British Land Share Discussion Threads

[wogunremi] 05/8/2019 15:25

Did you see INTU falling this far?

[essentialinvestor] 05/8/2019 15:24

I'm tempted by LandSec here, but not confident I can call it.
Thought Intu would face challenges, but did not see the extent of the HMSO
price reaction, particularly outside of recession.

[jonwig] 05/8/2019 15:18

I hate bringing in politics, but there are several reasons why London (ie. its property) might be resilient in the face of a global storm.

1) I guess lots of rich Chinese are already moving a lot of money from HK to UK.

2) GBP is weak, very weak.

3) UK law is trusted globally, and the central threat to prosperity (Corbyn) is looking ever more a distant possibility.

4) We have a current government (esp. a PM) which recognises these advantages.

5) The bit I hate to opine on, but ... it's perfectly reasonable to conclude that the UK will not suffer worse than the EU after a bad split. Stresses and economic conditions in the EU and especially in the EZ make it pretty unstable. That could be the beginning of an new negotiation.

Whatever you think about BoJo, he seems to have the ability to gather brilliant people around him and let them get on. Did May, does Corbyn?

[chiragmahe] 05/8/2019 15:03

what a difference 1 week makes. huge falls everywhere

[essentialinvestor] 05/8/2019 13:31

Well they say fortune favours the brave!.

Holding HLCL, HSTN, SHB and GPOR atm, added very small amounts of each today.
In total they are approx 1.5% of what I can invest, hopefully some opportunities
as an early general election/and or 31 October looms large.

[chiragmahe] 05/8/2019 11:28

6.55% yield now

[jonwig] 02/8/2019 16:25

London Offices not dead yet:

An Asian investor has offered to buy a landmark property development on London’s South Bank for more than £875m, in the latest boost to a real estate market affected this year by Brexit jitters.

The investor has made a formal offer to buy Southbank Place, a development that includes a large WeWork co-working space opening this year and the London headquarters of Shell, according to two people briefed on the situation.

They have offered above the £875m asking price, increasing the probability that the deal will be completed, although it could still fall through, the people said. Developers Almacantar have for now ceased marketing the building.

[essentialinvestor] 01/8/2019 12:47

What makes the sector difficult to read/value atm is a convergence of factors.
Firstly, the wider economic cycle - we are 10 years in to an expansionary cycle
which is old on any post WW11 data. The UK needs to navigate leaving the EU (with 2020 macro possibility taking a large hit)
and finally there is a significant secular change impacting many UK retail property assets. So, quite challenging conditions.

Challengingly circumstances can create opportunities on the flip side.
Timing this is the tricky bit.


Ian, most welcome. As always DYOR!.

[ianood] 01/8/2019 12:17

EI - thanks for the GPOR steer. I remember holding them for many years and sold them when we needed cash for a house move in '88!

[essentialinvestor] 01/8/2019 11:00

Just beat me to it, HP thanks for posting.


Great Portland have been net sellers for the last 6 consecutive years and still
appear keen to sell, however no recent disposals may indicate London office
buyers becoming more circumspect.

[jonwig] 01/8/2019 10:37

Good article, HP ... unfortunately!!

[hugepants] 01/8/2019 10:04

Stockholm syndrome for REITs?

[essentialinvestor] 01/8/2019 10:02

Ian,

From memory Gerald Kaye joined Helical just a few years following Michael Slade,
(who has just let the business) - although still retains a sizeable chunk of their equity.

On Helical what I find most interesting is their positioning. They see London office
as producing the best returns going towards. They exited secondary retail a couple of years ago, and also industrial property (warehousing).
Hansteen plc, who are very sharp operators, appear to see an imminent top in UK industrial property.

Reading through Land SEC's recent reports I notice they stress a refocussing of their business on London and away from regional.

So for me, HLCL, GPOR and possibly SHB are first choices, although I'm watching both BLND and LAND.

[chiragmahe] 31/7/2019 19:45

fed cut rates. whats the effect on uk property?

[ianood] 31/7/2019 18:20

EI - INTU's gearing at 60% is over 2x that of BLND. Most banks have an LTV covenant pitched at 70%. OK the market is not ideal but where would you rather be?

You mention Helical Bar, agreed used to be excellent, however, I fear that company is no longer the same post Slade's retirement and as we know property is very much a people business.

[essentialinvestor] 31/7/2019 17:42

Yes GPOR, edit!. - that's dyslexia - the gift that keeps on giving ).

[jonwig] 31/7/2019 16:17

Yes, agreed, there will be. (GPRO? GPOR.)

[essentialinvestor] 31/7/2019 15:40

Jon, I hold a very small amount of GPOR intending to build a position
there through the cycle - their LTV is in single figures, 100% focussed on London
with low retail weighting - I can't make a case for buying it right now tbh.

Helical Barr are usually the smartest in the room - just look how
they navigated the financial crisis without resorting to a highly dilutive rights issue (which even Great Portland needed). HLCL NAV is well Above 2007 levels,
as is SHB and GPOR@ 5.94 ( 2007). 8.49 NAV at the 2019 H1.

Some nice opportunities will open up in this sector, worth watching at the very least.

[jonwig] 31/7/2019 15:11

EI - I've just looked at their 2007 AR. LTV (the thing I've stressed) was 41% at 31/03/07. Yes, their NAV was 1682p, but I think valuers were unprepared for the events to follow.

Now, I would think valuers are much more cautious and retail is not the central plank of their strategy.



March 2007 - everybody was asleep! I should have looked at 2008, '09, etc. but I haven't the energy. For now.

[essentialinvestor] 31/7/2019 13:19

I'm highlighting their 2007 EPRA NAV @ 1682 a share,
to show just how quickly the market, and consensus, can change.

INTU, is that another black swan event?.

[ianood] 31/7/2019 13:03

Your high lighting the banking crisis during which time all assets were difficult to price and the bulk of the CDO's that were traded were property backed (not with good quality either). It's not called a black swan event for nothing.

[essentialinvestor] 31/7/2019 12:47

Ian, really?, You must have a short memory when it comes to this sector
then. Have a little look at their 2007 Annual report.

BLND NAV is still very significantly under that level 12 years later due to a highly dilutive
rights issue, same applies to LAND on NAV.

Debt metrics looked hunky dory for both BLND and LAND in 2007.

[ianood] 31/7/2019 12:41

Have a tick jonwig :)

[jonwig] 31/7/2019 12:39

EI - buybacks increase eps. If they can borrow at (say) 3% and rent at 5%, there's a 2% free ride for the quity, hence increase in eps. So paying down debt would lower eps.

OK, you know all that, but I think it's their rationale. In 2007-09, propcos with a LTV above about 40% were distressed, LTV over 50% would mean takeover or death. BLND's LTV is 28.1%, so pretty secure.

They're also exiting pure retail pretty quickly.

[ianood] 31/7/2019 12:38

Group leverage 22%; consolidated 28% as at 31 March 19. I think they may know how best to manage both their banking relationships and the share price relative to NAV as one of the better UK REITS.