Abrdn Property Income Share Discussion Threads

[essentialinvestor] 13/12/2022 17:31

Is there ever a time when Jason B is not..delighted by some development ;.

[cwa1] 13/12/2022 17:24

Modest increase in holding, taking them over a percentage point...

[skyship] 13/12/2022 17:01

Sorry ADAE - I wasn't being rude, I was stating fact. Oh; not wishing to have the last word but my demonstrations of capital gain were in API (a REIT) and in GACA, a fixed interest equity, ie - a Pref. Not a bond.

[adae] 13/12/2022 15:16

Skyship, you think IPF won't last out the year? And while you said secure, you also said "Totally 100% wrong", which was both rude and incorrect.

There's capital gain to be had in bonds too, as you've demonstrated.

But my last post on this nonsense too.

Jonwig - yes, at least 12 years. That era seems over.

[nickrl] 13/12/2022 14:58

@cc2014 im with you and although they have the cap the worse case is higher than your figures if BoE continues to raise rates by another 0.54%. Seems to me they are gambling on rates being reduced now for this to provide a material benefit to what they had which given its from July 24 to 27 it will probably pay off. However, its cost a sale of an asset to fund the cash element so they don't add further to borrowing as anything in the RCF is uncapped.

Those lettings if they come good will be beneficial but could be premature to release RNS now but guess they need to a share price boost prior to end of year so they don't look too bad in the tables.

[skyship] 13/12/2022 14:52

Sorry all - O/T; but this my last on the topic:
===============================

Adae - I did say "secure". IPF? - you've got to be kidding. Esure is no longer quoted - now a division of Bain Capital.

You're also missing the fact that with timing there is capital gain in REITs. Pavey & I had the good fortune to buy back in here lower down - Pavey @ c52p, me 53p. So we now have a 10% capital gain in addition to that high yield at cost.

FI has its place for sure. Happily bought a full allocation of GACA down at 113p; and also overweight NBPS for a 2yr guaranteed 5%pa. So a 30% allocation to FI. Just a 21% allocation to REITs - but a higher yield; and the prospect of capital gain to boot.

As always - each to their own. Good luck.

[pavey ark] 13/12/2022 10:02

If the current letting announcements are completed and taking the office sale into account (deducting current office rent) and management fees I get an increase in dividend cover of c. 6%.( 2023 onward)The office sale cash is obviously reduced by the swap redemption costs but a net cash .

[jonwig] 13/12/2022 09:34

Adae - no, you're not 100% wrong. In fact, your reasoning is the same as that of people (like me to some extent) who are re-thinking the old "40-60" portfolio. Many who sold equities this autumn won't be buying them back.

But your argument is about timing. In probably no other December for last twelve years could you have made it! If the medium term consensus is for moderate growth and moderate inflation (seems reasonable, post recession) then real assets (property, infrastructure, renewables) will outperform fixed interest, simply because they can raise revenues and revalue assets upwards.

In a scenario of deep slump and very low interest rates, you can win from bonds, but you need gilts.

[cc2014] 13/12/2022 09:04

Currently SONIA + 150bp = 2.92+1.50=4.42%
BOE expected to raise rates on Thursday by 50bp given 4.92%

Then add the cost of the cap over 3 years another 83bp = 5.76%

Then add the cost of the break clause over 3 years another 119bp = 6.95%


Basically this change in the loan imho just a load of messing around to get rid of the embarrasing headline interest rate and bury it by dumping a load of the cost against this years profits. I suspect between the jigs and the reels this is costing shareholders even more money as negotiating anything costs money to get released from the previous agreement.

[adae] 13/12/2022 08:57

'Totally 100% wrong'?

How is a bond, didn't say a long-dated one, but taking that as an example, any more hostage to an interest rate rises than a theoretically infinite duration equity invested in property? Share prices say they have been just as affected by interest rate rises, none so spectacularly as API.

IPF2, 8% GRY, maturing a year from now. Go out a little longer and IPF3 pays you 12% pa a year for 5 years.

Co-op's 42TE, 9.2% GRY to 2025.

Esure, 2 years to redemption, 8.7% GRY.

No shortage of examples, or bond funds if you don't want a spread of GRYs & prefer a better spread of risk. PIBs, if you want invest-and-forget.

Buy equity for rising yields. API more at risk of it falling. Bond prices can fall, of course, but the coupons are safe barring corporate troubles, and necessarily safer, all being equal, than equity.

NAV isn't even an argument. There's no GRY in equity.

[skyship] 13/12/2022 08:33

Adae - sorry, but you're totally 100% wrong with that assumption.

With a long dated bond giving a high yield of 7% (name a secure one) you are hostage to the fortune of an interest rate rise. Not the case with a high yielding REIT standing on a 40% NAV discount.

[adae] 13/12/2022 08:07

Why choose to lock in a 7% dividend at API, not growing, still at some risk of being cut , when you can get the same or better in FI?

That appears to be the reality the Real Estate Investment Trusts are waking up to.

[spectoacc] 13/12/2022 07:45

Not sure a 10bps reduction in the fee gets close to making up for that fiasco.

Still - a far quicker decision on breaking the swap than on the refinancing, which should have happened a year ago.

5.46% now the max interest rate. A few too many variables (rates, recession) to have much confidence in the divi promise, but they've caveated it well:

"* This is a target only and not a profit forecast. There can be no assurance that this target will be met."

[skyship] 13/12/2022 07:44

Well, at least it puts a line under the whole debt fiasco; though admittedly at a cost of £3.5m.

Still, overall good news, especially with the dividend confirmed at 4p for the next two years.

A 7.1% yield and a massive 46% discount suggests this might soon claw its way back above the 60p level.

A strong HOLD in my book.

[cwa1] 13/12/2022 07:40

Interesting announement with lots to chew on...

[neilyb675] 05/12/2022 09:41

55.00 - 55.80 (GBX) at 09:37:24
on Market (LSE)

[pavey ark] 03/12/2022 10:38

Had a deep dive into the figures and the LTV looks closer to 21.7% than 20% but many moving parts and obviously of no concern regarding banking covenants.

The 4% reduction in values and the £22m property sale right on the 30th of September rather cloud things.

A 25% fall in NAV and a 25% cut in dividend would still see 5% yield and a 25% discount at 60p share price.
What I expect is a return to 60p at least which is a 10% capital gain added to a yield range of 5%-7.25%

I am certainly not expecting a 25% dividend cut and a 25% fall in values, although possible, is at the outer limit of my calculations.

"you pays your money......"

[pavey ark] 25/11/2022 15:45

Things have happened since Sept'22 that brings it to or below 20%.

I'm pretty sure I've detailed my calculations previously.

Yes, bought at 53.5p but strangely had to go through my broker as couldn't trade online.

[skyship] 25/11/2022 15:25

API's LTV as at Sep'22 was 21.7% - still a low figure.

Good intraday top-up Pavey - now 54p bid again...

[pavey ark] 25/11/2022 14:47

Topped up today at 53.5p...not showing yet.

7.5% yield with a LTV of under 20% and almost 50% discount has quite a bit of downside built in

From this week's IC:-

"Shares in a high-yielding regional commercial property Reit are pricing in a 30 per cent decline in property prices, an Armageddon scenario that is highly unlikely to materialise."

I thought API had better figures than the REIT in the article but "you pays your money you takes your chance "

[peckers56] 23/11/2022 15:02

Pavey Ark: If I posted that I bought 6000 shares in Oct 2020, why would you believe me? It's the truth, BUT is it????