Delek Glbl Share Discussion Threads

[kenny] 22/1/2009 14:52

... and the buying continues for a fourth day.

A guess would be that it is one or more investors for income - a unit trust or similar fund group(s) buying ahead of the next dividend. I certainly would be delighted if they maintain the dividend at 5.5p - which is looking more likely in view of the size of the gas find made by other subsidiaries of Delek Group, off the coast of Israel.

I wish I too had inside information about which companies will be paying their dividends and which will not!! Would have saved me a fortune over the year's.

[grollfam] 22/1/2009 10:49

Interested to see who took the stock, very high volumes as Holding company in Israel already holds over 85%. Should pay at least 5,5p final divi as Delek Real estate have to repay loan of #6 million by 31st March this year, plus free cash flow of swedish property sale is about 2p per share.

[schlemiel] 22/1/2009 00:20

excellent volume and watching closely

no position

[kenny] 21/1/2009 16:09

About 6.2m shares in total traded over the last three days - a record for this company and hopefully indicating the only way is up from here!

May be wishful thinking, only time will tell, but I am getting more confident that DGRE will continue paying dividends and should be able to roll over its loans as they fall due. That would be quite an achievement in the current environment.

[kenny] 20/1/2009 11:19

schlemiel - please read into previous posts which will give you a lot of information.

DGRE is not a short term investment, rather it is, hopefully, going to prove a regular and steady source of income.

[schlemiel] 20/1/2009 11:13

anyone interested in these?

[a0469514] 19/1/2009 11:47

Quite a few more deals going through today. Recent news seems to have reasured the market, it certainly reasured me. The first deal of the day is mine.

Xylos

[topvest] 18/1/2009 16:02

Not selling. As I've said, not worth it! Will hang on in to see what the future holds. If we get another dividend or two, then the current price is ridiculous. Main concern is the asset values not income. I suspect the NAV will be shraply lower after the year end valuation is done. With the level of debt they hold, there is no way you can call this a safe investment. On the other hand, it's not a basket case...so has a fighting chance.

[flying pig] 18/1/2009 15:30

Kenny

I rather agree that this is a much better bet than some REIT type stocks - positives include decent quality and long leases, non-recourse debt and lease income exceeding funding costs.
Negative - May be some valuation issues but if rental income flows - banks will just seek to increase margin in event of "technical default".
Improvement - parent company prospects!
I would like some more spare cash .......... to average down a tad.

[kenny] 18/1/2009 14:23

topvest - sell if your time frame is short or you have lost confidence. Any buying or selling by individual investors really has no effect on this stock - it is what the fund and hedge fund managers decide to do that effects the share price.

Long term, I think DGRE has now become a lot safer investment than other REIT type companies I could mention because I suspect all potential problems in rolling-over of existing loans have been removed at a stroke - by this massive gas find by the group.

[topvest] 18/1/2009 13:51

I wish I felt that confident. Not much point selling at the current price though.

[kenny] 18/1/2009 11:29

Shares in the ultimate holding company, Delek Group, currently up about 50% today, on top of a 9% rise last Thursday. Delek Real Estate currently up about 16%. Both on massive volume of shares traded. Related to the fact one of their subsidiaries have announced a large gas deposit find off the coast of Israel. (Could be worth up to $15b but costly to drill - Delek Group interest, through subsidiaries, in the gas filed is about 28%).

Beginning to feel that whatever the future holds, my investment in DGRE is very, very secure. Looking forward to receiving some nice dividends and, as and when commercial property recovers, a recovery in the share price of DGRE.

[flying pig] 17/1/2009 15:32

16 January 2009

Delek Global Real Estate PLC
('DGRE' or 'the Company')
Sale of Swedish Property

Delek Global Real Estate (AIM:DGRE) announces that a subsidiary in which it has a 75% holding has completed the disposal of its entire holdings in 'Repslagaren 37' ,a property located in the centre of Stockholm, Sweden.

The property, which comprises offices, shops and storage, totals an area of approximately 4,700 square meters with a lease in respect of the main area of the property which is expected to be terminated within approximately two and a half months.

As at 30 September 2008, the total value of the property in DGRE's accounts was 217 million Swedish Kronas ('SEK').

The property has been sold based on a value of SEK235 million (approx. 19 million GBP), to which a reduction was made of an amount required for the performance of certain adjustments and improvements in the property amounting to SEK18 million, together with a simultaneous price increase of about SEK4 million due to an assignment which entitled the seller to receive rental fees during the first quarter of 2009, and in total, about SEK 221 million (approx. 18 million GBP).

The outstanding balance of a loan relating to the property of SEK145.17 million ('the Bank Loan') has been repaid in full. The property was originally acquired in April 2004 for SEK185.5 million.

As a result, DGRE's attributable share in the available cash flow received from the sale (before tax), after deduction of expenses, investments in the property and repayment of the Bank Loan, is an estimated SEK54 million (approx. 4.5 million GBP).


Comment -
Sale profit before tax c £4.5m is a tad under 8% of Market capitalisation of c £57m
Sale generates cash
Loan 145m = 78% purchase price April 2004
Loan 145m = 66% sale price Jan 2009
Sale was above balance sheet value.
Sale was c8% of target sales of $326m announced by parent.

[flying pig] 17/1/2009 09:07

The good news about the debt is that the vast majority is non-recourse. Thus it is secured on the rental stream and asset value of a single property or group of properties. The price of the company factors in a significant number of defaults, but no default is likely to have significant knock-on implications.

As has been stated above, the portfolio appears to comprise reasonable property is let on long-term agreements to acceptable credits. Certainly I do not think that NCP is the highest risk of insolvency in the short term.

We will wait and see - I remain optimistic, but not entirely confident!

[a0469514] 16/1/2009 23:20

Kenny,
You sound a little nervous and if you have a large holding I guess that is understandable but I still do not see much of a problem.
The interest payments on their loans are comfortably covered by the income from their tenants. The interest payments should have reduced substantially as interest rates have fallen and their income is safe and predictable based on long term leases. The only problem as I see it could be if a substantial number of their tenants went bust and they were unable to re-let the properties but with the type of tenant that they have, that seems unlikely.

The average debt maturity period is stated to be 7.2 years but I suppose some of it rolls over every year and there might be some doubt on re-financing if the property values fall substantially. However,the banks have not shut down completely. When you read or listen to the media you would think so but as an example on a personal level, I recently extended the term on my interest-only mortgage by 10 years and it went through with no problem at all, seemingly on the basis that I had a perfect credit record. They did not ask for a revaluation of my property and they did not even want any evidence of my income. I was astonished but it is true and now I only pay 2.75%, and hopefully less after the recent rate reduction whereas last year it was over 5%.

If that is my experience, I cannot see Delek's being much different.

Certainly though, the next figures will be very interesting.

Xylos

[kenny] 16/1/2009 14:54

Xylos, I guess the concerns are;

- That bearing in mind high gearing, how far has NAV been wiped out due to valuation falls?
- In view of those falls in property values, will DGRE be able to roll over its bank loans when they fall due?

The current price of DGRE seems to assume hope value only e.g. that it will fail to survive or will need to implement a rights issue – I hope neither event occurs because I have a large holding. In fact, I am encouraged by recent developments - the immediate holding company, Delek Real Estate, is in the process of selling some of its properties and is also to buy back some of its own bonds which are trading at a big discount.

For the last few months the position has been unclear and it hard to know how DGRE will cope with the above. The results to 31 December 2008, when announced, should provide clarity on NAV at that date – note that DGRE has not re-valued its properties since 31 December 2007; it has only accounted for subsequent currency movements.

I am also hoping that the current high yield on commercial property generally, will enable values to at least stabilise. Property has become one of very few high yield asset classes and the depreciation of Sterling should also attract foreign investors. Currently however, even I believe it could take some time for DGRE to recover albeit I believe the company will pay dividends, at some level, during that time.

[a0469514] 16/1/2009 13:15

They look very cheap don't they. They paid a dividend of 11p last year which puts them on a historic yield of 50%. Presumably the market believes that they will slash the dividend payment this year. However with figures like the following from October's results:

- Rental income up 21.4% to £41.4 million (three months ended 30 September
2007: £34.1 million). For the nine months ended 30 September 2008 rental
income of £121.7 million (nine months ended 30 September 2007: £76.6
million)
- Average debt maturity period of 7.2 years
- Occupancy rates remain high at 98.8%
- Average lease length remains long at around 15.2 years

they do not seem to have much of a problem. They have tenants like NCL carparks and various hotels for example, which, whilst they may not be getting as many customers as this time last year, do not seem likely to be about to default on their rental payments to Delek.

Or perhaps I am missing something. If so, will someone please enlighten me.

Xylos

[paperclip3] 07/1/2009 11:24

The net loss at DGRE is something of an illusion: What they seem to be doing is marking to market their interest rate swaps. What this means is that as long term interest rates decline, DGRE will post losses. Provided the fixed rate loans on its portfolio of properties are not repaid early, then these losses are book keeping entries. This stock looks cheap. Somebody will soon try and buy a big slug of it.

[a0469514] 15/12/2008 08:25

Good to see you are still around Kenny. I suppose that the market will be waiting to see whether it can indeed achieve book value for the sale properties. Personally, I would not fancy selling any property at present but we will see.

Xylos

[kenny] 11/12/2008 09:20

Good news announced re; sale of properties by Delek Real Estate.

Muted response on the share price, which I guess is no surprise in these markets. However, future dividends are looking more secure not least in order to provide funds to the holding company; Delek Real Estate.

[a0469514] 26/11/2008 18:03

I have been reading back over the posts here and there is certainly some excellent stuff. A great example of how a bb should be. It is just a pity that the posts have dried up of late.
The third quarter results were out on 25th November. They looked excellent to me. Here are a few highlights.

- DGRE's portfolio valued at £2.33 billion (30 September 2007: £1.99
billion)
- Attributable Net Asset Value of £726 million or 274 pence per share
(30 September 2007: £653 million or 246 pence per share)
- Rental income up 21.4% to £41.4 million (three months ended 30 September
2007: £34.1 million). For the nine months ended 30 September 2008 rental
income of £121.7 million (nine months ended 30 September 2007: £76.6
million)
- Average debt maturity period of 7.2 years
- Occupancy rates remain high at 98.8%
- Average lease length remains long at around 15.2 years

The current share price, around 30p, is massively under asset value. The market cap is £69.3 million compared with attributable Net Asset Value of £726 million. (Attributable Net Asset Value = Value of DGRE's share in the portfolio less DGRE's share in outstanding loans)
The historic yield is a massive 37.29% and with these figures there seems no reason why the dividend should not be held or even improved!

I know we are in a recession and a credit crunch but the share price here seems ridiculous. I have doubled my holding today.

Xylos

[kenny] 05/11/2008 11:43

Looks like a large seller is getting cleared out.

At this price the shares are trading at just over the cash in the company (properties valued as equal to loans!!) so I have topped up over the last few days. Far too low but I am a long term investor for income.

I am hoping the dividend will be maintained; I think it will because the immediate holding company, Delek Real Estate, which owns 85% of DGRE needs the cash. However, please note there are no cash flow problems in DGRE.

Assuming the next dividend is paid in March/April 2009 it would be more than enough to effectivily repay the £6m loan from DGRE to Delek Real Estate.

[brigand] 04/11/2008 16:02

What's going on?