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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Ediston Property Investment Company Plc | LSE:EPIC | London | Ordinary Share | GB00BNGMZB68 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 68.80 | - | 0.00 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
Date | Subject | Author | Discuss |
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22/5/2023 13:06 | Below is questions i raised with Calum Bruce. Answer in CAPS 1.The cash being held hasn't accrued much interest - why? are you not permitted to invest it in money mkt accounts? THE INTENTION WAS TO REINVEST THE CASH OVER THE FIRST HALF OF THE COMPANY’S FINANCIAL YEAR, SO IT WAS KEPT IN THE COMPANY’S REGULAR BANK ACCOUNT. ASSETS TO ACQUIRE WERE UNDER OFFER DURING THE LAST CALENDAR QUARTER OF 2022, AND INTO Q1 2023. DURING THIS PERIOD, AS THE MARKET WAS REPRICING, WE WERE RENEGOTIATING THE PRICE DOWNWARDS. THE STRATEGIC REVIEW WAS THEN ANNOUNCED SO THE DECISION WAS TAKEN BY THE BOARD TO HOLD THE REINVESTMENT PROCESS. WE ARE IN THE PROCESS OF OPENING DIFFERENT ACCOUNTS WHICH WILL GIVE A HIGHER RATE OF INTEREST, AND STILL MAINTAIN EASY ACCESS TO THE MONEY. 2. The 31m locked up in one of the loan facilities - is this offsetting the value of the loan? If not who is benefiting from the cash? THE CASH IS HELD IN A DISPOSALS ACCOUNT AND CAN BE USED WHEN NEW ACQUISTONS ARE IDENTIFIED. THE CASH CAN BE UTILISED IF THE LENDERS LTV REQUIREMENTS ARE MET, AS PER THE FACILTIY DOCUMENTS. IT IS WORTH POINTING OUT THAT AVIVA HAS ALLOWED THE COMPANY TO USE THE CASH ON EACH OCCASION IT HAS ASKED FOR IT, EVEN IF THE LTV WAS HIGHER THAN THE PERMITTED LEVEL IN THE DOCUMENTS. THE CASH DOES NOT OFFSET THE BALANCE OF THE LOAN, AND ANY INTEREST ETC ACCRUES TO THE COMPANY. 3. Interest expensed in income statement is 30% above the run rate for half the annual run rate of c3m - why? FOLLOWING A REVIEW OF INTEREST COSTS PREVIOUSLY CAPITALISED, IT WAS CONSIDERED APPROPRIATE TO TRANSFER AN AMOUNT OUT OF BOOK COSTS INTO P&L WHICH HAS REDUCED BOOK COSTS AND INCREASED INTEREST COSTS IN THE PERIOD. THE NET IMPACT OF THIS IS NAV NEUTRAL, HOWEVER DOES PRESENT AN ELEVATED POSITION OF INTEREST. Useful answers and im surprised that they've not had some on deposit at better rates although i can see they needed ready access to cash. Anyhow changing tack now but ought to have been done as soon as strategic review was announced. Seems like the board is tying Calums hand and now am not convinced they've been acting in betst interest of shareholders. If i was Ediston i would be looking at taking out the portfolio. | nickrl | |
22/5/2023 11:07 | "valuations appear to be levelling out, meaning there is a prospect of capital value growth during H2 2023" which overturns the idea that it was sensible to hold off, now is an ideal time to reinvest. Except the financial advisers (? Investec ?) said to preserve the cash pile uninvested "to keep all options open". Frustratingly as you say not even on short term deposit in the money markets, and not offsetting the 2.9% interest being paid on debt. I interpret this advice to mean there is a fair prospect of the entire REIT being acquired or merged with a scaled up property investor who would relish the opportunity to get their hands on the cash. At a time, as the Chairman stresses, when new cash is not being made available for property investment despite the inflexion, there are some sensible bargains available. The stabilisation of EPICs asset valuation should allow them to negotiate closer to the 80p? The alternative, selling off properties and returning our capital, might get us a fuller but slower return than being offered shares in another REIT which pays a more modest dividend from investment in property sectors which may not have seen the bottom yet. The option for EPIC believers, to fully reinvest in order to cover a 6+% yield, seems a no go while its lender is trapping £31M in the debt facility. | marktime1231 | |
22/5/2023 08:01 | Thanks for that nickrl. | flyer61 | |
22/5/2023 07:59 | @CC2016/adae as i said total interest payments over the half are well above the run rate for half the year which seems odd to me and certainly suggests that the 31m trapped in the facility isn't offsetting the interest there. Anyhow clarification email sent to Calum Bruce - ive always had responses in the past. | nickrl | |
22/5/2023 07:54 | The paltry figure of £167k on the cash is something that ought not be a mystery. It really makes me wonder about what is (not) happening here. I had previously maintained that they had been smarter than their critics were decrying by not investing the cash. Although the fact remains that they did well not to invest, everything else scores no higher than 3 out of 10. | chucko1 | |
22/5/2023 07:52 | It's a review as to how they can best maximise their fees... | skyship | |
22/5/2023 07:34 | Quite a bit to digest... Operationally performing well. However we could do with a lot more clarity on the cash situation. Not sure why they won't give more detail. You would have thought they would be trumpeting the interest on the 47.7 million earnt???? The EPC improvement exercise is to be welcomed. The yield on the portfolio at over 8% seems to me to validate the asset values in the present environment. Risk free rate (10 yr) around the 4% mark. Maybe others think 8 is not high enough and capital values need to drop further?? And William makes me nervous! Surely selling the assets off and closing up has to be higher on the list of future plans. This 'strategic review' is now renamed 'an agenda-ist review'. | flyer61 | |
22/5/2023 07:32 | Total debt of £111.1m. Cash of £47.7m, that really ought to be earning a reasonable rate of return. Further £31.2m available for drawdown in the debt facility, presumably not incurring interest nor earning any. is how I read it too. The Early Q3 deadline is for an 'update' on the strategic review, not necessarily its results. | adae | |
22/5/2023 07:27 | CAPITAL STRUCTURE The Company's total debt is unchanged at GBP111.1 million at a blended 'all-in' fixed rate of 2.9%. Gearing at 31 March 2023 was 39.1% of total assets. As at 31 March 2023, the Company had approximately GBP47.7 million of cash for investment and operational purposes. The Company had a further GBP31.2 million of cash held in its debt facility. This cash is subject to the lender's LTV requirements being met for it to be released for investment purposes. At the date of the March valuation, the loan-to-value across the Company's two debt facilities was also 39.1%. The Company is compliant with its debt covenants. Is this weasel wording. The company if I read this correctly has £47.7m of cash available for investment. Yes, I can see this on the balance sheet and I see no reason it's not getting money market rates of around 4% for overnight or short term deposit. But, I don't think it really does have £31.2m of cash held in a debt facility. That isn't on the balance sheet. What I think it is, is an undrawn debt facility, so not really cash at all. What do others think??? I find it all a bit oddly worded. | cc2014 | |
22/5/2023 07:20 | So nothing to say on the "strategic review" other than we will update shareholders early in Q3 so maybe by end of June. Anyhow positives are vacancy level down a tad and all tenants retained with contracted income unchanged despite sale of other assets. Adversely one has say 167k of interest income on c80m of cash aint much of a payback (SONIA avg 2.84% over the half). Also reported interest payments are a lot higher than half the full year run rate maybe its just timing on payments but certainly infers the cash locked up in one of the debt facilities isn't offsetting interest there. Finally nearly 5m of capex committed now so that will come out of cash pile. This strategic review needs to get concluded pronto as we are just slowly bleeding out here currently. | nickrl | |
22/5/2023 07:03 | Apparently we won't be kept waiting much longer; "STRATEGIC REVIEW On 16 March 2023, the Board announced that it is undertaking a strategic review of the options available to the Company to maximise value for shareholders and to achieve its growth objectives (the 'Strategic Review'). As stated in the announcement, the Board has a preference for structuring a merger with one or more REITs, but it will consider all options available to the Company that offer maximum value for shareholders. Since commencing the Strategic Review, the Board and its advisers are engaged with a number of interested parties and the Board expects to provide an update to shareholders early in the third calendar quarter of 2023. " | fordtin | |
22/5/2023 06:57 | Inexcusable not to either (i) Have the money earning market rate (ii) Have invested it long ago 'I hope that the Company's Strategic Review produces not just a good outcome for the Company's shareholders and its other stakeholders...' So do we, William, so do we. This comment says you don't actually know yet. '...Also the first stage in the reshaping of the sector to unlock the capital it needs.' An early acknowledgment from a REIT that a huge amount of spending needs to be done before 2030 on existing assets, and that much of it will need to come from raising capital. | adae | |
22/5/2023 06:52 | They're receiving virtually no income on the cash. It appears the cash is locked in the lenders debt facility and isn't available to invest in money market funds etc. Why that couldn't be stated in black and white I do not know. Anyway, the sooner the strategic review is concluded the better as that is costing ~0.3p/share per quarter. | frazboy | |
22/5/2023 06:43 | " ... Finally, I mentioned in the Strategic Review announcement that attracting investor capital into the sector was critical for a successful and thriving UK real estate market in the long term. Capital is needed to decarbonise the sector through building refurbishment and the introduction of new environmentally friendly building technologies; it is needed for regeneration and levelling up; it is required for unlocking the chronic shortage of housing; and, finally, it is essential for the economy that the built environment meets future occupier needs. The REIT sector is the ideal home for attracting a wide range of different types of investor capital. However, it is not doing so at the moment. I hope that the Company's Strategic Review produces not just a good outcome for the Company's shareholders and its other stakeholders but is also the first stage in the reshaping of the sector to unlock the capital it needs. William Hill Chairman 19 May 2023 " The final comment suggests selling up and returming cash to share holders is very unlikely. | fordtin | |
22/5/2023 06:41 | Dividend cover 67%. | hedge fund harry | |
05/5/2023 16:00 | They may have used the term "uncovered" loosely, in that net renal income ex-costs fails to cover the EPRA dividend, and the cash AS WELL AS interest earned makes up the "capital" they refer to. Otherwise, I am at a loss as to what the heck they've been doing with this cash. Is it in the company safe? | chucko1 | |
05/5/2023 12:16 | @marktime what doesn't add up is even the free 50m of cash should have attracted at least 1m in interest by now so as i say ill be interested in what the accounts show. | nickrl | |
05/5/2023 11:27 | @nickrl - good point on the cash, the fact the divi is still coming partly out of capital (hence the NAV drop) suggests it's not being used in the way it should be. And fair point re only 7 weeks away - but "early" in Q3 could easily be another month beyond that, and how long have they had already? They seem determined to do "something". | spectoacc | |
05/5/2023 11:20 | So they don't mean their own FY23 Q3, the proper convention, which started on 1 April, they mean 2023 calendar Q3 which starts 1 July. Daft blighters. In which case yes we could be waiting another couple of months for a conclusion. My guess is there has been interest but nothing to bite the hand off. If the backdrop is stabilising, so maybe the next quarterly valuation will be slightly positive, no need to rush, except for the eroding effect of uncovered dividend and, as postulated above, the debilitating effect of the costs of the review process itself. | marktime1231 | |
05/5/2023 11:09 | @marktime arghh their Q3 not calendar Q3 so around 7wks then before they give an update. | nickrl | |
05/5/2023 11:05 | Hang on ... we are in Q3 since April aren't we, so "early Q3" has passed? Are there extra costs eg of the review which are in Cap Ex or Management & Finance costs, which seem to be the main reason why NAV has been dragged back a penny. | marktime1231 | |
05/5/2023 10:50 | Is it simply time to sell up and move on? Investors don't like doubt and with so many options open there seems to be a lot of doubt on whether any final decision is going to be to holders' advantage. | petersinthemarket | |
05/5/2023 09:26 | Given they've basically told EDISON to mind the shop only for the next 6mths then the cash should be placed in the money market. They don't control all the cash as 31m is trapped in one of the loan pools and whether its treated as offset or accrues interest isn't clear. Looks like we will have to await the financials in a few weeks to get a better insight. | nickrl | |
05/5/2023 09:05 | Ditto This was looking like the beginnings of a really good reit | williamcooper104 | |
05/5/2023 07:59 | 100 per cent agree StA. | flyer61 |
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