Abrdn Property Income Share Discussion Threads

[cwa1] 03/11/2022 07:48

Dividend:-

Third Interim Dividend

The Directors of abrdn Property Income Trust Limited (the "Directors") have declared a dividend of 1.0p per share payable in respect of the quarter ended 30 September 2022 split as follows:

Property Income Dividend (“PID”) 0.1806 pence per share

Ordinary Dividend (“Non PID”) 0.8194 pence per share


Ex-Dividend Date - 10 November 2022

Record Date - 11 November 2022

Payment Date - 25 November 2022

Dividend per Share - 1.0p

[cwa1] 03/11/2022 07:47

Updated NAV, etc...



Net Asset Value and Valuations

· Net asset value (“NAV”) per ordinary share was 106.1p (Jun 2022 – 110.7p), a decrease of 4.1% for Q3 2022, resulting in a NAV total return, including dividends, of -3.3% for the quarter;

· The portfolio valuation (before CAPEX) decreased by 4.2% on a like for like basis during the quarter, whilst the MSCI Monthly Index decreased by 5.1% over the same period.

· Voids have fallen to 9.3% in September 2022 from 11.8% in September 2021, with a further 1.8% reduction contracted subject to completion of a refurbishment.

The outlook obviously remains uncertain, and continued elevated volatility is to be expected. In that environment we believe it is important to look through the current turmoil, and structure portfolios to hold good quality assets that will continue to meet occupier requirements in order to maximise the long term income potential. Industrial / logistics remains a favoured sector over the medium term, as do sectors of “Other”, in particular some of the living sectors. Offices and retail are likely to remain challenged, and stock selection will be paramount in these sectors.

[pavey ark] 02/11/2022 15:43

"9 of the last 20 posts on here are yours."

There's number 10 .....mainly in response to you and in addition I have shares here.
I was referring to your 15 posts a day on numerous boards.....to be fair you do say the same thing on all of them.

"Well you certainly have an opinion on all of them and it is repeated on a daily basis."

didn't that give you a clue ?

[essentialinvestor] 02/11/2022 15:42

I know Epsom well and would be surprised if there is healthy demand for offices
in that area. Kingston a few miles down the road tends to be a more attractive location.

[pavey ark] 02/11/2022 15:37

nickrl, a bit more thought in your post but it does focus on this sale and then that is simply extrapolated to fit you views.

Looking simply at the sale: it looks a very good deal in the current climate.... regardless of the refinancing or any other aspect of API's circumstances.

As I said before the occupancy levels have always been low/poor and the valuation over the last few years is shown at £8m-£10m.

API did some work on the property, signed up new a new tenant or two, got the occupancy up to 100% and unsurprisingly the valuation rose ....just a guess but £8m to £9m.........the weighted lease period was 2.5 years !!!

Obviously API want to sell and since June the market has fallen and certainly looks like falling further ......here is the clincher....If I owned it I would have been happy to sell at £7.75m!!!

This is a win win for API as they have sold a historically underperforming asset in challenging times and there is the additional benefit of increasing cash reserves ...again in challenging times.

My view of the sale as a stand alone is.... GOOD!!
My view of the sale in terms of the additional bonus of cash generation is ....VERY GOOD!!

This is still a sound and reasonable deal on its own and can not be construed as a panic measure or fire sale.

NB I am not saying things are rosy for any REIT or perhaps any share but time for a bit of objectivity.

[spectoacc] 02/11/2022 15:18

9 of the last 20 posts on here are yours.

[pavey ark] 02/11/2022 15:05

"API not the best managed REIT IMO, now running to stand still"

Well you certainly have an opinion on all of them and it is repeated on a daily basis.

To post c. 15 times a day over a long period does tend to reduce the effect.

I am certainly not a massive fan of REITs but have done well with them buying and selling at opportune moments.
Had three REITs at the start of the year and sold them by April ...nipped in and out of SREI but didn't warm to it....API my only REIT.

My reason for reinvesting in API at 52.5p (having sold in April at 88p) was simply because of the divergence of the price from other REITs I was tracking .....due in no small part by the response to the refinancing.......but for some it was good for one post after another after another !!

The refinancing was not their finest moment but it had to be seen in the context of their overall debt.
This is a very well run company and Baggaly has shown himself to be ahead of the curve in most aspects of the property business.
Offices: Total allocation AND type of use
Industrials: size and facilities available
Environmental : EPC certification...actually saw one REIT (popular on ADVFN) with 28% of properties uncertified!!

The loan to book value is now 20% and the spread of assets looks as good as any.
The recent sales have taken the risk even lower and as I pointed out the two sales since June have /can produce the same income as the sold properties and leave c. £9m-£10m over.

The recent sale looks like going into the RCF but doesn't have to stay there.

Anyway I tend to actually buy (and sell) shares and do it quite well ......as everyone knows you win some you lose some but I've never managed 15 posts a day....must try harder !!??

[spectoacc] 02/11/2022 13:56

I think the tone says it all:

"Whilst disappointing to have sold below the June valuation, we believe values will continue to be under pressure in this sector due to market and economic uncertainty. In the short-term, we will use the proceeds to reduce our gearing."


But to suggest valuations are only going to be "..Under pressure in this sector.." misses the fact that they've been under far more pressure in eg Industrial.

I still think REIT debt costs will eventually go higher as liquidity is drained by the BoE, but there's no argument that at any time prior or post they would have got a better rate. API not the best managed REIT IMO, now running to stand still.

Most seem to have recognised an impending top - including API, to be fair - but having put the bullet in the gun, API then shot themselves in the leg.

[nickrl] 02/11/2022 13:46

@paveyark agree they would have had this sale in the system before agreeing the RBSI loan adjustment but they surely will have a policy now of seeking to minimise the RCF given the high all in rate they've signed upto. As it currently stands my view is that will be an outlier rate in our REIT space and it does rather reek of a panicked decision by Jason and the board many of whom are connected to pension industry so maybe are guilty of a bit too much knowledge creating group think.

Anyhow they will only be able to sustain the dividend rate post the rate change by using capital.

[pavey ark] 02/11/2022 12:27

Further to this sale it now looks a rather good deal.

The occupancy rate was low even before covid and has even been under 60% one year.
The overall lease term was 2.5 years and I don't thing API was looking forward to voids in two years time.

API obviously spent some money, got the occupancy rate up to 100% and sold it on.

Interesting that in Dec. 2019 API was 33% invested in offices, 23% June 2022, now with the two recent sales it is c.20%.

This sale was part of a policy of reduction in office assets and not in any way a fire sale.

Overall a good deal and the cash is certainly welcome.

[pavey ark] 02/11/2022 10:47

I doubt if this is anything close to a distressed or forced sale.

These sort of negotiations must have a considerable lead time but the final sale price may have been "adjusted".

API sold offices for c£8m in August on a 5.3% yield and did say that it could have problems with improving the EPC rating.

The company recently stated that ALL offices were compliant with the 2030 EPC requirements so this asset (after recent refurbishment) was now at least B rated.

Obviously the almost 12% discount is "disappointing " but at least 5% has been acknowledged as the Q3 industry wide valuation guide....... more for offices ?

Perhaps more importantly the API share price has dropped over 30% since June and any share buyback would obviously be a better deal than holding this asset.
If the dividend is held at anything close to the current value the "yield" on the buyback is c. 7%

My guess is that the £7.7m will simply go against the revolving credit debt and bring the total (term + RCF) very close to £100m with the possibility of a future buyback programme.

Interesting to look at the 2021 report and the occupancy rates "The portfolio vacancy rate at the end of 2021 was 9.7%. This is higher than the Investment Manger targets (5%) and is predominantly within the office portfolio."

Given that things are unlikely to get better for the office sector sales in this sector should be viewed against this backdrop.

[spectoacc] 02/11/2022 10:07

Fail to see how RGL isn't toast, if my bearish view proves anything near accurate. Perhaps very slightly insulated by having high yields - easier to ignore an interest rate move from 0.1% to 3% when your yields are 10%, than ignoring the same move when your yield is 3%.

Def think API are having to realise cash to cut the RCF. No particularly benefit to earning c.7% when your debt's costing you that.

[nickrl] 02/11/2022 10:02

@specto they need income producing assets to cover the interest costs but guess they are dialling back the need to carry an RCF. Won't help the dividend in the long though. Also not a good read across for RGL.

[spectoacc] 02/11/2022 07:31

The high cost of debt kicking in.


SALE OF ASSET

abrdn Property Income Trust (API) has completed the sale of The Kirkgate in Epsom for £7.725m reflecting 7.25% net initial yield. The office building was fully-let to 6 tenants with an unexpired term to break of 2.5 years, with the price reflecting an 11.7% discount to the June 2022 valuation.

Mark Blyth, Deputy Fund Manager of API commented "Having undertaken a comprehensive refurbishment of the property and achieved full occupation, we had successfully completed the asset business plan and have taken the opportunity to further reduce our sector weighting to offices. Whilst disappointing to have sold below the June valuation, we believe values will continue to be under pressure in this sector due to market and economic uncertainty. In the short-term, we will use the proceeds to reduce our gearing."

[pavey ark] 29/10/2022 08:41

"so perhaps Aberdeen can trim the inv mgt fee!" ??

Do you consider their fees to be excessive or out of step with other REIT managers?

[nickrl] 28/10/2022 23:39

Pavey Ark re#165 most of the REITs acknowledge this issue and majority are ahead of the 2023 deadline with their portfolios but plenty will need to invest if they want to retain assets beyond 2027. Thing is the price of energy is going to overtake the original driver for this legislation and certainly better rated buildings should be easier to keep occupied so at least API should have less to worry about so perhaps Aberdeen can trim the inv mgt fee!

[pavey ark] 28/10/2022 16:32

Just a bit of the article:

"By April next year, every commercial property that is leased needs to have an energy performance certificate (EPC) of E or above. The government plans to increase that threshold to C by 2027 and B by 2030. Commercial developers cannot let buildings that don't meet those targets. As such, they are spending billions of pounds on retrofitting and redeveloping their properties to avoid being lumped with scores of empty, useless assets."

From 4/8/22 NAV update
"ESG remained a key theme of the quarter as we completed several small upgrades to air conditioning plant and lighting systems, to ensure all our offices are at a minimum EPC C by the end of August 2022 (and therefore complying with statute out to 2030)."

[pavey ark] 28/10/2022 10:00

Rather illogical and you certainly fail to grasp my point regarding yield and discount.

I also pointed out at some length my view on recent underperformance.

Your tone suggests to me that you are unlikely to have appreciated or indeed understood much of what I said.

[adae] 28/10/2022 09:41

Of course the problem is with the sector - we have had a property bubble.

If your reason for investing (albeit only 3%) is discount and yield, neither look particularly easy to pin down.

Mr Baggaley must be very pleased to have such a supportive shareholder, even if by your own admission API has underperformed recently.

[pavey ark] 28/10/2022 09:19

Adae, you seem to be taking a rather firm tone.....with yourself ??

Again, I have looked at SREI and UKCM against API over any number of years and the graphs are absolutely in step with one crossing the other from time to time but but all three would be very close to any best fit curve/graph.

The problem (if there is one) is the sector and as far as I can see not with API.

Jason Baggaley took over in 2007 and is highly thought of in the industry and was always a consideration when I was buying.

Back to the graphs and you will see that although the share price graphs were almost in lock step over the last 15 years there has been a substantial divergence over the last month .....buying opportunity ?....I thought so.

The drop of API shares was on top of the industry wide selloff due to the ongoing financial situation.

There is always a point in any asset when the price compensates for any problems.

There was a considerable amount of pearl clutching over the debt renewal but at 16-20% of the book value I considered the problem to manageable.
Little attention was given to the £30m of sales (very low yielding industrial unit and an office block that had questionable potential) or to the share buyback.

The refinancing took this lower than the others but the economic problems still exist.

The question is has the market indeed been looking forward......50% discount and almost 8% yield would suggest that the market has indeed taken a view.

Will things get worse (?) possibly/probably but it would be foolish to view this worsening situation as though API hasn't been discounted already.

Further falls would see me buying more....currently at under 3% of my total share holdings.

[adae] 28/10/2022 07:02

Long term, we're all in the ground, but 2004 a perfectly reasonable period to look back to.

You need to compare reinvested dividends with the All-Share, and a real property index. If SLI has underperformed both, it has been both a poor investment and poorl managed.

The gearing effect really should make it outperform a simple property index.

[essentialinvestor] 27/10/2022 21:56

PA, that's why I mentioned the.. longer term performance.

Admittedly longer term can mean different time frames to different people etc.

[rambutan2] 27/10/2022 21:28

Pavey Ark, although I don't really agree with your half glass full take on API's prospects, I do appreciate you airing them and making me question/test my assumptions.