Delek Glbl Share Discussion Threads

[lewseyfarm] 08/7/2008 16:50

thanks kenny for sharing your views

[kenny] 08/7/2008 15:08

Like any other property company there are bound to be write downs in their property values albeit the value of the car parks and hotels may hold up better than UK offices.

In my personal opinion, the dividend will be marginally increased and not cut - last years' was 11p total and the brokers are forcasting 11.6p. Delek Group, the ultimate holding company, has recently announced that two of it's other subsiduary companies are in negotiations to potentially buy 400 service stations for 160m Euro and a refining business for $1 billion.

So, I am assuming the group, which holds 85% of DGRE, has no financing problems and could, if necessary, lend DGRE a few pennies.

I bought a few more today, but I am a long term holder who is investing money I do not need to access for at least 5 years so do your own research and invest accordingly.

Unlike a number of other high yeilders, I think DGRE can afford to continute to pay its dividend as most of it comes from net rents e.g. it does not represent a return of your own money. Further, the great comfort of having a large holder with 85% is they are not going to abandon their own investment; unlike for example the property funds launched in the last few years which are primarily held by personal investors and fund managers who do not have big stakes in the equity.

In summary - short term the pain is brutal; long term the secure dividends and holding company are what enables any investor to relax, collect the dividends and wait a few years' for sentiment to turn.

[lewseyfarm] 08/7/2008 13:55

kenny whats the prospect of property wright downs and a dividend cut?

[kenny] 24/6/2008 08:29

Today's announcement confirms the legal case is settled - DGRE's share of the settlement is a further payment is £3.66m plus whatever legal costs it has incurred.

After all the panic that this legal case was going to bust the company etc, the actual result should really boost the company's shares.

[kenny] 17/6/2008 17:31

With the recent share price fall we are now back to yeilding just under 14% on prospective dividends of 11.6p over the next year.

Bonkers in my opinion!!

Not too woried as I am in for the dividends. I am guessing that it is a fund manager that has been selling at any price over the last 10 days - just confirms my decision to take personal control of my pension funds through a SIPP and not trust fund management - most of which are making decisions on a short term horizon.

[kenny] 11/6/2008 10:21

The article below is interesting; no shortage of cash/loan facilities in this property group:

Delek Belron enters loans market in €58m purchase
06.06.08
Delek Belron International has made its first foray into the property loans market with the purchase of three B loans at a 27.5% discount to their face value of €80m (£63m).

The Israeli company teamed up with compatriot insurance group Israel Phoenix Assurance to purchase loans secured against 30 properties in Germany and Switzerland for €58m (£46m) from an undisclosed 'international bank'. The deal was agreed last Friday and is expected to complete this month.

Buying debt that is secured on property from banks is becoming increasingly popular.

B loans cost more than traditional bank debt but less than mezzanine debt. In the event of default, B lenders are paid back before mezzanine lenders but after senior lenders.

Ilik Rozanski, chief executive at AIM-listed Delek Global Real Estate, which is 85% owned by Delek Belron, said he hoped the deal would provide a springboard for Delek Belron to spend €500m (£396m) on debt.

'Loans are good deals right now and we want to do more in the sector,' he said.

Delek aims to achieve a return of 14%-16% from the loans, provided they are repaid.

[kenny] 02/6/2008 13:51

Also, buying more shares using the funds received from each massive dividend has a great compounding effect for a SIPP, or indeed, a non-pension holding.

[flying pig] 02/6/2008 10:01

I agree - purchased a few more for my SIPP. Decent leases and long term funds with development potential. Looks OK risk reward ratio.

[topvest] 28/5/2008 14:27

Good trading update yesterday. Bought a few at 93p. A 62% discount to NAV and a yield of over 10% is ridiculous.

[kenny] 23/5/2008 10:02

Today's update from Investors Chronicle is as follows:

Delek jumps on legal news

Shares in property investment company Delek rose 11 per cent as the company revealed progress in a legal dispute over an aborted acquisition. The massive dividend yield has also attracted interest, even though debt is a risk.
TIP UPDATE
Delek trades on a wide spread, so selling at 92p might not be as appealing as it initially appears. The forecast dividend, if paid, remains exceptional. We retain our buy recommendation.

[cestnous] 23/5/2008 09:17

Another aricle in IC online today. Buy.

[kenny] 20/5/2008 15:12

I believe the share price will march upwards albeit with regular partial pullbacks. Here's an analysts comment on British Land's results announced today:

"These are strong results and, while trading at a 41 percent discount to net asset value and a 4.6 percent dividend yield, the shares look oversold," said Lehman Brothers analyst Mike Prew.

DGRE are on a 56% discount to net asset value and 12% yield. DGRE might not be the size of BLND but there is every reason to believe the gap will close.

BLND are on quite a high discount to NAV compared to the real estate sector average of 30% because BLND have a fair amount tied up in property development, which the market believes may not find tenants. DGRE has no such speculative development.

[hectorp] 20/5/2008 14:54

That sounds and seems very reasoned. Maybe you'll be proven correct.
I've not managed to get a fill myself in any case.

[nickcduk] 20/5/2008 10:38

Ive been selling a few around current levels. The recent move up has been triggered by the IC article and the clearing of the overhang. I think buying yesterday and today was insider trading ahead of today's announcement. Im not sure today's news is positive or negative. The legal action claim still exists. Possibly those trading ahead of today thought it would give the shares a marked boost but I think the rally will start to falter. Sentiment is still extremely negative amongst commercial property and the disparity that DGRE was demonstrating against sector has now narrowed somewhat. Don't see what catalyst will drive the shares markedly higher from current levels.

[hectorp] 20/5/2008 09:57

Still a possibility DGRE will have to find some millions here, but this looks more positive. Why did they drop the original arbitration claim? maybe they dont have any legs to stand on regarding the clain for damages also. Perhaps that could be settled out of court, eg a nominal sum much less than that mentioned. This has been leaked because the price of the share rose 4-5p before the announcement. Even so, I think I will start buying here as risk has fallen.

[hectorp] 20/5/2008 09:54

LONDON (Thomson Financial) - Delek Global Real Estate Ltd. (DGRE) said Swiss
retail and real estate group Jelmoli Holding AG has withdrawn from its initial
arbitration claim related to the sale of its real estate portfolio.
However, the company said Jelmoli will claim damages resulting from the
alleged breach of the agreement.
Jelmoli -- 33.4 percent owned by DGRE -- had earlier indicated that its
damages amount to about 134 million pounds plus interest.

In December last year, Jelmoli had commenced legal proceedings against the
consortium of Blenheim Properties, Delek Global Real Estate and Delek Belron
International over the failed sale of its real estate portfolio.
The 3.4 billion Swiss franc transaction was first announced on July 31,
2007, but the purchasers subsequently refused to close the transaction.

[hectorp] 19/5/2008 14:32

Kenny , that makes sense, though I'm surprised the I-C writer did not mention it in passing. Oh well then back to the drawing board and I may consider coming in. I'll do some further D-D.
many thanks for your helpful post.
PS RUS is very much worh a look and is also at some fair old discount.
Hector

[kenny] 19/5/2008 10:39

Hi Hectorp, if the dividend pattern follows last year, the interim was paid on 1 October.

The litigation with Jelmoli should, in my opinion, not be overblown. The IC made no mention of it which you may consider an important indication of what may be the end result. DGRE may win in which event they have over reserved about £3m, less legal costs of defence. If they lose, I have difficulty in imagining that damages will exceed that which DGRE has already provided. Jelmoli themselves have announced they are splitting into two companies so they may wish to have the matter resolved quickly - the chances of this case actually going to court are, in any event, slim.

However, if you are concerned that substantial damages could be awarded against DGRE, I think you will find that even that scenario does not reduce NAV materially. If the discount to NAV narrows and that, I believe, is the "bottom line" on the litigation, my opinion is that it is an irrelevent issue. (Estimate for yourself how much you think the damages may be, and by working out how much that is per share, I think you will concur that the litigation is a non-issue. DGRE is trading at a 60% discount to NAV so even substantial damages makes a tiny difference to this discount).

[hectorp] 19/5/2008 09:12

Any ideas on date of ex div, then payment?
TIA
H.

[hectorp] 19/5/2008 08:09

Kenny just lurking and also saw the I-C BUY tip on page 34.
I have no worries about the overall situaiton of this company ,and I am also invested in DDC, and RUS, property plays in E-Europe and Russia respectively.
However the legal action against DGRE does concern me and it could be the factor which prevents me from investing.
THe instigators look as if they could have a sound case, in which case DGRE's decision not to go ahead with a massive property puchase ( which seems to ahve been made just before the bubble burst) could go against them in a damanging manner. What is your take on this.
H.

[kenny] 16/5/2008 10:29

Perhaps a bit churlish of me to pick holes in the "buy" tip in today's Investors Chronicle so I will just say that space may have limited them in highlighting a few important positives in their buy note.

1. About 90% of the gargantuan dividend that DGRE pays is covered by net rents after all costs including interest. At present, this in unlike almost every REIT and copycat REIT that you can invest in, as most are paying a yield of roughly half of DGRE's and, importantly, their dividends are wholly or mainly uncovered and therefore coming from capital.

2. DGRE is roughly 85% owned by a large conglomerate and therefore if loan markets remain illiquid that group is going to protect their £200m investment in DGRE. In particular, they can guarantee new DGRE loans/facilities for a small fee charged to DGRE. So unlike a couple of other REIT type companies that have hit problems renewing loans, DGRE is unlikely to face funding problems in 2010, 2011 and 2013; even if capital markets have not improved by then.

3. Although the Investors Chronicle buy note does mention that DGRE is trading on a massive discount to last announced NAV, it does not highlight the fact DGRE is on roughly double the discount of other commercial property companies; REIT or non-REIT.

[kenny] 16/5/2008 08:51

Thanks Skyship. Thought it might be eventually, predicted it would be tipped soon after the results - see one of my earlier posts. Large volume this week may suggest the overhang is near cleared but hard to know for certain.

[nickcduk] 16/5/2008 08:48

I think overhang may have been mostly cleared yesterday. It was obvious someone wanted to shift stock quickly yesterday. They drove down the price to 77p in order to get the buyers to step upto the plate. Some very chunky buying kicked in which suggests we may have cleared them out. Even with grim property markets as they are we should still be markedly higher based on the dividend alone. Guess it will come our way in due course.

[skyship] 16/5/2008 08:39

Kenny - Tipped in the IC today