European Real E Share Discussion Threads

[redhill9] 02/10/2015 17:57

With a gain of £1.9m on the sale of Kaiserslautern that should give a current NAV per share of £180.

£180 per share - Colonel A, if only!

Excellent news today, not unexpected that Kaiserlautern would be sold around now, but the premium to NAV is very welcome and gives a comfortable feeling about ERET's other valuations. I haven't had chance to check my own calcs yet but janvrot's logic instinctively looks sound to me. Also, NAV has every chance of increasing from 180p.

[flyfisher] 02/10/2015 17:55

£180 would be nice colonel, but we will have to make do with 180p for now.

You may be right about an earlier small distribution as it has cash from the Murcia payment and the ibm dilapidation payment.

Also worth noting that the Kaiserslautern sale will allow a wind up of the german subsids and go some way towards resolving the tax issues that have been limiting cash payouts. ( Potential tax liabilities ( Note 13 ) restrict our ability to return further funds. )

The immediate focus now is on the Spanish assets, for which we have had the tenant emerge from creditor protection after being restructured. Which has led to improved accounts for the tenant and ultimately to a takeover of the tenant by a stronger international business with a better credit rating. Fitch ratings announced recently that they are credit rating positive on the deal for group bimbo.

What value now for the Spanish assets which are expected to be up for sale in q4, they had been written down from a purchase price of 48.5m euro to somewhere around 15-17m euro now. I would expect a significant revaluation of the asset at year end valuation point after the group bimbo purchase.

Would it be reasonable to expect a sale at a yield of 10%-12% ?

[janvrot] 02/10/2015 17:37

I agree, at todays exchange rate (1.35) NAV is GBP1.80 per share. Assuming proceeds from kaiserslautern are used for a buyback at NAV then if you buy 1000 shares today at gbp1.35, you will receive GBP648 in the buyback (360*GBP1.80) which means you effectively pay GBP1.10 for the remaining 640 shares.

Pay GBP1.10 for equity worth GBP1.80. Not bad and economic data from spain is very positive and the deal with bimbos even more promising.

[colonel a] 02/10/2015 16:09

FWIW:
The half yearly report gives the NAV at, a then hyperthetical, 1.35 €/£ as £47.7m
With a gain of £1.9m on the sale of Kaiserslautern that should give a current NAV per share of £180.
I'm assuming that the "value" of La Gaude will be written down by the amount of the IBM dilapidation payment. Unless the valuation specifically allows for a different figure ??

[colonel a] 02/10/2015 13:33

Finally.
Good news, a decent price.
Given that they have money from Panrico and IBM and some profit on the rents, I wonder if there might not a be a smaller distribution sooner ?
If there were, it would be roughly the same as the last one by my estimate.

[flyfisher] 02/10/2015 12:33

Excellent news today with Kaiserslautern sale at a good premium.

We seem on track for a 70p-75p cash return in q1 2016.

[colonel a] 09/9/2015 10:50

¿Qué pasa?
Qu'est-ce que c'est?
Was ist los?

[colonel a] 23/8/2015 14:33

Sleepy,
As somebody explained to me many moons ago Kaiserslautern is in as "held for sale" at £15.3m, which is roughly €21 {as per flyfisher earlier}.

The other two are in as investments at £22.8 and there have been various guesses as to the split.
Panrico is on the up but still in the accounts as high risk and so most agree is now undervalued.

La Gaude is the wild-card. But Schroders are incentivised on the return they get from it and I can't imagine they would have negotiated that if they thought it a dud.

[sleepy] 23/8/2015 11:32

Anyone like to suggest a breakdown of NAV among the 3 assets?

[redhill9] 23/8/2015 10:20

Don't know what value is included for La Gaude, but IBM leaving has been known for a long time so that is itself already factored in.

The unknown about La Gaude is how quickly it may be redeveloped, or sold for redevelopment. ERET have suggested it won't be quick.

[eezymunny] 23/8/2015 09:14

Anyone know how much of the NAV is the French La Gaude property? With IBM leaving it may be worth much more or much less than what it's in the books for, non?

[colonel a] 23/8/2015 08:38

Hmmmmmmm,
After another look at the rent roles end 2014 and end June, there are a couple of minor quirks.
€25m represents a well stuck out neck.

[colonel a] 22/8/2015 11:27

Redhill,
Although I was binned by the NAV update {almost lack of} I still feel that a £2 NAV at that {and this} time is actually more realistic, indeed still rather consrvative.

The half yearly report makes it clear that nothing official has changed re Panrico, but in reality the chances of Panrico defaulting have dropped massively.

And I whilst it will be great when Kaiserslautern sells, current book would not set anything alight.
Just for the sake of sticking my neck out again - I'm looking for ~ €25m

GLA !

[redhill9] 22/8/2015 10:19

Have to agree with your comments Flyfisher.

Colonel A, you made a case recently for a NAV of c.200p and while that seemed premature at the time it's not impossible to believe ERET could be worth that eventually, with "eventually" not being too far in the future.

The market has been unimpressed with ERET gradually moving from the "medium-term speculative" category to being considered a more realistic short/medium term investment (I'm thinking imminent sale of Kaiserlautern and a re-rating of the Panrico property risk enabling it's sale) with the share price actually shading down a touch yesterday, which is odd in the circumstances. Maybe ERET isn't big enough to be on the radar of many. I'd guess the sale of Kaiserslautern should stimulate some market interest, particularly if it's accompanied by an announcement about a distribution.

I also added yesterday at 116p and although now close to my self-imposed limit I feel inclined to buy more.

[flyfisher] 22/8/2015 09:15

Yes colonel, they are likely to do it that way, but they generally announce it in terms of returning a certain amount per share.

This latest news seems to offer the prospect of the full current market cap being returned to holders within 9 months, with a free ride on la gaude.

Kaiserslautern sale at book 21.5M euro
Murcia payment 1.2m
ibm dilapidation payment 2.5m
panrico sale at 12% yield 20.8m

That gives 46m euro/121p per share potential distribution and the Kaiserslautern sale will allow resolution of the german tax issue which has been part responsible for them having to retain a high level of cash, so it could be more.

Of course there are a couple of hurdles to jump in order to achieve this, with the panrico sale being the biggest. Prospects for this have certainly improved with the news of a trade buyer, which is likely to improve the covenant strength and sale prospects.

I added to my holding yesterday on this basis.

[colonel a] 21/8/2015 13:49

flyfisher,

The news looks solid with the usual lack of hype from Schroders.

But if / when they return more cash it is very likely to be a buy back at NAV again.
Perhaps 30% of the shares.

Given that Kaiserslautern is likely to achieve more than it's last valuation {IMO at least} the buy back will be at a level above the current NAV.
However, as previously it will not alter the then NAV.
But will alter the risk / gearing or however you want to look at things.

And the £ is moving down against the Euro at last.

[flyfisher] 21/8/2015 12:59

Good news in todays half year results with the property at Kaiserslautern now under offer.
This, along with the accelerated payment of the deferred Murcia proceeds and the ibm dilapidation payment due soon should lead to a distribution in the last quarter in the region of 65p/share.
If so, it would leave the stock at 50p, with a 102p nav.

With the Spanish properties likely to have a valuation uplift due to the stronger covenant of the new purchaser of panrico and due to be brought to market in late 2015/early 2016 the discount looks excessive.

[kramch] 06/8/2015 08:40

I see a local is suggesting (article comments) it could be used to house migrants!
K.

[janvrot] 04/8/2015 18:22

can you provide some links, all I find is articles from 2014

[flyfisher] 04/8/2015 14:47

Another reference to the outbuilding designated B4U on the ibm site.

On the IBM site, He said that in the transformation project B4U building (about 10% of the floor area of the site), it had "completed negotiations for a building permit valid" (for student housing for the school of nurse, housing that count in our social housing, from 69 to 70 units)

[flyfisher] 04/8/2015 14:37

This came up on a google search for la gaude news. It comments on a Chinese hotel group showing interest and student housing in an outbuilding owned by matrix / eret.

To maintain the activity around the site, several tracks: the installation of Malongo, a proposed university campus and a luxury hotel complex .
Five hundred and twenty employees, including 420 permanently on the site, definitely leave the historic seat. So they cease to frequent the surrounding businesses or professionals, the hotel restaurant, the large area at the bakery.
"For the town, the departure of" IBMers "will be the loss of a large customer in the local economy," Mayor fears.

In this context, what are the prospects for the area left vacant?
Transfer of all Malongo Carros
After a nine-year legal proceedings initiated by some hostile neighbors to its implementation, Malongo, confirmed in October by the Council of State in its building permit, preparing its site in Plan-du-Bois.
Once completed, the existing facilities will welcome about 25 000 m2 of the former IBM site transfer all production activities Carros: torrefaction, assembly workshop Machine and Coffee Museum. This is also expected by the mayor.

The campus "pending a decision"
The challenge is also to restore customer proximity "with the arrival of 400 employees, we will have countered the departure of IBM."
Moreover, in the projects, the university campus. It would combine paramedical training, on the ground floor, and social student accommodation on the upper floors of the U. B4
This building is also owned by Matrix, IBM lessor. It is close to the UGECAM and nursing school and help caregivers receiving intermittently 600 students.

"We are awaiting the decision of the Region, which has the training competence, and including a twenty year commitment will be needed,"

Finally, a future that any other computer looms for perhaps 15,000 m2 of B1, iconic building cross IBM: a Chinese group specializing in the luxury hotel would be interested to install a complex.
A panoramic view of the Mercantour to the sea, the unspoiled environment and the proximity of the airport to fifteen minutes are arguments that matter to investors.
"The important thing is to avoid getting stuck with a blank space. The hotel offer is a track" optimistic, Michel Meini.

[colonel a] 31/7/2015 15:42

Hmmm, can they see light at the end of the tunnel perhaps ?

[redhill9] 23/7/2015 09:55

Thanks flyfisher, that would appear to be excellent news for ERET.

[flyfisher] 23/7/2015 08:42

Group bimbo have now agreed a price of 190m euro for panrico, with completion expected in q4.