Interesting.
Wonder where those shares came from.
Takes Hawksmoor back to roughly where they were back in December 2020.
Could have come from the Charles Stanley holding. |
CWA thats a big step and must have come from another institutional holder so have to see whether it elicits another RNS. |
Somebody(apart from me) is keen:- |
ive bought a big coat, Putin can stick his gas where the sun doesn't shine, the money i save i will spend on AIRE, ive done my figures it compounds the savings way above RPI or CPI |
Currently UK Gas prices on the National Grid Hub entry are at broadly the same level as they were back in November Yes there have been big spikes up but they've rapidly unwound so given the market is well aware of the shift in gas geopolitics the next energy price reset rise might not be as much as expected. However, there is a going to be a drag on inflation as even if energy prices stabilise at this level there is a lot of positive feedback that will work its way down all sectors of the economy as can bee seen in the various categories. So i get AIRE won't keep up with inflation but at least im assured of some compensation. There is is no guarantee open market rents will outperform either but have an each way bet with my spread of REITs. |
6.2%
8.2%
Going higher, double figures for RPI soon. October's utilities rise going to be hairy. |
specto - tenant failure is a problem. some businesses (like care homes, not that they should be run as businesses but that's a point aside) will struggle to pay 4% compounded rents, so you're then down to the quality of the underlying real estate. i've only had a cursory look but overall it's pretty solid.
LXI reit and supermarket income reit offer better covenants but you'll get less than 5% yield whereas here it's about 7%. |
I'd say it's becoming quite pertinent and relevant, but each to their own. |
"have endlessly banged the drum for the falsehood of "inflation protection","
Quite and that drumming noise is becoming quite repetitive and boring.
I doubt if many investors have just one REIT and AIRE has its place along side others.
Every investment in any asset class has its positives and negatives but on balance some are perfectly happy to include AIRE in the mix of their investments. |
@m_kerr - fair points, but - AIRE has not many properties, only takes one tenant (Meridian Metals...) to cause a big hole.
On the flipside, they did very well getting the (closed) WetnWild (waterpark, not strip club) sold to Serco, who were presumably nailed to the floorboards in the lease.
Have a look what industrial & logistics rents have been doing - way in excess of any 3% or 4% AIRE caps.
Or - compare AEWU performance to AEWL/AIRE's. |
shopping centre and retail warehouse rents have fallen by about 50% in the last 5-7 or so years. in the same time period, a 2% per annum rise compounded would deliver a running rent 10% higher i.e. a 60% gap. i know where i'd rather be. many other commercial leases will be 5-7 year terms with maybe 6-12 month rent free periods (even in a lease that short), no fixed uplifts too.
it's not ideal as an asset owner to have rent rises capped at 4% PA, but the reviews are upward only.
when safe bonds and bank interest barely above zero yield, a 7%+ yield rising potentially at 4% compound is shooting the lights out. almost all 'inflation protected' long term leases have a cap and collar between 1-4% so if you want better than that you'll have to seek out such an asset yourself on the private market. |
Interesting @TRCML, not heard that before.
But yes, have endlessly banged the drum for the falsehood of "inflation protection", which is nothing like. RPI's going to double figures, and in danger of becoming entrenched. |
@TRCML
Given the 18 years average lease length of the portfolio, though, isn't the problem of expiring/renewing at (probably) a lower, market, rent one that we could safely disregard for at least the next decade or so? |
Having read the IC write-up and never heard of this Reit before i browsed Alternative's website and visited this chat to find out whether others have commented that most of the rent reviews are capped. My contribution is partly to mention that as the caps are around half the prevailing inflation rate the rents are not keeping pace with inflation which rather suggests that the discount to nav is to enable the dividend yield to be 7& or so. Also, more importantly, a factor often overlooked with index-linked rents (particularly with long-leases which can cloud judgement), is that on expiry of the lease and assuming Landlord and Tenant Act 1954 renewal rights the rent on renewal will be the market rent without the index-linked cushion. As there is no correlation between inflation and market rent, it is often the case that the index-linked rent would exceed the market rent. in other words, on expiry/renewal, the initial rent would be rebased quite possibly to less than the previous rent. |
Specto see your point as they say on the website "A long lease strategy with income growth linked to inflation". One for the FCA?
I agree with your view on inflation but given the wide ranging impact on all commodity groups how much pricing power business will be able to achieve is going to be a challenge and there is a real risk here of a very deep recession. Of course you can't countenance Putins behaviour but this could cause collateral damage across the globe so i do hope the clever people in the IMF etc are being consulted on what action should be take to mitigate the impact of sanctioning oil & gas which appears all that is left in the Wests locker with military intervention off the table. |
@Wozzitworthit - good question, I don't know. And assume depends if retired already, in which case might be unlimited RPI. Believe that's the case with the NHS. |
SpectoAcc
100% agree with your mis-selling comment re ITs
As an aside, I have a final salary pension that's capped at just under 5% - luckily it's still on RPI, but, and correct me if I'm wrong, aren't all military, teachers, civil service etc pensions all un-capped, albeit at CPI ?? |
this is a very obvious buy for me on a risk adjusted basis. yielding over 7% with 18 years average lease and 92% inflation linked is highly attractive. even if prices fell, leases tend to be upward only. covenant quality is variable but the underlying assets look reasonably good. care homes for instance are easily let to other operators in the event of business failure. |
thnx Nick... |
 Further to results link from Skinny
portfolio 100% let
rent 100% paid
arrears fully repaid added 197k but those nice M7 advisers are now on full fee so thats 90k of it gone this half and the rest next half. Given portfolio has 18 years WAULT with a couple of expiries due over next 18mths then nothing until 2027 directors could save us a few quid and stand them down.
Rent uplifts in the half achieved 3.5% and forecasting 3.7% for 2nd half so well below RPI and given diesel now 1.64 at my local we know which direction that is going but at least its locked in.
Dividend is covered at cash level and 5.5p forecast for FY. Looks like a reasonable step up in NRI next year according to the lease table which i guess is from rent frees. They are also pursuing a claim (1.2m) in respect of cladding they've replaced on the Travelodge asset so might see a return in several years but wonder how much it costs for lawyers and professionals to make the case to the court.
Now above 20% disc yield 7.84% on 5.5p forecast as I type. |
Thanks marktime1231, that's a great summary! |
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