Ediston Property Investm... Share Discussion Threads

[edinandy] 30/3/2023 14:20

I suspect Reality Income Trust will buy them...money to spend and like retail parks...

[skyship] 30/3/2023 07:45

re Oliver Shah's article in React. He only quotes two stats; and manages to get one totally wrong.. Like many journalists better with the waffle than the data.

At 62.5p EPIC stands at a 22.8% discount to their Dec'22 NAV; so why state 35% to their Sep'22 NAV?

[williamcooper104] 29/3/2023 22:16

Would dilute SUPRs core strategy - though do see the synergies

[williamcooper104] 29/3/2023 22:15

Yep most likely either a portfolio sale and liquidation or carry on As we've all noted - best thing is to either do a deal or get on with the business

[alan pt] 29/3/2023 22:12

SUPR is still the only one I can see that makes a bit of sense

Discount not so much different now, SUPR frees up cash and needs income to cover divi with the sale back of Sainsbury properties. EPIC already has RPs with supermarket anchors, there's definitely some fit there

However, managing a REIT where I guess you only have to talk with a few head office staff at 3 or 4 supermarkets seems very different to the more detailed, hands on approach needed for RPs

Merger still seems unlikely

[williamcooper104] 29/3/2023 21:03

Oliver Shah in React Capco and Shaftesbury; LXi and Secure Income; Workspace and McKay; LondonMetric and Mucklow: whisper it, but consolidation in the listed segment is finally happening. We all know the obstacles to corporate dealmaking – management team turkeys tend not to vote for Christmas, and discounts to net asset value can make the numbers awkward.But we also know the REIT sector needs bigger, more liquid companies to attract the attention of generalist investors. This wave of mergers and acquisitions is long overdue.Ediston Property Investment Company (Epic), the quoted owner of 11 regional retail parks, did its bit for the cause this month. It put out a statement saying, in effect, that it had reflected on its position and decided it needed to find a merger partner, sell itself, or liquidate its portfolio and return the proceeds to shareholders.Epic, which has a market cap of around £130m, summed up the argument for wider PLC real estate M&A when it said: "The company, like many of its peers, remains of a size which might deter some potential investors. Challenges as to liquidity, the ability of larger investors to achieve their desired quantum of investment commitment, market profile and cost efficiencies are all directly referable to the modest size of the company.""Very brave, minister"It was an admirably honest assessment. "Very brave, minister" might have been the civil servant's verdict. The decision to put an M&A process out in the open from the get-go was also unusual. One investment banker not involved speculates that Epic might have held private conversations with a suitor and not got anywhere before issuing the statement. Another describes it as "a very high-risk strategy, unless they have a deal in the background that we just don't know about". But a source close to the company says: "Epic wants to find the best solution, and only by kicking it into the public domain can you explore all the options."Epic presumably had the support of big shareholders such as TR Property Investment Trust, which has been vocal about the need for consolidation. In many ways, M&A is more difficult at the shallow end of the industry, where directors may be more attached to lifestyle businesses, portfolios may be of more mixed quality and small market caps don't move the needle for big acquirers. Epic will be an interesting case study.Person, Human, TarmacEpic's Prestatyn Shopping Park. The retail park specialist does not have any pure competitors that would make obvious merger candidatesSince its float in 2014, the company has sold its office and leisure assets to concentrate on retail parks in locations such as Glasgow and Rhyl. It doesn't have any pure competitors – and LondonMetric, which still dabbles in retail parks despite its logistics focus, is understood not to be interested, put off by Epic's holdings in Scotland and Wales. Any partner would have a portfolio that would skew Epic away from retail parks. So getting bigger would come at the cost of straying from the strategy.Deal or no deal?The obvious big suitor would be British Land, which has been active in the retail parks space. Discounts would make it tricky, though. British Land is trading on around a 50% discount to September's NAV of 695p per share. Epic is on around a 35% discount to its September's 95p. Taking British Land paper share-for-share would be dilutive to Epic investors, then, while adjusting for the discrepancy would be dilutive to British Land investors. Not easy.Another prospective industry consolidator, the diversified REIT Picton Property Income, has found that it can take time. Picton danced with Invista Foundation Property Trust in 2011 before it was taken over by Schroders. It looked at flexible office company Workspace in late 2021, but decided the numbers didn't work. Michael Morris, Picton's chief executive, made clear his desire to lead corporate activity at the start of last year, saying transactions were "inevitable". But so far, nothing has transpired."Especially in the property sector, people like to do deals and make things happen," says an industry source. "But if they're not making any money, sometimes it's better not to do deals – and if you think about the direction of the market in the past 18 months, not doing deals has been the right thing.""Epic and its board deserve praise for setting aside self interest and raising the issue so straightforwardly"As this column has previously stated, the minnows need squashing together or taking private. According to Panmure Gordon, more than half the 75 quoted property stocks have market caps of less than £500m. That's 48 companies burning money on stock market overheads – corporate broking, PR and the like – and not benefiting from scale. One investor who fishes in this pool describes them as "lobster pots" because of the way value can get trapped.Epic and its board, chaired by former Schroders veteran William Hill, deserve praise for setting aside self interest and raising the issue so straightforwardly. When a company persistently trades on a discount, the best way to prove the market wrong is to get a bid at a premium or to sell assets at book value or above. Epic might find liquidation easier than M&A – although in the current market, even direct asset sales might be a struggle.Its efforts will be worth watching, because they will test the water for much-needed small-cap consolidation.

[spectoacc] 29/3/2023 05:54

I got this yesterday, with no response to my very specific questions:

"Thank you very much for your email in connection with the strategic review. The Board is really keen to hear from the Company’s private shareholders and I can assure you that your views will be circulated to my fellow directors and the Company’s advisors."


I'd been promised a phone call that never came.

[alan pt] 28/3/2023 22:56

Got a reply to my email today from the chair, similar holding response, but wording sufficiently different that it clearly wasn't just a cut & paste standard response, so credit to him for that

"The Board is really keen to hear from the Company’s private shareholders and I can assure you that your views will be circulated to my fellow directors and the Company’s advisors"

If nothing else, at least we have given some counterbalance to the communication and pressure from, potentially, one institutional holder

[cwa1] 27/3/2023 06:18

Announcement of Interim Dividend

Declaration of Interim Dividend

The Company declares its interim dividend (property income distribution) payment in respect of the period from 1 to 31 March 2023 of 0.4167 pence per share, as timetabled below:


Ex-Dividend 13 April 2023
Date:
Record Date: 14 April 2023
Pay Date: 28 April 2023

This monthly dividend of 0.4167 pence per share equates to an annualised dividend level of 5.00 pence per share and is unchanged from the previous dividend declared on 28 February 2023 .

[flyer61] 26/3/2023 14:57

What Skyship said.

Accept yields are higher but that doesn't have to mean less quality of yield. They recently got an M and S into their Wrexham RP. The challenge is to at least get an M and S food store into all the others. There is hope with what are clearly 'regional' assets. Those Costa drive throughs etc as additional units all add up.

People love driving to RP's where they can park for FREE. Unlike town centres where the State (councils) through various policies have knackered them.

[skyship] 26/3/2023 14:30

TRCML - rents are far lower in the regions than London & the SE - across all sectors - & has always been so. However you are wrong in your main tenet - in regional RW rents are strong and there is good demand.

[trcml] 23/3/2023 10:12

Provincial retail parks and such are inevitably high-yielding because of little or no growth in both rents and investment demand. The big money and the demand is in London and the South-East.

[rambutan2] 23/3/2023 00:26

Last week IPO said they were getting 4.6% on the £100m approx cash drawn down on a credit facility, thus nearly covering the 5.25% it was costing them. And they are not the sharpest of operators by any means. I think it’s time EPIC made it clear what they are/or not earning, and on how much of the cash/drawn facility.

[nickrl] 22/3/2023 21:53

I see BLND picked up three RPs yesterday and sold one.

Capitol Retail and Leisure Park, Preston £51.5m, NIY of 8.43%
Solartron Retail Park, Farnborough for £35m NIY 7.65%
DFS RW, Cambridge for £7.35m NIY 7.14%

and they sold 50% of

Deepdale Retail Park, Preston to Melford Capital for £30.3m NIY 7.5%


Both the RPs were atypical EPIC assets although whether they met Bruces criteria ive no idea and no doubt the BoD have a block on purchases anyhow.

[skyship] 22/3/2023 21:17

Get your emails in...

[williamcooper104] 22/3/2023 18:34

Yes - you won't be leaving £80 with one counter party and nor will your loan agreements prevent you from diversifying (Not least as Aviva don't do deposits so their only care is that the £80m is secure)

[williamcooper104] 22/3/2023 18:31

Usually with cash trapped you have permitted investments (AAA money markets and short duration guilts) and you can deposit the money in any bank with a reasonable credit rating So no reason why trapped cash doesn't earn a return

[williamcooper104] 22/3/2023 18:28

Lenders are nowhere near in control It's a performing loan in Avivas annuity books - they aren't a notably proactive creditor and even if it was Apollo (repay me today at par so I can reinvest at a higher yield) there's nothing they can do

[alan pt] 22/3/2023 18:21

No need to be Burning Bridges, you might still get Whatever you Want

[chucko1] 22/3/2023 18:12

"It will end up as Status Quo" - you mean Down, Down, Deeper and Down??

[skyship] 22/3/2023 18:01

marktime - "My belief is that it is the lenders calling the tune"

???

No, it would certainly not be the very well covered lenders. Absolutely no reason whatsoever.

The BoD is responding to Marcus Phayre-Mudge's constant bleatings over at TRY. He hold 17.1% and wants to see sector consolidation - which isn't happening and won't happen.

The Strategic Review is just an expensive smokescreen so that they can say they've looked at all options.

It will end up as Status Quo - though for shareholder value voluntary liquidation would be the best outcome - though would cost the BoD and investment managers their lucrative remuneration.

[chucko1] 22/3/2023 17:57

Nickrl, where they are permitted to invest is a fair question. But they should be able to purchase Gilts, especially as this is the most conservative investment so far as any creditor is concerned. Leaving 80mn on deposit is a clear no-no, and as a board member I would demand a conservative course of action which might exclude the higher yielding MM accounts, and any MM-type security which has any counterparty risk. But Gilts can/should always be on the table.

[chucko1] 22/3/2023 17:51

MT - I either fundamentally disagree with, or cannot understand, pretty well every sentence you wrote! I am not shouting you down, nor is anyone else as far as I can recall.

Rates unexpectedly rose to 4% and this has impacted all REITs; overly in some cases. That is not rocket science. EPIC have a fair wad of to-be-invested [perhaps not now] cash; praise the Lord.

[nickrl] 22/3/2023 17:45

@chucko CTPT sold out Berkley St in Aug22 when rates were at 1.75% although to be fair they only had c4mths worth of interest at HY accounts so looks like that would equate to c2% over the year. Anyhow thanks for challenging my post and looks like more interest income is actually available which is good enough for me. I doubt they would be allowed to invest outside of cash accounts? There is also the fact that 30m of it is cash trapped so may not attract interest.

[marktime1231] 22/3/2023 17:17

Yes of course you are right and my instincts are wrong, because I have changed my opinion based on emerging facts or the unfolding situation I must be mistaken.

I got frustrated by investment delays stretching out, and speculated some time ago that the underlying reason why EPIC may not have reinvested proceeds of disposals, hinted at by the wording of updates from the board, was partly because loan conditions had trapped some of the credit. I also speculated that if there was a significant income shortfall it would have been prudent to reset to 4p for the intervening period. Shouted down by those linking yield to share price who saw it differently. And persuaded to add some as the share price dipped, based on the analysis presented here that any shortfall was not as serious as my estimate and likely to be closed by interest on cash.

The shareholders are clearly not in charge here, especially not small private investors, no matter how many emails you fire in. The board and management themselves have lost control of strategy. My belief is that it is the lenders calling the tune and they don't like maintaining an uncovered dividend from reserved cash. Quite the opposite, they want to preserve value and get their capital back.

By all means let off steam but feeling strongly or preferring a different view and course of action will not solve the problems nor is it likely to influence the result.

Bad luck EPIC a bold strategy and a great income investment undone.