riverman - this comment is from the last annual report:
The full-year dividend is in-line with our revised policy of having the dividend
covered by EPRA earnings 1.2x-1.6x and in-line with the guidance given in May
2022 that 2022’s dividend would be in the middle of the range. |
I'm thinking more generally, they've historically always liked to keep cover around 1.5x or higher, as they are much more active on the development side than traditional REITs. I haven't followed the company closely recently, but not sure they would want cover to run much lower than this.
Agree, if rates fall back they should be fine, although suspect they would find it difficult if rates remain high. |
riverman - no, as per the Annual Report / Presentation, they've come to the end of their large capex expenditure programme, reducing from £50m last year to £30m this.
Most of the short-term debt already refinanced.
Generally accepted, especially in Europe, that the higher rates are a passing phenomenon. So, IMO debt not an issue; especially as the dividend already very well covered and 55% of rents inflation-linked. |
I think the fairly high level of the debt and its short maturity must be a big factor behind the discount. My understanding is that a large part of the debt will need refinancing this year at much higher rates, which could impact dividend cover. I know CLI like to maintain a high cover as they are quite active on capex front - this could surely put dividend at risk? |
I tend to agree with Skyship, poor sentiment towards offices is the issue, not the debt.
Reducing debt costs would of course be welcome. |
Debt relates to individual properties and non-recourse. Debt not a problem here. The absurdly low share price purely relates to adverse sentiment v. offices; without any sensible differentiation between class of office.
Usually this would result in an opportunistic bid to right the wrong. |
I see the CEO and CFO have been buying shares but that through some shar eplan where they get one free for every one they buy. I would buy it also if i was getting it at effictively 50p a share. Does this have significance for the rest of us. I have made a starter positon in CLS but i am concerend its all office and they seem to have quite a bit of debt :( |
Skyship - A large number of the properties have their own individual companies, if you go on Companies House and type in Spring Mews (Student) Limited and Spring Mews (Hotel) Limited, under the Filing History section are the accounts for 2022 which show the property values and that these two companies are profitable. |
WOW! Talk about luxury accommodation for today's students - see link below.
Strath - where did you see that £89m figure? Unable to find a list of properties with valuations...
SPRING MEWS:
Our student and hotel operations continued to perform extremely well throughout the year, achieving record results. The student accommodation was fully let for the 2022/23 academic year and the hotel occupancy was at an average of 87% for 2022 (70% in 2021) with much higher average daily rates. The hotel has just undergone a limited refurbishment programme to ensure it continues to provide best in class accommodation for both short and extended stay customers. |
Somewhat surprised that they haven't sold off the student accommodation and hotel in Spring Mews as these don't appear to be core assets. I know that they had (and may still have) a lettings contract with one of the local universities although if this is still ongoing then it must be in its final year. The student building is in the balance sheet at £89M and would go a long way to bringing debt back to a more suitable level. |
Let's hope so |
I doubled down yesterday at 95.4p.
Surely this level of discount can't hold - I can feel it straining to break out north - but there still seems to be a persistent large seller/s.
I like SKYSHIP's optimism at creating a new thread - I'm sure the break-out will follow soon... |
I've created a new CLI thread; one with an up-to-date Header, which will be further updated with events: |
CLS Holdings (CLI) – Massive NAV Discount coupled with a very high Yield
CLI is a commercial property investment company with a £2.21bn portfolio split between the UK (46%); Germany (42%) and France (12%). It specialises in prime offices in prime locations. It has c718 tenants, including blue-chip organisations and government departments.
Exc. Shares held in Treasury, there are 397.4m shares in issue. As at 23rd Jan’24 CLI had a MCap of c£378m @ 95.1p.
The family of the founder together hold 60% of the equity, with one family member, Bengt Mortstedt, serving as a Non-Exec director.
The quality of their properties can be viewed on their website; and of special interest is this presentation of a newly completed refurbishment in the City, in London:
06/03/24 – Prelims to 31st Dec’23
07/08/24 – Interims to 30th Jun’24
12/11/24 – Q3 Trading Update
Co. website: |
I'm hopeful you'll see that Q1'24. Would love to see that easily surpassed in a rush as a PE bid arrives. The discount is totally absurd.
Sure they are an office specialist; but the offices are prime and in prime locations. The portfolio will contain duffers for sure; but the valuation more than allows for that.
But quite remarkable is the fact that we're getting an 8.3% yield whilst we wait upon events... |
Just taken a good slug at 95p, I now need to see £1.20 to break even! |
Yes a bit concerned about the potential lack of dividend cover once the loans are refinanced. CLI do quite a lot of capex on their buildings so suspect they'll want to maintain a roughly 1.5x cover. On top of that you've got vacancy rates gradually creeping up, so overall can't say I'm that confident they'll maintain current payout. |
This persistent flirtation with the 100p threshold is beyond the pale. Get a grip - breakout North please!
free stock charts from uk.advfn.com |
 CLS best attribute is the divi has been well covered for years albeit it was so paltry i never took any but the high coverage meant it stayed on the watchlist. Last years share price decline has now translated into a high well covered yield albeit the recent spate of debt refis is eating into the cover. Mustn't underestimate though the impact of the high level of refis reqd by end of 2025 and the increasing impact this will have on overall IR. They had an extraordinarily low yield on debt only EBOX bettered it and thus in last 18mths its gone from 2.22% to 3.32% and they still have c40% of debt load to refi by end of 2025 so 4-4.5% overall is entirely possible. So my forecast is that cover could be eliminated by end 25 but all depends on how NRI evolves from here. You can already see vacancy rates rising, albeit slowly, in all countries so at best any rental increase is going to be neutralised for a while yet. Only 25% of debt is floating so some help if rates fall. Of course on such a discount to NAV to looks great value but viability of divi is what interests me but further declines in NAV could lead to loan breach issues on LTVs of course.
As an aside I've raked through there 200+ page ARs even back a few years trying to find the specifics on debt but they give you snippets never a complete table that almost everyone else does even if you have to dig around. |
Probably some investment manager who wants to be able to report to their clients no office exposure. |
Two strange trades yesterday which seem to have resulted in that mid-day dip to 98.5p. Both at 98.7p, both for 99k, both at 12:05. Thereafter swiftly recovered back up to 100p.
Seems as though seller(s) still around. Will clear eventually... |
...also 25mins into this video presentation: |
chucko
To assist your background research I would strongly recommend taking a look at SERE's last Presentation, especially where they deal with Offices in Europe - starting with p41 |
Need a bit of volume to make this jump higher: |
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