European Real E Share Discussion Threads

[redhill9] 02/8/2016 15:21

Eezymunny, That's reassuring - did you get confirmation direct from ERET or from another interested party? I made the resulting potential uplift a bit higher than your 10p but that ignored any cash held prior to the current redemptions which obviously reduces the effect, so I think your figure of 10p is probably about right.

I've just redone my calculation shown in post 629 above and an extra 10p on the NAV makes a surprisingly large change to the residual discount as it means less shares will need to be redeemed to achieve the second 115p per share. I've re-posted below the relevant section of my post 629 with updated figures inserted assuming a revised estimated NAV of 235p and using an example of holding 10,000 shares today (figures won't be precise because the two redemptions will now be based on two different NAVs, but close enough):

If those shares are held for the cash redemptions, 6,170 shares will be redeemed (10,000 @ 61.7%) @ 235p, generating £14,500 cash. The residual shares held of 3,830 (10,000 - 6,170) will need to be worth £5,500 (£20,000 - £14,500) for the shareholder to be in the same position after the redemption as before, which translates to a share price of 143.6p. As the NAV will be unchanged at 235p, a share price of 143.6p would indicate a discount to NAV of 38.9%, not bad for a share that will have a fair proportion of it's NAV in cash and has only one property (La Gaude in Nice) remaining, and is actively attempting an early sale of that property - note this quote from the RNS of 29 July:

"Work continues with the local development authority to explore the best possible future use of the site, in parallel with considering all options to effect an early sale. "

I'd say well worth holding for the two imminent distributions and beyond if the discount remains close to this level.

[eezymunny] 02/8/2016 13:48

I have had confirmation that the Panrico sale was not reflected in the 225p/share NAV at July 15th. I make the uplift about 10p/share, so it's possible that the second redemption on 11 Aug may be at a slightly higher price than 225p (the price has not yet been announced). Actually it makes little difference IMO to those planning to hold for the final curtain but just FYI.

[eezymunny] 02/8/2016 12:59

It's not a dividend - it's a redemption. You'll get some cash but will own less shares.

[eeza] 02/8/2016 12:28

XD is thursday. Register is Friday.

Edit: but not really clear.

"Company today announces that it will return GBP5.3 million (equivalent to 30.0 pence per share) on 4 August 2016 (the "Redemption Date") by way of a compulsory partial redemption of shares (the "Sixth Redemption").

The Sixth Redemption will be effected at the estimated unaudited Redemption Net Asset Value per share as at 15 July 2016 of 225 pence per share. The Redemption will be effected pro rata to holdings of shares on the register at the close of business on the Redemption Record Date, being 4 August 2016."

So looks like XD is Wed 3 Aug

[orinocor] 02/8/2016 12:20

great post redhill.

Question. It says if you are on the register on the 4th August you will get the 30p dividend. In that case can you wait till tomorrow to buy the shares or does it have to be today? TIA

[redhill9] 02/8/2016 10:37

I've been playing around with some figures to consider whether ERET is a sale, buy or hold in the current circumstances of two imminent cash distributions and only one property remaining in the portfolio.

Let's assume the latest share redemption of 115p is at the same NAV of 225p as the 30p redemption. That means cash distributed in the first half of August of 145p from a NAV of 225p, equating to around 64.44% of shares in issue being redeemed (the actual percentage may be slightly different as there are two sequential redemptions rather than one).

Using the example of someone owning 10,000 shares today which can be sold at current Bid 200p means that shareholding is currently worth £20,000.

If those shares are held for the cash redemptions, 6,444 shares will be redeemed (10,000 @ 64.44%) @ 225p, generating £14,500 cash. The residual shares held of 3,556 (10,000 - 6,444) will need to be worth £5,500 (£20,000 - £14,500) for the shareholder to be in the same position after the redemption as before, which translates to a share price of 155p. As the NAV will be unchanged at 225p, a share price of 155p would indicate a discount to NAV of 31.25%, not bad for a share that will have a fair proportion of it's NAV in cash and has only one property (La Gaude in Nice) remaining, and is actively attempting an early sale of that property - note this quote from the RNS of 29 July:

Work continues with the local development authority to explore the best possible future use of the site, in parallel with considering all options to effect an early sale.

I'd say well worth holding/buying for the two imminent distributions and beyond if the discount remains close to this level.

[eezymunny] 02/8/2016 07:32

We can't be sure of the numbers because too many moving parts ROB, but my best estimates suggest that ERET is valued here at about value of it's net current assets (ie liquid assets, mostly cash).

So by selling here you're saying that

Final sale proceeds of La Gaude - running losses/profits of company and La Gaude til wind, up will be zero or worse. I'm strongly inclined to disagree, tho it's perfectly possible that you'll be right. That's what makes a market!

[robizm] 01/8/2016 12:10

I sold out 10k at £1.99. I only bought them at £1.30 in july. I was a bit worried about being stuck in the rump after the second pay out of £1.15. The assets left amount to approx. 70p but cant see the rump trading at 50p. I could be wrong and time will tell.

[eezymunny] 29/7/2016 10:16

One wonders if the 225p/share NAV announced on 21 Jul reflects the Spanish sale announced today (I suspect not). That would take the NAV up to 235/240p. Edit. on reflection I suspect is does. Impossible to tell but numbers add up better at 225p!

I've bought quite a few today as risk/reward feels good, tho clearly there is risk is various forms.

[eezymunny] 29/7/2016 08:59

Finally bought these as it looks pretty safe to me,after years deciding it was never quite safe enough :(

Stuck a few in the EEZY3 portfolio FWIW

[flyfisher] 29/7/2016 08:43

The final property is La Gaude, a listed building, described in the prospectus as four buildings of 37k m2, on a site of 150k m2. It comprises two sites, 14.1 hectares on the main site and 1.04 hectares of 4 tennis courts on the other side of the road. It cost E40.7m.

Eret has sought a change of use and has been in discussions with the planning authorities for some time.
It has been reported that a Chinese group are interested in a hotel conversion and planning permission has been granted for a change to student accomodation for the outbuilding B4U, for a local nurse training institute.

When it will be sold and for how much is a difficult question?

[flyfisher] 29/7/2016 06:51

Good news, with a prompt sale just a couple of weeks after the court resolution.

It should lead to another compulsory redemption of about 60% of outstanding shares at around 225p, in a couple of months.

[robizm] 29/7/2016 06:26

Sold panrico at 10% prem. 1 more to go

[flyfisher] 28/7/2016 20:08

The bimbo deal formally concluded a while ago, so I think it reasonable to expect that schroders would have commenced marketing the Spanish assets promptly as their contract with eret only runs to 8th october.

With the schroders agent recently being at the French site doing the drone coverage it is also possible that they could be trying to market the French assets.

ERET have also seemingly mitigated some of the tax issues with an insurance contract.

It has been a good ride over recent months and I can see the Spanish assets going before the year end, hopefully at a good premium. If so, their should be another redemption at the end of the year in the order of 150p.

[flyfisher] 21/7/2016 07:23

As the nav date is given as the 15th july, i would suggest their has been an upgrade to the value of the Spanish assets, under normal circumstances they would most likely have used the nav as at the half year point of 30th june.

[robizm] 21/7/2016 06:26

NAV of 2.25 is a bit higher than I thought it was. Wonder if that includes an increase in value for the spanish assetts

[spob] 13/7/2016 16:20

The only annoying thing here is, ERET never fell far enough for me to add to my position

I usually only start adding if a stock falls at least 20% below my buy in price, unless the facts have changed significantly in the meantime

Nevertheless i'm very happy here and clearly there is a lot more to go for

[spob] 13/7/2016 16:03

no i'd just be guessing i'm afraid

i'm no expert on commercial property, especially in europe

[bubbleandleek] 13/7/2016 14:42

this is awesome news

[flyfisher] 13/7/2016 14:30

With the £ depreciation against the euro, I make current nav at 205p before any premium for the Spanish assets.

Schroders management contract and commission agreement runs to 8th october, so their may be another reason for them to bring to market promptly.

Spob, do you have any thoughts on the yield at which the Spanish assets will sell.

[spob] 13/7/2016 13:58

thanks for the info

[flyfisher] 13/7/2016 12:32

Here we go. Presumably eret will now put the assets to market shortly.

The Social Chamber of the Supreme Court examined the appeals against the judgment of the High Court which had declared layoffs Panrico adjusted right, and majority and dissenting vote against, "has decided (dismissing resources unions and the grounds for annulment invoked by them, and estimating the resource of the company) confirm the judgment of the High Court, except as regards the postponement of the agreed compensation is declared in accordance with law ". Thus the Mexican Bimbo will close the purchase of the Spanish company.

hxxp://vozpopuli.com/economia-y-finanzas/86134-bimbo-comprara-panrico-el-supremo-avala-los-despidos

[flyfisher] 27/6/2016 11:21

The bimbo acquisition of panrico has received approvals from both the Spanish and Portuguese competition commissions and is now awaiting the court ruling on the legality of last years restructuring of panrico, the result is expected in july. A favourable result will allow the deal to conclude and for bimbo to commence a planned expansion in Madrid, which has been on hold whilst awaiting the result.

If a favourable result is achieved I would presume that the Spanish properties would then be put on the market, but what would they sell for?

The assets seem to be booked at 11% blended yield, as per the notes to the accounts, which gives a value of E22.4m. It would seem reasonable to assume that the credit rating of bimbo would allow the assets to be marketed at a premium to book.

If 9% yield was achievable it would return E27.3m or 130p at todays fx rate, which is more than the current s/p.

Is 9% too optimistic?