European Real E Share Discussion Threads

[redhill9] 23/4/2014 09:41

AGM next week, 1 May, but held in Guernsey so presumably one of those formality-type AGMs where few or no external shareholders actually attend.

An update on progress on sale of the German property would be welcome but I suspect we'll have to wait until the Interim statement (which last year was 16 May) before we hear anything, if then. share price has been drifting down over the last month but I see no reason to sell at this stage as it seems just a matter of time before value is realised.

[janvrot] 16/3/2014 13:57

ERET has done a lot of work extending leases at Kaizerslauten and it looks like an attractive asset. But, this ground lease issue seems to be slowing things down. Does anybody know more about the implication of the ground rent?

[alanji] 14/3/2014 14:20

The nav is better than I anticipated. We now have a much better idea of what the properties are valued at.

Co now has 6 properties - 4 Spanish let to Panrico, one in France part let to IBM with only one year of the lease remaining and one in Germany let to low risk tenants on leases of 9 years plus.

The German property is up for sale and has been so identified in the accounts. It is valued at £23m on a yield of about 7.5% Hopefully that will sell pretty quickly. Add the net current assets of £13.7m and that equates to just over 100pps.

The remaining properties are valued at £30.8m. One of the Spanish properties was damaged by fire and is no longer occupied by Panrico - the insurance claim of £2.4m has been included as an asset in the accounts. That is equivalent to a yield of just over 17% based on the contracted rent of £5.3m. The co holds a one year rent deposit from Panrico.

At the current offer of 135p and deducting the 'safe' 100p that means you are getting assets valued at £30.8m for ££11.3m - a discount of over 60% What are these properties actually worth? I have no idea but these quotes from the accounts are relevant as some have already pointed out:

"The valuation decline reflects the risks associated with the covenant of our major tenant in Spain, Panrico, and the short remaining lease at the property occupied by IBM in France."

"The office buildings in Nice, France are now 63% occupied by IBM on a short remaining lease which expires in February 2015. The property is located in a predominantly residential area and we are in discussions with the local authority to determine the best future use of the site should IBM choose to vacate. The outcome of these discussions is uncertain and is expected to take some time to resolve."

"As noted above, Panrico, the tenant of the four industrial properties owned by the Group in Spain, is undergoing a substantial cost reduction exercise as part of a formal insolvency process. We are in discussions with them about their remaining lease obligations, which are significant at an average of over 17 years and a contracted rent of €3.8 million per annum. We have been informed that the properties owned by the Group, with the exception of the Murcia property which was damaged by fire in July 2013, are strategically important to Panrico, however the outlook remains uncertain. Panrico is not in occupation of the Murcia property and an insurance claim is in progress. Further announcements will be made on this subject in due course. Should Panrico's financial situation deteriorate further and lead to a permanent default of its lease obligations, the impact on the value of the properties, and hence the NAV of the Company, will be material. The value of the properties is underpinned by the income stream receivable from Panrico and alternative uses are limited.

"Extinguishing the debt facility provides the Group with greater operational flexibility and, as noted above, the Board are therefore considering strategic options to maximise shareholder returns."

I think the price will jump when (if) the sale of the German property is announced along with a return of cash to shareholders. I sold half my holding on a stop loss two weeks ago at 120 and bought them back at 135 yesterday - we all make mistakes! If 90p is distributed, following the sale of the German property you are risking 45p for assets of 113p at current valuation.

[n1mgn] 14/3/2014 07:51

thanks gents

[flyfisher] 13/3/2014 21:04

Chevalier, thank you.

[nnaim] 13/3/2014 19:45

Or even a hotel complex conference type development

[chevalierdaven] 13/3/2014 19:24

Flysfisher,
La Gaude surface is 15 hectares=150,000m2.
plots of land trade between 200 and 500 EUR per sqm2 in La Gaude, that is for smallish plots up to 5,000m2...that would translate at 200 EUR into a land value of EUR 30 million, against a valuation of about E22m at year end (Matrix cost E32m in 2003, E41m valuation in 2007)

Built constructions trade for EUR 3,000 /m2.

There is clear case for a conversion from office to residential.

[nnaim] 13/3/2014 19:15

Would appear IBM are shipping out Feb 2015

[dalmeny] 13/3/2014 18:52

"predominantly residential" not "prime residential" flyfisher.

[flyfisher] 13/3/2014 18:21

n1mgn , The accounts show £23m value for property held for sale which should be Kaiserslautern, and investment property £30.8m which will be split between nice and spain.

Interesting comment about nice site being in a predominantly residential area , What is the nice site worth as residential land ?

edited , thanks dalmeny.

[n1mgn] 13/3/2014 15:31

i know the company gave an indication of value of each proerty ie 0-25 mil and 25 plus , but does anyone have more of a idea of the breakdowns,

i am trying to get a idea of individual yields on the propertys not 11% overall , because at a guess i reckon spain is in the high teens ?

any info much appreciated

[redhill9] 13/3/2014 15:05

Panrico is certainly a concern:

Should Panrico's financial situation deteriorate further and lead to a permanent default of its lease obligations, the impact on the value of the
properties, and hence the NAV of the Company, will be material. The value of the properties is underpinned by the income stream receivable from
Panrico and alternative uses are limited

So if Panrico does default finding a new tenent will be challenging, and would be at lower rental income meaning lower capital value.

Also interesting point about the IBM lease expiring in February 2015:

The office buildings in Nice, France are now 63% occupied by IBM on a short remaining lease which expires in February 2015.The property is located in a predominantly residential area and we are in discussions with the local authority to determine the best future use of the site should IBM choose to vacate. The outcome of these discussions is uncertain and is expected to take some time to resolve.

At NAV of 203p, the current Bid/Offer of 128p/135p give discounts of around 37% and 33% respectively. Certainly a hold in my view, and probably a buy as well - but so much depends on Panrico.

redhill

[nnaim] 13/3/2014 15:03

Big emphasis on strategy change here. Nice change of use to resi? alludes to something unconventional here (working with the local authorities, mainly residential population etc)

[asmodeus] 13/3/2014 14:48

"In view of the near term income risks of our assets in France and
Spain it is not expected that distributions of income or capital will be
made, at least during the period of the strategic review."

[spob] 13/3/2014 14:02

final report out

nav 203 pps

[alanji] 05/3/2014 11:15

Hi Nigel,
I disagree that "People over on the IERE thread don't seem to know much". scburbs provided a good analysis and I provided a reply (reproduced below). Cerrito and Kenny have also made good points.
I am holding the ords in hope of multi-bagging if refinancing is successful and the prefs as a possible longer term hold, but they could also do very well short term. At 59p there is a potential 80% profit and a 15% yield. Of course if refinancing is not sorted out.........


AlanJI 21 Feb'14 - 11:14 - 2377 of 2381
Good analysis scburbs. Not all the €96.7m is poor quality as it includes properties improved by asset management activities. I thought the rns was pretty positive on refinancing. Remember they put an offer on the table to BoS in December (declined) so they must have had an alternative finance offer at that time.
Thanks Loobrush for making me have another look at the prefs (and buying). Looks like there is a large buyer, which has contributed to the increase in share price Property would have to fall in value by almost 20% before the prefs are not covered in full and about 24% before current 54p offer is not covered, according to my calculations. It is an interesting risk/reward ratio. I now hold both ords and prefs.

[nigelwestm] 05/3/2014 09:47

Anyone else looking at IERE at the moment? I got out of them years ago but recently they bombed out on debt funding issues and now it looks like they are making moves to sort this. The shares up a bit on the last couple of weeks, so wondering if anything is afoot. I have put some of my ERET profits in there, although only a small amount since I see it as a binary play: the shares could be a four-five bagger in a few months or they could just end up being worthless.

People over on the IERE thread don't seem to know much, so it would be useful if someone here has anything to say about them...

[profitaker] 27/2/2014 15:25

Keep the faith !

[badtime] 26/2/2014 21:41

A flood of updates to nothing for nearly 2 months

[flyfisher] 29/1/2014 19:17

Interesting, it looks like the mystery buyer has picked up a few this week. The company has a buy in authority, i wonder if that is a start of it.

[profitaker] 28/1/2014 15:46

Just had a call from my broker asking if I want to part with my shares at 131.5, completely unsolicited. Very strange !

[zangdook] 21/1/2014 03:09

post deleted - now irrelevant

[bondholder] 17/1/2014 09:10

Daylight at the end of the tunnel ? (hopefully not a train !)

hxxp://www.pie-mag.com/articles/6721/time-to-invest-in-spanish-commercial-property-deutsche/

[profitaker] 06/1/2014 14:08

Flyfisher

Parked ? Not sure what that means. Most of the news releases for Panrico have been written in spanish, so some things may have gotten lost in the translation.