Any thoughts on the merger?Yes or No? |
ii describe it as "Other" and don't appear to get quotes (but don't tell you).
This is the sort of thing the LSE/govnt should be working on, not trying to secure bubble listings, SPACs, or Kazahk airlines. Too many UK stocks aren't consistently tradeable across different platforms (EBOX another), and who puts their £20k in with the same broker every year. |
* KID 'issue' because of the corporate action? - at a guess. |
@dr biotech CREI's tell us they are using proceeds to lower the RCF (6.9% IR)which isn't a bad thing. At HY24 it was c24% of borrowings but c40% of interest charges so this will lower finance charges bur would have been nice to know what yield it was sold at. |
I've bought in here. I see it as a bit of hedge against my substantial API holding should the deal collapse, and if it doesn't it seems like a good opportunity to get another higher yielding investment into my ISA. Commercial property makes up 12% of holdings now which is enough. Hopefully if interest rates come down it will underpin the share price and the underlying portfolio.
Decent sale today too. Hopefully API will shift a couple too. |
Well I bought in this morning. CREI look a well managed outfit - the increased scale means this should rerate once deal goes through. I think the market reaction is wrong in this case - just because API was trading at a 40% discount, does not mean their properties are worth 40% less than their book value. It merely reflects lack of confidence in the management team as well as general apathy towards these sub-scale diversified REITs. Of course these issues will no longer be relevant when deal goes through since there will be a new management team and API will become part of a larger, more specialist REIT which should attract a higher rating. Ultimately, CREI have got their hands on some decent, mainly industrial properties (with good reversion potential) 25% below book value, while instantly increasing their scale towards the magic £1bn figure which should ensure a better rating. |
a good deal for all involved due to the ample discount offered by APIs assets, compared to the free market. |
The combined industrial and retail holdings (44 per cent warehouses, 20 per cent offices, 18 per cent retail parks) are good enough for me to get in at this price. |
A useful "Merger" presentation over on the CREI website:
I suspect CREI will open Monday at minimally 72p; and climb from there.
Why the house broker wasn't supporting CREI after breaking the news, is perhaps rather surprising. |
Specto, you're assuming the market was completely rational and correct in giving one trust a 40% discount and the other a 15% discount. The difference probably just reflects the perception of the qualities of the 2 managers, not because the API properties are inferior and worth less. If that is the reason then it should no longer be relevant since CREI will assume management.
Discounts often become entrenched for no logical reason. Putting the discounts aside, CREI are getting a decent portfolio of properties for a 25% below NAV, plus the benefits of scale which should lead to a better share price rating over time (lower costs, cheaper finance, better liquidity and more demand from wealth managers who increasingly won't look at anything below 1bn) |
@specto post the announcement they are now trying to mash a 27% one with a 35% one I like CREI pretty conservatively run and always give good transparency but there was better value until Friday so given the a/c had the EPIC cash saved me postulating for too long given its 20% drop over 48hrs. Wonder if CREI BoD expected that!! |
Share price movement totally expected. Arbitrage in place till signed off.Combined assets should place it comfortably into FTSE 350, even 250.Then, the trackers move in ,massively increasing liquidity. Watching the video, the CEO hints they could sell off a couple of assets PDQ |
The reason, as posted on API thread first thing, is that they're mashing together a ~15% discount REIT with a ~45% one, of similar size.
Ergo, discount of combined entity will be c.30%, all else being equal (which it largely is, considering the properties don't change).
If you're going to stick REITs together, which does make some sense, either don't do it NAV-for-NAV, or better, do it with ones on similar discounts. |
Yes API dividend is only 80% covered and the property portfolio itself also quite low yielding (the high dividend yield is only because of the wide discount and low cover). Not done a proper calculation but looks like the combined entity will have an uncovered dividend following the deal - perhaps that's the reason for the share price reaction? |
@riverman pre covid they would regularly issue 1m shares at slight premia and probably had coterie of wealth mgrs that were pushing it to their clients so had a reasonable following. Its never fallen back like many of peers and dividend has been covered at cash level so absorbing API who are way off covering dividend is going to undermine that metric if the deal goes through. There are some sweeteners on charges may forestall it long enough for reversionary income to close the gap. |
CREI very well-managed; but historically always rated too highly versus more than competent peers. Hence 2yrs ago the shares always traded at an NAV premium - for me a total No-No for any investment company.
The driving force here is the MD - Richard Shepherd-Cross. Used to walk on water; but reputation now trashed in a single day as the Market predictably slammed this all-share merger.
Didn't expect quite such harsh treatment, otherwise would have sold my API first thing! I didn't.
Now CREI have crashed to c69.5p where the discount is nearly 26% and the yield 7.9%. So IMO the fall well overdone. Would have bought Friday - but no cash on my a/c. |
On my very initial scan, CREI reminds me a bit of AEWU - smaller regional properties typically offering a higher yield. Also seems to be largely focused on industrials and retail parks, with only about 15% in offices, so they appear to be in the right sectors. |
I am very interested in your thoughts, riverman |
Never really looked at CREI before as always on tight discount but could be interesting at these levels. People too focused on the wide discount of API, but it is actually a decent portfolio and no particular reason it should trade on a different discount to CREI (other than that perhaps concerns over the management, who of course will be replaced once the deal goes through). Ultimately CREI will be getting a portfolio of properties at a good discount, while also increasing their scale which should lead to an improved share price rating. Intend to take a closer look at the CREI portfolio over the weekend. |
@pharmaboy useful link and saves fully digesting the offer document. They have mgt charge savings of 1m pa and they are waiving additional charges on API portfolio for 9mths worth a one off 1m. They clearly want rid of the expensive API RCF and say that both companies have disposals lined up ready to go to eliminate part of it. |
CEO of CREI.Explaining logicHTTps://vimeo.com/904190906/d9d3c5c70f?share=copy |
I couldnt buy these either thru II late this afternoon. Too late to fone them after multiple on line attempts. Very annoying. |
Ive recycled my EPIC payout into here sub 70p was too tempting. Mind you it was a palaver ii didn't have the KID uploaded so wont let you trade it online but its wasn't obvious that was issue till i called them and after three abortive attempts the planets were aligned and despite the delay actually ended up with 0.6p improvement!! |
A bit of a disaster for CREI shareholders so far but yield is 7.9% at 69p by my calcs. Good value whatever happens? |
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