Breaking up through the still falling 50day SMA:
free stock charts from uk.advfn.com |
" so, they delayed the annual report for a few days so they could publish this "
Trading Update 24 February 2025: " when we publish our 2024 full year accounts at the end of March 2025. " |
A 2p (37%) cut in the final dividend, even if allowed, would save £8m compared to debts of £1bn i.e. 0.8%. Not going to make much difference, apart from to the wallets of the shareholders... |
It would make no sense to have a rights issue when the shares are at such a discount to NAV (if you believe the NAV). They obviously need to keep selling properties to get the LTV down. Also sensible to cut the divi to the amount need to retain REIT status.
Nothing else to do really! |
As LTV seems to be the issue here then I would like to see any surplus cash from sales paying down debt. |
It is much more fun to be an optimist Freud ! And i can assure you that in this case it will also be much more profitable ! Cheers! |
 so, they delayed the annual report for a few days so they could publish this. perhaps they needed to get some good news out now because the report continues to show some stress, but it might not look quite as bad now.
ok good news at least, spring mews has been sold. LTV down from 50.7 to 47.9 for a £100m deal. there were 2 more german properties for sale at another c£100m i think, so if they sell at comparative valuations LTV does start to look a little more sustainable at 45ish, but it really should be lower. as long as no further revaluations. i do remain concerned about potential over-renting.
my main beef with this company is that they are clearly attempting a refinancing. but they are doing it by selling their assets. and it is their assets which are their future rental income. and hence future shareholder returns. and spring mews is one of their best properties because it is very fully let. they shouldn't be selling off the silver. i would not be holding out for asset appreciation in the current economic climate.
they might well have needed to complete this sale before deciding on the dividend but it got too late for the sale to be confirmed for it to influence the dividend. i think any sensible company would reduce their dividend to pay down debt. i can't see it staying at its historic level.
i can't see them doing a buyback. there are 40m shares sitting in the treasury already. imo they should refinance in a more typical way with a cash raise. however if they did that, the family holding would have to cough up a significant amount of that and i think it is the family who are perhaps under more pressure than anyone else here. they have lost an emormous amount of capital over the last 4 years or so. and lost their ceo and motivating force. so they keep things as he would have wanted them, in their eyes at least.
often a large family holding is helpful for a business so they can steer the longer term plan. however in a refinancing situation their resistance to it becomes a hindrance. if they don't do a capital raise, i think the institutional shareholders will start to push for it and that will act as an anchor on the share price for ages.
so my predictions for the report- no re-fi, reduced divvy, some further asset devaluation in the wider estate (not much though), ongoing stresses over financing, possible further sales. but also some good news re their redevelopment plan in vauxhall.
chart - it is still in a very long term downtrend. there is some upside potential to around 90p which does look like quite a strong resistance level at the same level as the death cross. if you are lucky enough to have got in recently and it gets to that level, i would take the money and run. if the dividend is reduced you need another thread. again. there were some spectacularly wrong predictions in the old one. |
Net income from Spring Mews was around or below 4m so net they will see EBT increase a tiny bit, reflecting repayment of more expensive debt. A bit more than 15m of free cash released so pro forma cash most comfortable. No doubt they could afford to commence a buy back program - does not need to be more than 10m to make a difference. A sale of the french portfolio would bring LTV down to below 40% without hurting the NAV much at all. Risk/reward now very sound. |
Suspending the Final dividend would "save" just £21m - just a token move which the family trustees may not allow in any event. |
They need to ditch the divi really, but IMO they're no RGL, who were a basket case from 2 years before they imploded. CLI aren't going bust, & are unlikely to have a capital raise down here.
Suspend the divi for a year makes the most sense, albeit that won't be enough in the absence of a market pick-up.
But otherwise agree re LTV. |
Good news that Spring Mews was sold but LTV after this deal is still way to high.
"This will also reduce CLS' year-end cost of debt by over 20 basis points and LTV from 50.7% to 47.9% on a pro forma basis."
CLS feels like RGL 2.0, they need more equity. |
It hasn't been sold above book value at all, read the RNS properly.
Has enabled some debt-juggling but they're going to need to shift more of the best assets. |
Finally a move in the right direction. Now fingers xxed for those upcoming Prelims. |
The student accommodation has been sold for 8.1% above book value, and they have reduced some of the higher cost debt, which should dampen the effect of the reduction in EPS due to its sale:
The sale has also provided an opportunity to address upcoming loan maturities for New Printing House Square in Holborn and Artesian in Aldgate, which were due in June and December 2025, with the properties being substituted for Spring Mews Student into an existing portfolio loan with Aviva Investors. Consequently, on completion of the Spring Mews sale, the disposal proceeds will be used to repay £85.8 million of debt for the two properties being substituted into the Aviva Investors portfolio. The restructuring of the financing allows CLS to repay more expensive debt whilst retaining the Aviva Investors portfolio loan largely intact, which is fixed at 2.54% and expires in 2030 and 2032. The sale of Spring Mews Student will therefore be marginally earnings enhancing. This will also reduce CLS' year-end cost of debt by over 20 basis points and LTV from 50.7% to 47.9% on a pro forma basis. |
Sale Of Spring Mews
CLS announces that it has unconditionally exchanged on the sale of Spring Mews Student in Vauxhall, London to Rosethorn Capital Partners and Barings for £101.1 million net cash consideration. The purchase price is in-line with the 31 December 2024 valuation and 8.1% ahead of the 2023 year-end valuation. The sale will be completed in May 2025 when the remaining consideration will be paid. |
@baner cash from spring mews will surely be used to pay down borrowings not buyback shares but I could see the French portfolio being offloaded as a portfolio and that could be a step change. |
I am a recent buyer with a view to a recovering commercial property market opening up more sales opportunities, in addition to potential influx of cash due from Spring Mews, among other drivers I see worth risking it for. Maybe not this year, but probably next. Then buybacks.
Almost 12% divi while I (inevitably) wait makes it more worth it, even with a possible cut. Unless the outlook has changed materially from my expectations, any price dip post-results will be taken advantage of. |
No. If they put it back several weeks then it would be different. |
does it not make people anxious that they put the results back a few days? |
As strathroyal has already posted the results are due out next Tuesday April 1 |
With Spring Mews sold the company will be in a position to commence buying back shares - if not massively so. But this is of course very tempting from the majority shareholders point of view - my belief is that we will during 2025 see a more massive sale of for example the whole french portfolio, in order to accelerate such by back. This will enhance the pro forma NAV of the outstanding shares significantly and also give room for a good dividend longer term. Tomorrow we may however read about an extended sales process re Spring Mews, and possibly also a cut in the dividend short term. But this is nothing to worry about, the values are there and will not deteriorate as a result of keeping the money in the company - on the contrary. If the shares dip as a result - it is an attractive opportunity to invest. Limited risk, great potential. |
the full year results are out on thursday.... |
I still hold a lot and I'm happy enough. The next news will be Spring valley sale which will help reduce gearing. The company is quiet because they are getting on with it. |
so- 2 full trading days and one post giving a rationale to hold. which is well-balanced and i don't wish to dismiss out of hand. thank you for sharing scrumpyjack.
but the lack of other posts isn't exactly showing me that small holders have conviction in their positions. this chart isn't one to forget in your portfolio and pick up divvies every few months. potential capital losses need to be considered.
so, any advance on scrumpyjack's position? |
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