Abrdn Property Income Share Discussion Threads

[nickrl] 24/9/2022 17:33

llef Aberdeen Research Institute along with most of the other overpaid city forecasters never get it right. Anyhow i see they released an update yesterday in which they now say

"The combination of lower future supply and higher demand at a time of excess demand means that monetary policy will need to tighten further to offset this boost. We now expect Bank Rate to reach 3.25% by year end and then to peak at 3.75% before the economy enters recession following this policy tightening. The Bank will wait to see convincing evidence that underlying inflation pressure has peaked before eventually easing policy"

hxxps://www.abrdn.com/en-gb/institutional/insights-thinking-aloud/article-page/global-economic-outlook-q4-2022

More realistic although be surprised if we don't end with a 4 in front at some point but i suspect not a 5 as there are plenty of downward factors that will suppress global commodity inflation and allow the US to to top out soon.

In APIs favour has to be its low LTV currently but if they want 3 years plus i would reckon 4.5-5%.

Edit: The Q3 NAV update of 4th August reported NAV at 21% with some drawdown of RCF (is this another one using the RCF for a share buyback?). No mention of the debt deadline at all!!

[llef] 24/9/2022 16:28

This analysis from their update on 4th August has not aged well...

"aRI expects the Bank of England to continue to hike interest rates over the next few meetings, with the terminal interest rate reaching 2.25%, despite the predicted slowdown in activity. The BoE is then likely to pause its hiking cycle, and reverse the hikes with a cutting cycle starting in Q4 2023. Rising interest rates have had a material impact on the cost of debt, with very volatile swap rates"

with 2y gilts at 3.9% and 10y gilts at 3.8%, I think they will have to pay well over 4% for their debt rollovers..

[skyship] 24/9/2022 13:42

Re DEBT refinancing:

Below is what they wrote on 28th April in the Finals statement. That was 5months ago; and they still haven’t sealed the deal on a new Term loan. Tardy in the extreme; frankly damned poor management; but maybe what one has come to expect of ABRDN!

“The low Loan-to-value ("LTV") ratio of 19.2% at the year end, means the Company is well placed to deploy capital into accretive assets which fit the portfolio strategy. Discussions have begun to renew this facility and the term loan, both of which are due to expire in 2023………………………..

DEBT
The Company has two debt facilities, both with the Royal Bank of Scotland. The term loan of £110m is fully drawn and is subject to an interest rate swap to fix the cost at a rate of 2.725%. The swap value is marked to market each quarter in the NAV and at 31 December 2021 a liability was recorded of £568,036 (down from £3,735,254 in the prior year). The Company also has a revolving credit facility (RCF) of £55m that is currently undrawn. The facility was undrawn throughout 2021. At year end the gearing level or LTV was 19.2%. This is below the target range of 25% - 35% that the Board has set. It is anticipated that the RCF will be utilised again in 2022 to fund new purchases.

Both loan facilities mature in April 2023 and the Investment Manager and Board are in the process of finding a new facility. Early conversations have been encouraging, although with rising interest rates there is a risk that the cost of debt may increase from the current 2.725%. “

[spectoacc] 23/9/2022 13:01

Agree it's bizarre. Seems CTPT can't always find the stock to buy, BCPT's may have finished, SREI's the only one largely still going.

This in August from API:

"Accordingly, the Company may continue to buy back its ordinary shares to be held in treasury or for cancellation until the end of the mandatory closed period which is expected to be on or around 26th September".


For "may" read "once".

(@Pavey Ark - fair point - and now rates are going a lot higher for a lot longer, and the opportunity cost of everything inc T-Bills comes into play.)

[hugepants] 23/9/2022 12:44

Played a blinder here this lot. The last buy back was 1.2M at 76.93p three weeks ago. They can now buy at 60p but don't seem to want to.

[pavey ark] 23/9/2022 09:17

I've been in and out here three times since my initial buy Nov 2018 and this has been a lucky share for me (if I'd been as lucky with all my share dealing this would be coming from my private island....it isn't !!).

My most recent exit was early April at 88p NB: not particularly insightful...just wanted the money for something else.

Obviously I started to think about buying back as the price made its way down through the 70s and definitely very interested now.....but!!

Pre covid the dividend was 4.79p so at the current dividend 4p a price of 75p would give a 2018/2019 yield but the inflationary picture was very different then and interest rates were certainly lower so if not 75p what?

It could be that the silly old market does work....who knew?

I agree that the current price does look safe/attractive but it may actually be correct.

(nickrl: thanks for that ...just about to do it myself )

[spectoacc] 22/9/2022 12:58

Thanks @nickrl

[nickrl] 22/9/2022 12:45

Yup 110m term loan and 55m RCF both expire April 23 was undrawn at FY but at Q2 its partially drawn so are they using this to finance buybacks. They've got them fixed through a swap at 2.725% on an LTV covenant of 55% with it sitting at 21% at last NAV so may have worsened slightly come Q3 but well below that. So reasonably favorable to refinance at a lowish LTV to keep a lender happy so guess would be 3.5-4% range and that certainly wouldn't cause them any dramas on covering current divi.

[spectoacc] 22/9/2022 12:06

I've lost track, but is API the one with some debt to roll over in early 2023?

[nickrl] 22/9/2022 12:03

API down 20% over the last month worst of all the REIT/propco's somebody doesn't like them.

[panshanger1] 22/9/2022 11:30

Think we might hit this point sooner than later

[spectoacc] 22/9/2022 08:30

Reminded of what API said at last results:

"•aRI expects the Bank of England to continue to hike interest rates over the next few meetings, with the terminal interest rate reaching 2.25%, despite the predicted slowdown in activity. The BoE is then likely to pause its hiking cycle, and reverse the hikes with a cutting cycle starting in Q4 2023"


Should hit - or top - their 2.25% prediction at Noon. With almost no chance of a "pause" beyond that, particularly not with the FOMC going strong, and Trusseconomics coming.

[nickrl] 20/9/2022 22:37

spoole5 even being a ready buyer didn't arrest the share price decline so makes sense for them to sit on the sidelines and then move back with a much lower share price will be able to hoover up even more shares.

[spoole5] 20/9/2022 22:07

Hopefully they'll start buying back again. Seems to have stalled.

[riverman77] 20/9/2022 22:06

Obviously a sector wide sell off, but I'm convinced the Abrdn rebranding hasn't helped - just doesn't have the gravitas of the old Standard Life brand and I've noticed a few of their other rebranded trusts have also fallen more than than I would have expected.

[hugepants] 20/9/2022 21:13

Yikes. 6.1% yield and a 40.5% discount now. To think this traded at NAV before covid.

[hugepants] 15/9/2022 16:59

Keeps trending south this one. Discount now up to 38.5%, yield 5.9% and LTV 21.5%. Looks very good value down here.

[spectoacc] 14/9/2022 17:21

Noticed same at CTPT & BCPT, no idea why, whilst SREI going gangbusters on buying back.

All a little strange.

[spoole5] 14/9/2022 16:55

Seem to have stopped buying back

[nexusltd] 12/9/2022 21:36

Expecting interims for six months to 30 June this week.

[spoole5] 07/9/2022 14:16

Hopefully they're buying back today

[skyship] 05/9/2022 17:13

They like buybacks in 1.2m instalments:

# 12/08 - 1,2m @ 78.75p
# 19/08 - 1,2m @ 79.22p
# 24/08 - 1,2m @ 78.75p
# 01/09 - 1,2m @ 76.93p

That little lot = 4.8m @ 78.41p avge.

No calculator near me - but that's c£1m profit on c £4m invested.

RAM will give us the figures :)