I had a closer look at a few of AIRE's larger tenants last week using companies house website and couldn't find anything of concern (but don't hold me to that!). The biggest tenant Meridian Steel, which was causing a problem a few years ago, posted a stonking profit 2 years ago and a smaller one of around £1M last year. It's quite dependent on steel prices. |
I hold NESF which is yielding 10%. Divi cover this year forecast at 1.3x-1.5x |
SQZ (I hold) |
AA4 (XD today). Yield 15%. Discount c25%. |
But can you name some good ones ? |
Seems to be lots of stuff around with yield of 10%+ at the moment. |
gilts retraced back from last weeks high a fair bit already muddying the waters again about direction of travel for rates.
i dont usually bother with AGMs but may try and attend here if its not a strike day |
The extra drop from 60p towards 55p is unexpected since the results held no surprises. Could just be driven by the macro eg interest rate outlook and bond yields blah blah. A 33% discount and 10.5% yield covered by income is absurd, and I can't find any specific reason either.
Lining up to double down so in some ways this is a gift but heart in mouth stuff.
With the AGM coming maybe someone is pressing for a "strategy review" eg to sell up or merge. Hawksmoor/Carlyle the biggest holder or Canada Life the lender? |
Weak kneed investors are often the catalyst for good investment opportunities for others, so let's not knock 'em ;-) |
Yup, bought some NRR on the panic. Thinking how large to go AIRE. I am not a huge fan as it is fairly concentrated (by definition), but absent of a known specific issue and the price (and recent fall thereof), I'm quite happy to trade it again. I have been in and out of AIRE maybe seven times - it's a mad REIT.
Last bought at 60 and thought that was inexpensive! Funny how it has lost 4% today whereas since late last night, SOHO is up 10%. Hardly complaining, but it does make you wonder how weak-kneed some of their respective investors are. |
@chucko youve not missed anything unless someone knows something we dont. NRR ran back a fair bit last week on no news but has bounced back lets hope same happens here. |
Adding a few. Unless there is something specific that I have missed, this is a somewhat random excursion in price. But that is a theme re. AIRE, which does that in all market conditions, good, bad or ugly. |
The reviews, good or bad, do not start simply because of the landlord situation. They (presumably) predate the purchase and therefore is in the price and hence economics. |
It becomes their problem if negative reviews affect occupancy and they eventually have trouble paying their rent. |
That's not AIRE's problem tho.
Interesting re pay rises. AIRE market cap all of £48m. |
The Glasgow hotel is dated internally. The rooms require upgrading. |
Yes, looks like the board have increased remuneration by 30% for each position. |
@marktime BoDs awarded themselves a 38% payrise between 22 to 23 for doing what? I know its immaterial cost in the wider context but the advantage of this REIT was it was buy and tuck away minimal hands on.
Despite my adverse views above i will recycle my divi back into it. |
Bit harsh nickrl, AIRE doing its best despite what it calls the UKs economic woes. Everything crossed for avoiding recession and easing rates, resilient on a prayer. The discount here not nearly as bad though as other REITs invested in what it calls the traditional sectors, folks prepared to gamble on a 9.5% yield.
I wonder was the Glasgow hotel sale precipitated by fears that any further fade in property values could put AIRE in breach of the 40% leverage policy? If property values are indeed now stable it might gain the confidence to reinvest in the months ahead, so a REIT having an active investment manager looking at options is reasonable surely. What are they doing with the £7.5M meanwhile, please say it is being put to work at better than 3.2%.
Two years to find a buyer / merger or get in a position where refinancing is viable. |
I would think they will have no problem in recycling the cash into something suitable. There is plenty to buy at the moment if my inbox is anything to go by. |
@SteMis can't see why they sold that hotel it was a good income stream secure for another 13 years lets hope they find something else secure enough to replace it. Inv mgrs want to churn the portfolio its in their nature which why we only need a property mgr here.
Anyhow read the full report and your correct there was two chairman but the total cost was commensurate with annual charge of 39k up from 30k the previous year oh and now being increased to 41k for next year. Not exactly much do here you'd think Glenstone would just buy rest of it up and save the o/h's.
I look at divi cover at the cash level and was well covered but clearly isnt now and am stress testing the outcome of increased finance charges in the future. 5% will incur c800k extra which would need 10% extra on NRI (pre hotel sale) so I agree they will be close to covering if inflationary indexation remains at 4%. |
Costs are actually down despite inflation. Audit costs are up 17% if you take account that £6k related to prior year. Suspect some/all (?) increase in directors fees is due to timing on resignations and appointments.
If the end up paying 5% on debt, it would cost another £738k. The dividend cost is £4.589k and, excluding the one off £219k, the profit before revaluation was £5.212m. So £623k cover. Indexation will more than cover the other £115k (1.4% of current rent income). I don't see the dividend under threat from that.
Obviously they need to reinvest the proceeds from sale of the hotel in Glasgow.
The main risk is default of a tenant.
Ongoing dividend yield is 9.5%. If they continue to pay that then I'm happy to wait for falling interest rates to lift all the REIT boats. |
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