Capital & Regional Share Discussion Threads

[propinv] 22/7/2019 14:36

Look at Ocado. Insurance investigation found that staff turned off sprinklers. You can bet your bottom dollar that as an absolute minimum the insurance co will want an investigation and will cling on to any errors made by co. Of course, there may be none.

[cordwainer] 22/7/2019 14:19

Disastrous for Walthamstow community and a kick in the teeth for CAL, it looks like this shopping centre was on the cusp of proving or at least realising CAL's central strategy.

[zccax77] 22/7/2019 12:28

What are the chances of management pocketing the insurance money and then selling off the land for development. All money going towardss reducing Ltv?

[zccax77] 22/7/2019 12:28

What are the chances of management pocketing the insurance money and then selling off the land for development. All money going towardss reducing Ltv?

[propinv] 22/7/2019 11:06

Specto - it's going to drop value short term though

[zccax77] 22/7/2019 10:34

This is great news, opportunity for change of use with the insurance proceeds

[spectoacc] 22/7/2019 10:27

Not sure that isn't a good thing for CAL - and there's no bigger bear on the mf'ers than me. Insurance payout, shops closed?

...Although knowing how bad CAL's management is, I'd want to check they had the policy up to date.

[propinv] 22/7/2019 10:26

Shopping centre on fire in Walthamstow!

[karv1] 26/6/2019 12:28

Hi all are all the 7 locations that are owned out right are they freeholds, I read somewhere that 3 of them are leased is this correct? If so do they pay much and would this limit future uses.

[apollocreed1] 25/6/2019 14:18

I bought CAL last August after reading a positive broker's report from Berenberg. Well that's just another nail in the coffin for brokers. They really know nothing! But if you want to be amused by their incompetence, here is the article:

[...]

[zccax77] 25/6/2019 08:42

Why even pay a dividend. This is company in distress ffs. World class BOD. The income is going to drop off a cliff.

[zccax77] 25/6/2019 08:42

Why even pay a dividend. This is company in distress ffs. World class BOD. The income is going to drop off a cliff.

[spectoacc] 25/6/2019 06:56

They did cut the divi, but not by enough IMO. Management are total head-in-sand kn*bheads IMO.

70% max headroom sounds mighty generous already!

[hugepants] 25/6/2019 06:48

Can CAL increase the headroom on the covenants?
I can only assume not. Otherwise why would they still be paying a big dividend?

[spectoacc] 25/6/2019 06:28

@zccax77 - round my way, the major issue is that a few go bust/CVA, stand empty, but the remaining couple might be on say 5-10 year leases which the landlord can't determine. So stuck with a chronic empty rates bill, the missing rent, but no option to redevelop unless pay the remaining few to go.

I've used this one as an example before:


McD's are going nowhere, Argos & maybe Home Bargains too - but no one's taking the empty ones, and the others may disappear as footfall drops. Huge empty rates, massive rent gaps, no redevelopment possible. Any they do get let will be on pathetically low rents compared to the boom times.

[zccax77] 24/6/2019 16:47

I used to go to the Mall Ilford when I was young with me mum in the 90’s it was nice. I went there 5 years ago again, and thought what a sh*thole.

At what point do the Landlords say enough is enough lets sell this for redevelopment/leisure. I can see a lot of the London sites doing that. Not sure about elsewhere though.

[swindon41] 24/6/2019 16:34

The (theoretical) rent reduction of 12% and higher yield/discount rate of 6% is probably not pessimistic imho - CVA's looking for 50% rent reductions, being offered 20-30% apparently. I think investors will want retail yields of more like 7-8% for non prime sites, so NAV's could actually fall quite a bit more than your example. It is worth modelling these examples - yes, theoretical largely - to see what happens to NAV if rents fall. I believe they will.

[hillofwad] 24/6/2019 15:47

Plenty of evidence kicking around well over 6% today .Let's face it if there were keen buyers close to book they would have already shipped one out

Well lets keep it simple. Gross valuation
Rent say £100 yield 5.25% ( i.e. multiplier of 19.0422 )= £190.
Rent reduces to £88 yield 6% ( i e. multiplier of 16.66 )=-£146

That would show a deterioration of 28% of book value
Pessimistic view granted but not off the radar

[zccax77] 24/6/2019 13:46

@HillofWad, you talk some half truths.

Those London/SE based ones will fetch good money come sale time due to location alone and ability to repurpose. Look at what happened to the Nicholls centre in Maidenhead and look at the yield it achived recently.

However I personally do not think CAL will be a going concern in the next three years due to tenant default, the market will gravitate to mainly the super-prime and the value end. Super-prime being anywhere which has an apple store.

If you don’t believe me look at the Q1 2019 Savills update which shows how things stand at the moment.

[spectoacc] 24/6/2019 13:36

@swindon41 - a similar drum to that which I've been beating. 48% LTV looks OK, vs 70% covenant, until you notice NAV can easily fall 10% pa.

Any view on NRR? They buy the cheap stuff others are offloading, often repurposing it, but they've not been immune to NAV drops.

CAL also suffer from sh*te management IMO - and where is the director buying?

(SMWH - AFAIK their huge moneyspinner is the airport shops, and train stations etc too - captive customers. Can't see/don't see why their High St presence will survive).

[swindon41] 24/6/2019 13:16

I mentioned WHSmiths more because they are heard pressed to compete - albeit OK at the moment - and are going to be negotiating hard with CAL for rent forgiveness/rent reductions as much as anyone else....they have a trump card to play in that they ARE one of the few large space-renters /high street retailers doing OK and boy do CAL need them to stay........my biggest fear for CAL is the business model: it's based on large amounts of debt that is serviced by ( ever upawards increasing) rental flows as retail high street tenants compete with each other for the valuable space that CAL centres occupy. The model is broken - and in my view for good. I'm commenting here more as a property valuer than an investor; previously the dice have been loaded in favour of landlords: now it's with the tenants and their valuers. If I'm correct, you're likely to see rentals falling, void increasing and bad debts rising - all leading to falling NAV's. If that happens, it will mean one thing: Gearing Covenants being broken and the owners of debt taking control and at best if CAL are to survive it will be via debt for equity swaps. Make no mistake, if that happens equity gets decimated.

All imho and DYOR as I could be way out ( I was wrong about the speed with which CAL's share price has plunged) . If you still believe in retail, perhaps better to invest directly in those you think will survive like WHSmiths if you think they have a compelling long term business offer.

[hillofwad] 24/6/2019 12:48

The 3 London centres are valued showing an average yield of 5.2% I think they would be lucky to get anything better than a 6 in front in todays market. Factor in reduced rents and rent voids and they are already pushig the LTV enevlope

White knight needed

[redhill9] 24/6/2019 09:00

WHSmiths move to incorporate Post Offices in their stores could be a seriously beneficial move for them.

[zccax77] 23/6/2019 14:03

Boots are closing 200 stores. Why do you think WHSmiths is going down. They seem to be making good profits, no?

[swindon41] 23/6/2019 13:31

I have been negative on CAL since the share price declined into the early 40's and late 30's.....however, I am somewhat surprised to see it now below 15p which was my target 6 months ago. Since then, high street retail bloodbath has just got more bloody - CVA's the norm , now Monsoon hitting the fan and frankly I see Boots and WHSmith next up as potential CVA casualties. Either way, rentals are going down, seriously south and won't recover - this isn't a blip with rental correction upwards in 2 years. Retail is changing forever imho and CAL are in the wrong place, wrong time and m'ment don't know how to respond. I now believe this stock is a binary gamble - either you believe CAL's retail tenants will recover & rentals likewise, or it's done for and a debt for equity is coming soon. I now think the latter is a more likely outcome than the former but if I'm wrong, there's a great upside to be made at 14p. GLA either way.