAV and 9.1% dividend yield as highly compelling given the fund’s long-term track record, defensive positioning and the improved environment for new lending opportunities.

[skyship] 27/11/2020 09:36

Best result would be for ARC to make an offer for the rest of the shares they don't own. Take it private at a healthy discount for them and a healthy premium for us - at least over the current low share price 175p/180p would be acceptable to all I suspect.

[jt35] 27/11/2020 09:21

If they are struggling to deploy cash then they should either be buying back shares in the market given the discount or launching a tender offer. IMO compared to RECI the current stewardship is poor , I appreciate Covid has thrown up issues but RECI are deploying cash at good rates and short durations to mitigate risk in the same area which suggests to me that ARTL are not committed to this strstegy change or aren't sure of their abilities in that market

[skyship] 27/11/2020 09:03

So CASH now at £62.4m (c103p/share), on deposit and earning a meagre 0.1%. Management appear to be over-cautious; compare this with RECI who continue to find plenty of loan opportunities at highly attractive rates.

[skyship] 27/11/2020 07:50

Interims out today. Nothing too serious in there; and the NAV only slightly down on a further 6.5% writedown at H2O: The net asset value per ordinary share at 30 September 2020 is 211.1 pence per share (31 March 2020: 213.7 pence per ordinary share) (see note 10 of the financial statements). This reduction is primarily due to the impact of the reduced valuation of the H2O shopping centre joint venture in Madrid.

[cerrito] 22/11/2020 14:27

Skyship, I am sure that your curiosity will be satisfied this week if not the week after when we will get the half year report..Given the way they used the word cautious in the September 18 update I am not expecting much change in the cash position. No doubt they will give us info on repayments and undrawn commitment. Indeed I am sure they have looked at the level of detail and commentary that RECI provides its shareholders , although of course RECI’s portfolio of £346m dwarfs that of the £37m of ARTL. I would like some comment from ARTL where they see demand for loans coming from as I suspect that de novo development activity has frozen….although there has been a freezing of the supply of loans. I guess we need to brace ourselves for a further hit on the Madrid valuation. Be good if they were to comment on where they are with buy backs. I do not see myself as buying more given the illiquidity of the shares and the low dividend but at least it is a low maintenance share. Also while connected companies have 68poc of the shares would be good if there was some form of presentation to the retail shareholders, given that the AGM is in the Islands.

[bisiboy] 21/11/2020 11:22

i think they would have announced any material acquisitions but maybe i am wrong

[skyship] 11/11/2020 11:35

Been some cracking gains across the piece in the secondary REITs. ARTL, though seeing a few buys in the last few days, remain stuck in a groove c150p. Perhaps because they rather missed the opportunity to put some of that large cash balance to work. Still, maybe they have, but not yet announced...

[badtime] 04/11/2020 12:58

It was only 5k. At 107....but for a couple of days seemed a nice trade ....now back to ARTL

[badtime] 04/11/2020 12:56

Aye thats what occurred to me ..hence buy...and yes i took the profit on that unexpected news