Ediston Property Investm... Share Discussion Threads

[edinandy] 16/8/2023 07:26

REIT finds buyer for £200m+ portfolio16 Aug 2023 | by Chris Borland Platform comprises 11 retail parks What Ediston Property Investment Company had been considering ways to merge and consolidate with other REITs but has now agreed a sale of its retail park portfolioWhy Board had said its modest size made raising capital difficultWhat next Realty Income Corporation lined up to buy portfolio recently valued at £208mAfter exploring potential merger and consolidation options with other REITs, Ediston Property Investment Company (Epic) has settled on the sale of its £200m+ retail park portfolio to a high-flying US investment firm, React News can reveal.Realty Income Corporation has agreed terms to buy the 11-asset retail park collection from Epic, with pricing rumoured to represent a significant premium to what shares in the REIT are currently trading for. Abrdn, NewRiver, Custodian REIT and UKCM were also in the hunt for Epic.Earlier this month Epic's board said: "It is in advanced discussions with a third- party buyer regarding a possible sale of the company's property portfolio. There can be no certainty at this time that a sale of the company's property portfolio will take place; nor as to the final terms on which, or the price at which, any such sale might be undertaken." Epic declined to comment on the deal with Realty – the US investor that has steamrolled the UK's retail warehouse market in recent years – but it signals an end to a process that has explored ways to bolt Epic on to a complementary REIT as well as various other ownership and sale options.Epic kicked off a formal process to find a new owner in May after announcing a strategic review in March, citing challenges around liquidity, attracting larger investors, market profile and cost efficiencies that were related to the modest size of the REIT.One stated preference was to pursue a merger with one or more other REITs, however with potential partners also trading at notable discounts to net asset values, the board has landed on a portfolio sale of the real estate. It would lead to an assumption Realty has gazumped other options on the table with an offer that is close to the company's net asset value, with values for retail warehousing remaining broadly stable despite a general pricing erosion for UK commercial real estate.Epic's portfolioAt the end of June, Epic's

[nickrl] 13/8/2023 21:42

CSH were a car crash compared to EPIC but that didn't stop CTPT selling us out either.

[tag57] 13/8/2023 10:23

Didn’t CsH sell well below NAV? Would hope this manage ment team have a bit more self respect though.

[williamcooper104] 13/8/2023 10:05

It's curious that we are told discussions are well advanced - yet no price mentioned You'd have thought best to say nothing least you publicly commit to a deal and then get chipped Still at least it looks like a silly merger with another reit with expensive equity/trading at a discount seems to be of the table Would still far rather they stay listed, execute on their business plan and wait for the market to reward them But if we are to sell up then must be at NAV

[wskill] 13/8/2023 09:10

The longer this goes on the more I feel we are going to get stung badly I am sure if it was good news it would be out by now, March this review started at the behest of a major shareholder and still nothing concrete to report ,its a small property REIT not a huge conglomerate with assets all over the world about time this board of directors now said put up or shut up then get on with business.

[nickrl] 04/8/2023 15:39

@8W ultimately it will up to shareholders to approve so lets hope the big holders dont sell out like they did with CTPT.

[belgraviaboy] 04/8/2023 15:16

Increased my holding by 50% since the announcement. I am happy with the risk / reward balance here....

[8w] 04/8/2023 13:41

Even if it doesn't go through and share price takes a hit... still a good long term investment
EDIT...providing the Board let the manager get on with it!

[williamcooper104] 04/8/2023 13:38

"Significantly advanced" wording implies terms agreed so it's a question of if whoever they've agreed to sell to gets scared in DD and/or just wants to chip My gut feel is that it's about 70 percent likely to go through - they must have been confident to issue that RNS If it doesn't the share price will dip a fair bit - but I'd be happier to keep it Clearly the market implied pricing is more pessimistic and of course I could be wrong - but the board needs to be nuts to sell for anything materially below NAV

[8w] 04/8/2023 13:21

Interesting observation mark1231.... are Investec trading this? Surely some issues with that?
Todays share price looks much too cheap...If the sale is not going to realise over 70p it must be a non starter.
Got to be worth a punt

[williamcooper104] 04/8/2023 10:41

The problem with public companies is once they commit to a sale they feel unable to reverse course Something PE bidders are well aware of Property sale rather than sale of whole is good as means it can be marketed to non PE bidders Normal PLC takeover remember is no due diligence which usually puts of all but PE

[marktime1231] 04/8/2023 10:32

Agreed there is every reason to hope for a sale at close to NAV, it is not a fire sale these are healthy performing investments in an otherwise healthy REIT; especially as wc observes the published NAV is net of disposal costs. All shareholders will want to get value; although the lender and perhaps some major holders with cash flow problems will settle for lower? A premium would be a stretch but I like your enthusiasm.

Add on weakness from here, noting the deal architects Investec were happy to buy volume at up to 68p yesterday.

[williamcooper104] 04/8/2023 10:22

There will be no loan repayment penalties

[williamcooper104] 04/8/2023 10:21

Indeed - though last few weeks I've seen a lot of general nervousness - the fair value of the assets are worth IMO more than NAV - but they may struggle to get a premium in this market But equally we shouldn't accept anything less This is not CSH (and that shouldn't have been sold either)

[riverman77] 04/8/2023 10:02

There seems to be an assumption that the properties will be sold at a discount to NAV, but I'm not so sure. Valuations were slashed aggressively at the end of last year, although operating performance is good with 99% rent collection and rental growth ahead of ERV.
The properties are now valued at 200m, while generating 16m in rent - that's an 8% yield which looks like a bargain for an in demand part of the market. Wouldn't entirely surprise me if they're able to negotiate a sale at perhaps a 10% premium to the last NAV.

[williamcooper104] 04/8/2023 09:37

Remember the NAV includes a lot of the disposal costs and if property owning SPVs are sold (and they really are muppets if they haven't SPVd them up) then there's minimal/no stamp - so stamp saving should cover seller disposal costs The NAV is reasonably fresh So other perhaps than a tiny scratch of a discount the board just shouldn't sell

[frazboy] 04/8/2023 09:07

Is the 80.7p NAV realistic as a bud price?CTPT went for an 11% discount but two very obvious differences, it was an all share deal and the asset mix is very different. I would accept a 10% discount but hope for mid 70s. Any bid in the 60s should be a no no, the break up value (allowing for costs and any loan repayment penalties) must be higher than that.

[williamcooper104] 03/8/2023 23:04

I was very tempted to but didn't, and glad didn't as would have been murdered by the marks when selling up - stuck to swaps (which still had a little mark kick) and swaptions Also insurance companies generally a little bit more painful to deal with

[chucko1] 03/8/2023 22:23

We tendered for our own bonds. Paid above fair value, but nowhere near par (more of a credit thing back in the early 2010s than an interest rate thing, but the same idea). Many other banks did similarly, of course.

Make wholes on that stuff (where it existed) was generally at Gilts flat, so was a nod to credit rather than interest rates.

I do not know the insurance company lending market. If I did, it would likely send me into a fit as I would need some persuasion that it was ever a route to go down as a borrower. There will be reasons, but I am dubious as to whether they are good enough considering the value of the swaptions being given away for free.

[williamcooper104] 03/8/2023 19:44

Actually in the UK corporate bond market spens was a borrower concession Used to be that you just couldn't repay bonds (which meant in practise you could but only if you paid PV plus a premium)

[williamcooper104] 03/8/2023 19:39

The really annoying thing is that not only do you have spens but with a private placement you've usually got change of control covenants - and they won't be waived if the lender is going to get a windfall If you didn't have that then while you couldn't get paid out when repaying the debt you could at least sell it at the positive PV of the debt (usually discounted at the acquires cost of equity/expected return so not as good as getting paid out on a swap but still a material amount on a long duration note) Public bonds usually either don't have it or have it qualified by change of control and credit deterioration - see Morrisons corporate bonds now in the 50s

[williamcooper104] 03/8/2023 19:35

Have even seen US PPs where the cross currency swap the funder was taking out was backed onto the borrower

[williamcooper104] 03/8/2023 19:34

Issue is that banks won't lead beyond 5 or 7 years at a push whereas insurers matching annuities are desperate for longer dated paper and they adopt standard spens clause; as per virtually every corporate fixed rate bond Used to be that often borrowers took 5 year loans from a bank/CMBS (when CMBS was by usually by hook or crook a bank) and then took 20-40 year interest rate swaps (locking into lower than short tenor swap/libor funding) but after that blew up epically there's been none of that in recent years So if you want long dated debt you've alas to put up with spens - or in a US private placement make whole which is basically same

[fordtin] 03/8/2023 15:21

Flyer - re - "the market seems not overly impressed"

As there have been 204 trades up to the time of your post, and you've sold "a reasonable wadge", you are statistically just under half percent of the market. If you take into account someone bought your shares, you could be about 1% of the market.

Perhaps you could tell us why you, as part of the unimpressed section of the market, were not overly impressed.

[flyer61] 03/8/2023 14:36

Sold at 67.8 this am, a reasonable wadge....just bought that wadge back at 66.4p.

There has to be more in this...the market seems not overly impressed....