Empiric Student Property Share Discussion Threads

[jonwig] 23/11/2017 15:56

SteMiS - yes, that's a bit that concerns me (said earlier). The fact that the board *expects* is not enough to convince. I think they should have dropped forward guidance and proposed a dividend for 2018 which they knew would be covered (viz. 4.5p PID). They could then have raised it, if anything. As it is, they are hostage to downward revisions as well as upward.

Clearly the share price can't really go much lower, I think!

[stemis] 23/11/2017 15:41

The Company is targeting a dividend of 5.0 pence per Share for the year ending 31 December 2018(1) .

The Board expects the dividend for the year ending 31 December 2018 to be substantially covered by adjusted EPRA earnings and fully covered by the year ending 31 December 2019.

[jombaston] 23/11/2017 15:25

Spec, some good points there.

The key warning sign for me was the uncovered dividend (despite 100% occupancy). I buy REITs for income enhancement. Its not a true dividend yield if its not covered.

The cut in the dividend is a sensible measure. But the target has no credibility. Their target should be to cover the dividend as soon as possible. Only then should they think about increasing it.

With a covered dividend and a new management team this could become investable - dare I say even attractive at this price.

[jl9] 23/11/2017 15:21

IC have to be taken as a serious contrary indicator - esp on property stocks

[andyj] 23/11/2017 13:49

IC have reaffirmed their buy position today on account of the big discount to NAV.

[spectoacc] 23/11/2017 13:08

@Horndean - don't forget the pay-off to the CFO. He should have been paying them?

@Jonwig - fair enough :) Disappointed Numis still saying Reduce tho, you'd think this would have addressed their earlier concerns.

My overall feeling about this - and many others, inc the infrastructure trusts (eg HICL) & the P2P lot (eg RDL, P2P, VSL) & the small business lenders (eg SQN) - is: "never buy at a premium". Far too much downside if/when things do go wrong. And they do go wrong.

[horndean eagle] 23/11/2017 13:04

Has been awful. Shareholders who took part in the placing at 109p would have very strong case for legal action given the statement a couple of months beforehand re covered dividend. That was a blatantly misleading statement. Surprised the CEO and CIO are still in place given they have presided over the huge balls up. I guess the cost of getting rid of them would have made things even worse. Whats annoying is they will no doubt get their bonuses next year. Amazed how bad a balls up the company have made. On flipside we are at a material discount to nav and are heading to covered dividend. That is more than most others in the sector can say.

[speedsgh] 23/11/2017 12:34

@jonwig - Your wish has just come true. Buys now going through under 90p :o)

[jonwig] 23/11/2017 12:19

@ Spec - possibly I'd be a buyer around 90p, but no spare cash at the moment!

A broker update today:
23 Nov 17 Numis Reduce 89.75 94.00 94.00 Reiterates

Jefferies (the other covering broker) has nothing yet.

[speedsgh] 23/11/2017 12:09

I wonder how the IIs who participated in the July fundraising, which raised £110m, feel about today's announcement. The company/board's reputation will presumably have been trashed; the road to reputational recovery will be a long one. Any further 'mishaps' and the price of any future fundraisings will surely involve installation of a new management team.

[spectoacc] 23/11/2017 12:03

Agreed @speedsgh -

"Lynne Fennah, who joined the Company on 26 June 2017 as CFO, has led and now completed a full financial and operational review of the Group with Paul Hadaway (CEO) and Tim Attlee (CIO)."
should read as "she's sacked the lot of them".

Yes, that 109p must hurt - 2019's 5p divi doesn't look so great on that buy-in price.

[speedsgh] 23/11/2017 12:00

Spec - "Must be quite a few disappointed holders from the IPO & beyond."

Those that bought at IPO will be laughing in comparison to those who stumped up for the fundraising at 109p in July this year.

Seems to me that talk shouldn't be about director bonus entitlements, but more whether the current board are fit to run the company. Why isn't the CEO's head on the block?

[andyj] 23/11/2017 11:56

Latest 105p in June? On the face of it, taking action to cut inefficiencies, div slightly readjusted, big discount to NAV, it's tempting to buy more, but the last two updates have ignited heavy selling. A good deal of trust needed to avoid that happening again!

[spectoacc] 23/11/2017 11:56

You must find the discount to NAV attractive now @jonwig, albeit NAV could fall, execution risk, & lower dividend? Still compares well with many others out there IMO.

[jonwig] 23/11/2017 11:45

External revaluations are normally done twice a year - quite expensive. And a danger of "too much information".

[spectoacc] 23/11/2017 11:40

I looked too, so am assuming it's the same as previously - to be fair, they wouldn't have had a revaluation again now. But the next revaluation may show a drop due to Cardiff, Aberdeen etc.

[andyj] 23/11/2017 11:27

The operational inefficiencies admission is a red flag to an untrusting market. I think the current price of 90p is about right, given the div and potential for more disappointments. I have scoured the statement for a revised NAV, but to no avail. Anyone know?

[jonwig] 23/11/2017 09:24

Right - TMF, of course. (RIP?)

@andyj - the point about their revised dividend is that it's dependent on future events which they're hostage to.

[spectoacc] 23/11/2017 09:11

@andyj - they also said (in 2015) that divis would be 6p/share and grow by "at least" RPIX. Let's hope the latest target (5.5p, falling to 5p the following year) is more realistic!

Must be quite a few disappointed holders from the IPO & beyond.

Re the Aberdeen economic issues - those should at least be easing with govnt focus on the North Sea & the oil bounce.

[andyj] 23/11/2017 08:59

Jonwig note they said the dividend will be substantially covered next year and fully covered in 2019.

[spectoacc] 23/11/2017 08:50

It isn't just the costs issue tho (& I say this as a holder). They pulled out of a big London purchase, are only at c.92% occupancy, & are also planning to push through a slightly higher rent increase than last year. Who knows if they'll achieve that on eg a messy Brexit. Also eg:

"- Lettings in Cardiff and Aberdeen are below budget having been impacted by local property management issues in Cardiff which are now largely resolved and local economic issues in Aberdeen arising from the oil price slump. To address these issues, management has adopted earlier and more effective marketing, implemented rent reductions in Cardiff and Aberdeen, offset by higher than average rents in other cities, and commenced rigorous weekly monitoring of room-by-room bookings to effect earlier rental adjustments if necessary."

Personally I think the trading issues forced their hand on the expenses side - will be interesting to see what Numis have to say.

On the plus side - NAV discount and a c.5.4% yield at 92p even on the twice-reduced 2018 5p target divi.

[stemis] 23/11/2017 08:31

Good to see them re-iterating a target of >70% margin. Whilst it's easy to say that they should have had all these things already under control, the business has been through huge expansion and has not yet achieved critical mass in a number of area so it's not exactly surprising. There are some pretty specific targets in this trading update which nails their colours firmly to the mast. If they achieve them then EPS should exceed 6.5p and we'll see dividends back to the original level.

Very much a stumble rather than a fall.