European Real E Share Discussion Threads

[janvrot] 17/6/2014 11:26

flyfisher.........sre may be a better bet as they are also owned by karoo. However, how does the math work? Issuing new shares at a discount to nav does not look like a good idea to me?

[hugepants] 17/6/2014 10:15

Since the recent disposals anyone know the estimated eps now?

[flyfisher] 17/6/2014 07:49

janvrot, ''It would be crazy not to buy back shares''.

The board seems to see greater options in keeping the cash, pending the outcome of the strategic review.

Perhaps they would have a stronger hand in any merger proposal if they are cash rich. Their are other REITS trading at much larger discounts to nav that are largely at the behest of their bankers for which the cash rich and unleveraged eret could resolve their debt problems.

I have speculated before that something like an all share merger with IERE on favourable terms may be the end game here, but who knows, time will tell.

[janvrot] 16/6/2014 23:28

I figure eret has close to GBP23mil cash on the balance sheet. It would be crazy not to buy back shares while eret trades at such a big discount to nav.

If eret uses gbp20mil to buy back shares at gbp1.30 the nav jumps to GBP2.66 with 17mil shares outstanding. Using GBP20mil for buy backs may be too aggressive, but, the point is made.

[colonel a] 16/6/2014 17:36

AlanJI,
Thanks, I was not aware that they had published valuations of the separate sites.
I've only seen a few guestimates.

[alanji] 16/6/2014 15:22

Col A - I divided the individual assets by the no of shares in issue - 33,163,276

HP No I did not write down the value - if Panrico has solved or partly solved its problems the value might actually be increased.

[hugepants] 16/6/2014 15:12

I've bought some of these today. I wouldn't say an ultimate 30%-50% return is nailed on but I think it looks likely. And its difficult to see any downside.

[hugepants] 16/6/2014 09:15

AlanJI, Regarding your estimated NAV did you write down the value of the Spanish properties to account for the reduced rent?

[colonel a] 15/6/2014 11:40

No pun intended ?
AlanJI, how do you calculate the pps breakdown pls ?

[janvrot] 13/6/2014 12:39

MAS Real Estate (hxxp://www.masrei.com/) owns 40% of Karoo which in turn owns 17.5% of ERET.

As was pointed out in a prior post the land value of the Nice property (150 000m2) is EU30mil assuming EU200/m2. The Nice property is located in an affluent residential are where land sells between EU200/m2 to EU500/m2 so EU30mil is a conservative value.

There is clearly a lot of upside for patient owners and if one does the math it makes a lot of sense for Karoo/Mas to do a deal. Karoo/Mas win two ways, the value of their ERET shares will rise and secondly if they buy Nice for EU25mil there is some nice upside.

A similar argument can be made for Kaizerslautern which could be bought on an attractive yield.

In March MAS raised EU180mil so they clearly have the means. Thoughts?

[alanji] 13/6/2014 10:22

Disappointing that the share price has not moved following the two announcements. I calculate the nav of 203pps, using Dec valuation, adjusted for the two disposals is now as follows (pps):

Cash 64.5
Net current (7.5)
Kaiserslautern 54.3
Panrico & IBM 91.7

The remaining German properties are held on good leases to low risk tenants with a length of about nine years and a yield of about 7.5% So the valuation seems pretty secure. Adding the cash and net liabilities gives 111.3p The current share price is 112/119 (you should be able to deal within the spread) so you get the Panrico and IBM properties for virtually nothing.

[colonel a] 12/6/2014 17:42

5m is 4% of 125m
3.5m is 5.2% of 67m

With estimated NAV about 82m Euro ??

[robizm] 11/6/2014 20:26

3.5 mill is 5.2% of a smaller pot. Take the 5 mill of first

[colonel a] 11/6/2014 17:55

I must be exceptional dim today.
But how can 5m = 4% and 3.5m = 5.2%

[sharpshare] 11/6/2014 11:53

Parking lot sold today for EUR 5 million in cash at valuation. Nice.

Share price now 112p to 116p.

So NAV now at mid June 2014 around 205p.
(Dec 2013 at 203p - EUR fall of around 5p + 6 months net rent of around 7p = about 205p)

Of which cash about 60p and properties about 145p (before any new revaluations)
So at 115p share price today that is a discount of 90p or 44%.

Stripping out the cash means the properties are on a discount of about 62%

Reminder that the company has no debt, is in self liquidation mode and it is selling all assets and giving the cash back to shareholders.

Perhaps another property trust trading at a premium to NAV will come along and scoop up all the ERET shares by issuing paper at a premium to NAV and at a small discount to ERET NAV so acquirer gets NAV uplift and cash.
eg Hansard, Redefine, Segro, Sirius etc...

[flyfisher] 03/6/2014 17:32

It is reported in the French press that IBM have signed a lease for a new build office with developer ARTEA, with completion expected in late 2015.

hxxp://www.nicematin.com/cagnes-sur-mer/le-demenagement-dibm-a-nice-meridia-est-signe.1743101.html

As the IBM la gaude lease is up in feb 2015, it looks like there will be a lease extension of perhaps a year.

[redhill9] 15/5/2014 14:12

IMS as at 31 March 2014 now available. NAV reported as 31 December 2013 of 203p, next valuation 30 June 2014. Everything much as already known. I bought another batch this week at 116.6p, very happy with that.



The Company owns a commercial portfolio of six properties in Germany,
France and Spain. The portfolio is 88% let and generates an annual rental
income of €7.6 million. The value of the property portfolio at 31 December
2013, the latest valuation date, was €68.2 million following the sale of assets
last year. The portfolio will next be valued on 30 June 2014. Valuations are
based on those undertaken by the independent Valuer in accordance with
the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation
Standards and show the "Market Value" assuming an asset sale of each
property.

Disposal strategy and asset management
The accelerated disposal programme executed in the second half of 2013
and the €17 million financial benefit gained from the early repayment of
group debt caused the Company's net asset value (NAV) per share to rise
by 4.5% over the six months to 31 December 2013.
The company has made excellent progress in achieving its stated objectives
over the period. The next phase in the realisation strategy requires the completion of asset management initiatives on the remaining
properties in the portfolio. Significant income and valuation risks remain given the weak covenant of Panrico, our tenant in Spain, and the
short lease to IBM in Nice with the added uncertainty about the most appropriate future use of the site which is currently offices. The benefit
of having removed the debt facility and associated liabilities is that it provides the Company with time to ensure it completes the realisation
strategy in the best interests of shareholders, avoiding the risk of being required to implement short term initiatives which can be value
destructive. The high street retail property in Kaiserslautern, Germany, is fully income producing, has a weighted average lease length of
10.2 years and generates income of approximately €1.6 million per annum. The property is held leasehold which reduces its liquidity in the
German investment market however the property continues to generate revenue for the Group.

The office building in Nice, France is let to IBM until February 2015. Whilst we await formal confirmation of their intentions it is expected that
they will vacate the building on that date or shortly thereafter to re-locate their business in a more established office area in Nice. We are in
discussions with the local government to determine alternative uses for the site should IBM vacate. The site is located within a
predominantly residential area, which could permit a range of alternative uses, however it is expected to take some time to resolve a rezoning
or change of use with the local government.

The largest risk in the portfolio rests with the four industrial units in Spain which are let to Panrico. We have noted in previous reports that
Panrico is undergoing a substantial cost reduction exercise as part of a formal insolvency process, and these risks remain. Panrico are not
currently occupying the unit in Murcia which was partially damaged by fire in July 2013 and this is the subject of an insurance claim. If
Panrico's financial position deteriorates further and defaults on its lease obligations, the impact on the valuation of these properties, and
hence the Company's net asset value, will be material.

Outlook
Extinguishing the debt facility provides the Group with greater operational flexibility and the Board is therefore considering a range of strategic
options to maximise shareholder returns. Given the short term income risks associated with the properties in France and Spain no
distributions of capital or income should be expected while the strategic review is under way.

[colonel a] 10/5/2014 08:29

Revisiting last year's IMS, they have done a very impressive job over the last 12 months.
I've been building at these levels {most goes through on ISDX} and apart from the raw numbers it's the management record that gives me confidence.
DYOR of course.

[redhill9] 09/5/2014 09:21

Just bought 3,000 at 118.0p - is that a bargain or am I fooling myself and the market knows something I don't......? ERET has just crept into my top 5 holdings (measured by market value).

[redhill9] 09/5/2014 09:04

I've just been re-reading the year end report before deciding whether to increase my holding ahead of the IMS announcement, presumably due in a week or so (based on last year - can't see a date announced anywhere for 2014).

Everything looks good to me with the well known one glaring exception of Panrico, which must be what is holding down the share price However, as we know, the valuation of the Panrico properties was adjusted in the 2013 NAV to reflect that company's precarious financial state, and the current large ERET discount of NAV to share price further adjusts for it. Broadly, it looks to me as though bad news regarding Panrico is (largely) already factored into the share price and if it came to the worst and Panrico defaulted the resulting downside to NAV would still be well within the margin provided by the discounted share price Additionally, this situation would be mitigated by the one year rent deposit.

Taking Panrico out of the equation, ERET is left with reasonable properties in France and Germany paying good rent and no outstanding finance. Exchange risks remain but can go either way and unlikely, I think, to have a major negative effect on the share price I've persuaded myself to buy more.

[colonel a] 08/5/2014 19:00

Can't see why the share price has fallen back so much.
Debt free, a 45% discount seems absurd.
And with UK propco's now commanding a premium.

BY my reckoning they should be making about 1.5p per month on the NAV from income and if they could mop up a million or so shares at current levels that would add 3p.

Meanwhile strength of Stirling looks to have dropped the NAV by about 4p

Patience is the order of the day, hope mine lasts the course.

[profitaker] 07/5/2014 15:49

I'd like to think they're soliciting offers for the portfolio as a whole job lot. It is annoying to see the share price drift lower, but with a near 50% discount to NAV and no debt, nothing to worry about IMHO.

[investor_tp] 07/5/2014 15:06

Wasn't there something about them reassessing their strategic options in an RSN a while back?

[redhill9] 07/5/2014 14:44

Interim statement due (probably) late next week - doubt if we'll hear anything before then.

[n1mgn] 07/5/2014 14:00

Hi Gents , Anyone hearing anything ? Or any thoughts ? All gone very quiet. the company must be accumulating a fair amount of cash now, when u think they may give us some back ? Any thing appreciated