Balanced Commercial Prop... Share Discussion Threads

[2wild] 15/4/2024 19:59

Strategic review. Burn money on expensive advisors, no doubt. How about putting all of the portfolio on market at just above NAV and see if they can raise enough cash to pay off most if not all loans. Suspect would see reduction to NAV discount before continuation vote.

[vacendak] 15/4/2024 08:47

The latest RNS is talking about winding down the company or at least looking into it.

[spectoacc] 15/4/2024 07:10

Something had to be up, albeit there's no actual talks. BCPT been doing bizarrely well, but seemingly not well enough to be a REIT survivor.

[spectoacc] 08/3/2024 14:49

Keep thinking there has to be a bid - but still nothing, and still BCPT drifts up.

Not a holder, but was for a long time & this isn't usually how it behaves.

[nickrl] 02/2/2024 18:20

NAV update this morning down -3.6% tracking the others. Divi still well uncovered but doesn't seem to deter investors here.

[nickrl] 12/1/2024 09:01

Shame no yield declared or what the intention is for the cash but in short term they can sterilise the RCF and get a few quid on a short term money market account but isn't going to help the divi cover.

[vacendak] 12/1/2024 07:58

Selling off some offices, not exactly fire sale but at a slight discount.
I guess they got to do what they got to do for the "B" in BCPT.

[vacendak] 11/12/2023 19:07

Not sure if the URL is going to point to the story for long, som the gist of it is:

"Goldman Sachs has urged investors to stop betting against UK property stocks as the market shows signs of recovery."

[vacendak] 30/10/2023 11:29

Not looking good across the Atlantic, so not looking good here by association for office buildings.

[spectoacc] 26/10/2023 15:52

Yes would hope it's worth more than current s/p. But see no likelihood of them voting for Christmas - Board, manager.

Selling into the same market as liquidating UTs probably not wise either.

My problem now isn't that some things don't look cheap - they do - it's choosing which cheap ones to buy (or average down..).

And still doesn't feel the time to go all-in. Money's going to keep leaving the markets.

[giltedge1] 26/10/2023 15:47

I would guess, you would get the majority 65p pretty quickly, St Christopher, West End, Bristol, Retail Parks, Student etc. The "rump" (What was the manager thinking!) say 30p discounted, would take a few years. Should be in profit from this level, if prepared to wait. Should be announcing NAV soon?.

[spectoacc] 26/10/2023 07:30

Trouble is, like all of them, I bet if they make a sale it's one of the trophy ones, not eg the Aberdeen ones, where a sale in this market would expose NAV for what it is.

They all like to RNS sales at June/April/December/whatever valuation, rather than "we dumped this regional office at half of what we told you it was worth".

EPIC got away with it by downgrading the valuation of their final/worst one 3 quarters on the trot, from memory :)

Then, erm, sold the entire co for below what it was worth.

[giltedge1] 25/10/2023 21:58

Reviewed office portfolio as that seems to be the thorn, as in most Reits Westend Offices quality in good areas & fully let tick. But owns 4 in Aberdeen, not sure why such a large exposure? What is the attraction. Can,t imagine tenants queueing up if one becomes vacant.

[spectoacc] 25/10/2023 09:02

Forgot all about the continuation vote - wouldn't fancy being a seller in this market tho.

Always been a fan of the differentiation St Chris's brings, but worth noting the office exposure within that has been a drag:

"The mixed-use asset at St Christopher's Place, London produced a total return of 0.1 per cent as it continues to recover post Covid. A marginally negative capital performance of -1.5 per cent was driven by the holding's exposure to the office sector, which makes up circa 16 per cent of the asset's capital value."

And:

"The performance of the Company's office holdings was the main drag on performance, as the sector delivered negative capital growth of -7.5 per cent and a total return of -4.6 per cent."


BCPT also said this in September:

"The main drag on performance has been the portfolio's exposure to the office sector, particularly select regional office markets and those buildings on shorter leases. Although the Company decided to reduce its office exposure through the sale of Cassini House in 2021, and while our office assets have generally been backed by positive tenant demand, overall sentiment to this sector of the market cannot be ignored. The Manager is therefore reviewing the portfolio weighting and is actively looking to further reduce the Company's office exposure. "

Been nothing since, but any decent sales might give them a boost.

A struggle to see why BCPT should take my money rather than something else tho - looks decent value near 60p but true of a great many others as well.

[giltedge1] 24/10/2023 17:35

Thanks for comments, yes a gamble but at 50% NAV & most offices in West End, one of the few bright spots left in market. Continuation vote end of 2024, so at 62p yield over 8%, odds are with a gain hopefully, but admit a wind up may be long winded say 90p over 2 years.

[nickrl] 24/10/2023 17:14

@giltedge im not convinced it can be if rates dont fall back. Interest charge will be at least 16m assuming they ditch the RCF then they have 14m expenses and on 60m NRI that leaves 30m but divi needs 37m at current run rate. Maybe if London tourism remains in good shape St Chris may provide a bit more contribution. Mind you as Specto says they previously ran without cover and i guess there always a possibility someone would make an offer for St Chris.

[spectoacc] 24/10/2023 16:38

I'd be more worried about recession risk, and the very poor London office market. Without that, they'll surely hold the divi even if it goes a bit uncovered - remember the FCPT days!

[giltedge1] 24/10/2023 15:39

Dividend safe after 2024?, has anyone done the maths, assuming paying 7% on loan end of 2024, also cash £50m on balance sheet, so assuming they will use max against loan to offset, would expect say another 3m rent added by end of 2024. HY 2023 (6 Months Figures) cash in 24K, Interest 4K, Dividend 17K, surplus 3K. Assuming Interest doubles
to 8K & some extra rent from Westend Estate & recent rent frees end, looks like they can manage?, any thoughts.

[nickrl] 05/10/2023 09:51

@Sky argh yes forgot weve had a discussion on this already danger of having too many companies on the watchlist! Anyhow doesn't change my view here that the 260m is potentially a ticking timebomb until they disclose terms. Its not even clear what the RCF rate is either im presuming its c7%. Also that reads to me as they are paying a commitment fee on the new 260m generally they are 0.7-0.9% range so thats another couple of million cash charge. Im not a holder currently but id want full disclosure on the loan details before i would vote for continuation.

Maybe qtrly NAV update early next month will tell us more although i suspect not.

[skyship] 05/10/2023 09:12

nickrl - re yr above, the Interims detailed the update on refinacing:

Borrowings

The Board has been reviewing financing options available to the Company on its
debt, as its £260 million term loan with L&G is due to mature in December 2024.
The Company also has a £50 million term loan with Barclays which is fully drawn
down, along with an additional undrawn £50 million revolving credit facility
("RCF") which expires on 31 July 2024 (the term loan and the RCF together being
the "Barclays Debt Facility").

The Board engaged EY Capital & Debt Advisory to act as Independent Financial
Advisor in assessing the financing options available.

Following the conclusion of this exercise, we are pleased to announce the
signing of a new, initially two-year debt facility provided by incumbent lender,
Barclays, and a new lender, HSBC. The new debt facility has been structured with
two tranches, being (a) a £60 million RCF and (b) a committed £260 million Term
Loan, which can only be drawn to refinance the existing £260 million L&G Loan.
Each tranche of the new facility can be repaid at any time. The current Barclays
Debt Facility will be repaid, in full, and cancelled on 14 September 2023, with
£30 million of the RCF tranche of the new debt facility being drawn down on the
same date.

The new debt facility enables the Company to retain the competitively priced L&G
Loan which is fixed at 3.32 per cent up to its existing 31 December 2024
maturity, whilst also ensuring the future liquidity needs of the Company are
fully funded at an acceptable commitment fee, removing near term refinancing
risk. The new debt facility includes two one-year extension options that allow
the Company the flexibility to extend it with the agreement of Barclays and
HSBC, with the first option available to be requested from 1 February 2024.

The Board believes that the new debt facility represents a successful outcome
for the Company as it provides certainty of financing beyond the 2024
continuation vote while retaining the lower-cost fixed rate L&G Loan up to its
final maturity date. It avoids having to fix longer-term debt at current rates
whilst not precluding any future financing options and/or gearing targets in the
light of any future disposals. This new facility therefore provides the Company
with greater flexibility and optionality.

[vacendak] 05/10/2023 09:06

Yep. Not far off.
I have just begun to read the latest HY report.

Page 3:
"Dividend cover on a cash basis*
Cash dividend cover for the 6 months ended 30 June 2023 was 117.6 per cent (H1
2022: 97.1 per cent)."

So the new 0.44p is affordable, assuming nothing bad has happened since late June.

I assume they have indeed something planned for that refinancing exercise. They got caught with their trousers down during COVID and removed the divi altogether after years of selling the company as a great vehicle for constant monthly income, thus appealing to retirees. Having to cut the divi again would just finish off that image.

[nickrl] 05/10/2023 08:44

@vacendak c95% covered by my analysis but they of course they have better view of what the rental income stream is. The other negative factor here that will be on the radar shortly is the 260m 3.32% Dec24 loan needing refi. Looking at what GPE managed thats going to be double at least although with less office they may get a better margin but still will add on 8m to interest costs will considerably reduce cover. Maybe would have been better to hold onto cash to reduce value of that loan.

[vacendak] 05/10/2023 08:10

Bring in the champagne, the divi is up!

0.44 is still shy of the old 0.5 but indeed 10% more than last month.
That being said, back in the days of 0.5p it was not always fully covered.

[spectoacc] 02/10/2023 11:39

Interesting Sunday Times piece on West End office outlook. Could argue it's in the price, but you'd have to make that same argument on a lot of the REITs. ie par is not the starting point for valuations.

[spectoacc] 14/9/2023 15:19

Thanks @nickrl, good point re divi. Usually raised to cover errors elsewhere! Really should be preserving cash with office outlook so uncertain.

Do like BCPT, but agree it's currently too opaque.

More needs to be made of the fees - on all these REITs. Small in the scheme of fake-y NAV, huge when seen in context of rental income. Heads they win, tails you lose.