Picking up more CLS Holdings recently at sub 75p.
#CLI very, very illiquid due to small free float, difficult to buy in modest size without moving the price. |
 Trying to add a little more structure to the framework loglorry1 - rightmove shows the cheapest apartments 1 beds in the area from 350k. This is a an ex-council block in need of redevelopment so not a good comparison. There's really very little below the 500k mark. The best comparison is the Keybridge 1 bed for sale on a low floor for 600k; towards nine elms so arguably a slightly better area. Completed a few years back so won't contain the 5-10% new build premiums which new properties sell for.
The Prince of Wales development in Battersea I know a well (more desirable area but new 1 beds there start at 850k upwards; 2 beds 1m+ and as you go higher in floor and better aspect (river or park views = big premiums). All together - I don't think a 700-850k estimate is a bad conservative guess when adding in the premium for penthouses, higher floors, some will be two beds etc. So that is a residential GDV of 350m to 425m excluding value of commercial units etc.
Again Keybridge apartments are 1 bed 60 sq/m and two bed 80 sq/m it seems. Let's take the development at an average of 75 sq/m per unit. Google development costs gives 1.8-3k per square metre. Taking the higher figure that is 112.5m development cost.
Tbh, all sounding a bit too good to be true and given we're working off assumptions from a novice undoubtedly it is and I am missing some big aspects - I mean the biggest is that the planning application isn't even in yet. I more think it is an interesting thought experiment to show this site has a underlying fundamental value - which is what we're looking for in the portfolio vs. reflected in the share price. |
Can't imagine an apartment there would sell for less than £500k. 500 apartments would be £250m gross. Obviously loads of development costs etc but even if £200k per apt to CLS thats £100m which is huge compared to the market cap of £300m. Guessing numbers here so may be completely wrong. |
Spring Gardens / Citadel place development application has lost the student accommodation but materially increased the housing from 180-200 to circa 500 apartments. It is 7m extra rent but I can't help but feel they are going to use the Labour governments pro-growth & build rhetoric to go bigger and why not.
No Way CLS have the skills or knowledge to take on a project like this so surely the plan is to get planning and then sell the site to a house builder. Another site in the portfolio with huge fundamental value... albeit planning pack submitted in Q2; can't imagine it'll be a quick process for a project of this size. |
the way i see it is this is a buy and forget stock. Property should be worth a lot more than 2012 levels so its a waiting game now |
I hold this as a dividend machine - like a property with a very high mortgage. The risk in the cost of servicing the debt; but the reward is then priced accordingly. Interest rates on their way down. |
@Farrugia certainly improves things but 5yr swap rates are siting 2-3 times higher than they were and CLI has borne the brunt of that over last few years as they've had refi loans at very low rates a lot higher pushing up the interest charges. That said they were never over paying out on the divi and it was extremely well covered so never had to take a haircut unlike others. As long as occupancy levels hold up, and there is an if in that, they can square away this years refi load and still just about cover the divi. That ought to e more than enough to support the share price and move it up but can't see 100p anytime soon as offices are not yet out of the woods as we now have AI threat compounding WFH. |
doesn't the fact that the bank of england is reducing interest rates make it more favourable for companies wanting to raise debt at acceptable rates? |
Gary - purely the share price weakness taking the yield up to 11%; at the same time interest rates retreating and valuations elsewhere showing stability, even some growth. |
Sky, You make that sound as though you were expecting a divi cut. |
Wondrous to behold...
I'm daring to believe that the inference from today's RNS may be that we won't hear bad news in the Update.
If that proves to be the case we may even have cause to expect the dividend may be held and that two figure yield remains a reality.
Live in hope... |
Signs of life or am I dreaming? |
Added. Fool that I am. |
i bought quite a few of these. |
Has anyone any info on their Safra loan(s)? |
@sky the average IR across the portfolio increased from 2.69%(2022) to 3.61% (2023) then 3.81% at HY24. In 23 the refi's were at an avg of 5.27% in HY24 it had increased to 5.64%. Some of the increase is due to using short term loans to cover for sites they want to dispose of.
In FY25 nearly 40% of the loan portfolio needs refi and i get your point that they might slightly better rates than in HY24 especially on Euro denominated ones. Overall though they will still be higher than what they are replacing was what i pointing towards leading to the overall rate across the portfolio being above 4%. This is eating into free cash hence my forecast that increasing the divi is unlikely but as we all know yield here is already stellar. |
I agree the tenor of your post...but not enough to rec it (thumb up).
Someone disagrees strongly enough to spend time/energy on down-thumbing...but without the courtesy of saying why.
So they've not added anything to the discussion, other than 'friction/vexation'.
Why?
Life is too short to be small.
IMO.
HTH and ATB
PS Feel free to rec if you agree!
;-> |
I don’t follow ExTrader |
A downtick is a lazy way of responding...and unhelpful to the concept of info-sharing that BB's should aspire to.
Care to share what prompted this action, so we're all better-informed - whether we agree with your viewpoint or not-and maybe have a counter-argument?
That way, everyone's the wiser. Instead of no-one.
TIA |
Pyufak - you're right to think things may not be as bad here as the market rating might suggest.
There is no pressure to refinance; and all and every refinancing is per individual property with a very wide range of lenders.
Meanwhile interest rates are coming down again, rents are rising and finally people are starting to realise that WFH may be OK in the public sector where employees can do what they want; but in the private sector - time to get back to work!
The share price massively bombed out; so the slightest hint of good news in the Update later this month could well see a climb of 25% to 90p; even 40% back to the 100p level again.
Then of course; always the outside chance of a bid and a 100% gain quite likely! |
Nickrl - slightly confused why you think the refinancing this year will be at higher rates. In the last presentation of results the CFO said expects them to be at better terms and since then 5y swap rates in GBP is lower and considerably lower in EUR. I expect post tariff news today this to go further.
I’m a bit confused on this portfolio. Not as easy to wrap my head around as ASLI as lower WAM of tenant leases and many more properties. However; I do feel I can find a number of desirable assets in the portfolio - the Essen, Dortmund local council leases, student digs (being sold); hotel; Fetterlane just fully let to a law firm for 10y etc. every asset where NAV valuation looks manageable makes the bombed out valuation on the rest look even more extreme and on that metric I really do feel 200-300m of strategic sales hugely changes the narrative. While they are being slow it doesn’t look like they should panic sell either. Overall - may dip my toe tomorrow.
Out of interest - what clip size have people bought and sold easily in this one. I checked in a few months back and it was 3k by 3k 2c wide so I moved on. |
Need to see how the loan refi's are going for 2025 as they are likely to reset above previous rates so that eats into free cash but worse case is they have to the hold the divi. They need to conclude Spring Mews so they can actually get rid of some debt. |
C'mon Blackstone; there's a great deal to be done over this side of the pond... |
According to the website the trading update is due 24/02. |
Dr. Freud, on the chart I beg to differ. Yes, to pull up the all year chart there does seem a huge H&S from about 2019 when it reached 310; so it has now fallen to just short of 25% of peak value, which is a decline, peak to low, that always perks my interest if there is a going concern. Now clearly you think that's a BIG IF, but others here disagree and for the time being I'm inclined to follow them. We know that large mortgages can be affordable dependent on cash flows, so debt is not so much the problem being able to service that debt, while, from our pov, still paying a dividend.
Incidentally, from a further chart perspective, the run under £1 can be scary, particularly from a great height, when the breaking of the big round number causes selling. That is also evident on the chart, where it failed to break back over the £1 level and instead, kept tumbling to its present 72p. Looking back along thee chart, this does seem to be another historic support level on two previous occasions, though you have to go back some way.
My feeling, taken together with the much more general market malaise on high value/income REITS and ITs is that this is oversold. they just have to show the dividend as sustainable and we could find some dramatic recovery in due course.
So I'm holding until the picture clarifies. I certainly wouldn't want to allow myself to be scared out of it.
;) |
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