Alpha Real Share Discussion Threads

[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

[skyship] 04/11/2020 12:10

Strikes me that they could consider another Tender down at this level. The last one in Jun'19 was a substantial affair - 25% @ 175p. Took the controlling shareholders over the 50% level.

[skyship] 04/11/2020 12:00

Yes, moved too early... Incidentally sold my MGP into the rise this morning. I took a small loss, but you may have had a reasonable profit - hope so!

[badtime] 04/11/2020 10:49

Now available at 143.5p

[skyship] 03/11/2020 14:40

Bought back in for a few @ 150.8p today. Once again seem fair value, especially, as Pavey states, the very high cash balances...

[cerrito] 09/10/2020 21:00

Given what is going on in Madrid, their decision to sell 70pc in H20 way back in 2017 was prescient.

[pavey ark] 27/9/2020 09:48

davebowler,
Thanks for that,a very succinct piece that show the very obvious merits of ARTL.
Always good to get information and comments where there is no obvious ulterior motive.

I must look more closely but I hadn't noticed the commitment of 6% of NAV as a dividend but I was certainly aware that they were moving in that direction.

As Pointed out before these guys are very nimble and this is where they want to be today but they will pull out of this lucrative type of lending if circumstances change.
My only slight concern is that if you are providing a very full dividend then you may have to continue with that level of payout but I am confident of these guys ability.
I'm certainly not trading in and out of Simon Thompson's tips but he has got this one right.

[davebowler] 24/9/2020 09:57

Good mention here-

[skyship] 23/9/2020 14:10

YS - for sure will never forget DJAN. My equal largest gain in 50yrs of investment when the bid arrived just a few days after I bought and recommended on my Blog site (JDT thread). The other equal largest also came this year with my Tip of the Year on the same site. That was some start to 2020 - then along came Covid the next month!!!

[yieldsearch] 23/9/2020 12:15

1) Insider ownership
ARTL: 68% (Antler and Alpha Pte). v good but this does have its own issue.
BPCT, EPIC, RGL, SLI, SREI: very limited, the usual brain dead instit investors providing limited pressure to the management.

2) Strategy
ARTL increasing debt exposure vs direct equity. Security of income is greater and more protected (if a loan is not paying interest, artl would just take over the asset.). Not sure if they will be as successfull as RECI but they are well known in the debt market.

3) Real Estate view/cycle
Covid has/will trigger significant changes in the property sector.
Retail will be further impacted, leisure/food hospitality as well. (h20?)
Offices will have to be refurbished (hepa filter?), will have to be reconfigure, structural vacancy, etc
Lettings market is generally weak (wfh then not wfh then wfh.. how can you sign a 5 years lease??) with more concessions provided to tenants.
Investment sector is mixed: large open ended funds finally reopen could trigger substantial supply.
Additional supply should hit the market from lpa receiver acting for lender on busted loans.


then factor in Uk economy current state impacting the occupational and investment market (unemployment, v or w or l shape recovery)
finally factor in, the final outcome of brexit (no one knows what will happen, i really hope everything will be fine/oven ready but creating uncertainty now)


so punting the propcos because of large discount, yes it can be strategy, if well timed and no further stress and if you believe that the discount is not justified and will reduce. and if there is a rally, well done, you just deserve it.


Buying long term a company with large insider ownership, may also be an good investment (i am sure people remember Daejan holdings. artl not as close as djan but to some extent similar)

[skyship] 23/9/2020 11:16

Pavey - this chat not worth pursuing for either of us.

All I would say is that perhaps you have misunderstood my position re the REITs. I wasn't a holder during the fall; I am just looking at them now as good value trades; and have been doing exactly that for the past 3-4months.

Incidentally, I have profitably held ARTL in the recent past (in March '19 and again in May'19; and no doubt will do so again.