European Real E Share Discussion Threads

[sharpshare] 04/11/2013 14:41

Nice pic of Europort with Frankfurt airport beyond.

[nigelwestm] 04/11/2013 14:12

Good to see some people other than me doing the research here for a change. Very interesting posts. Keep it up, guys!

[smithie6] 04/11/2013 13:31

"Panrico stops paying the rent.
ERET gets vacant possession and sells the properties.
Cost was around EUR 52,000,000.
Valuation in June 2013 about EUR18,500,000? or about 47p?"


under Spanish legal system......any decision may take years !!
winding up process has to be agreed with unions and regional and national govts. !
co. can protect itself from creditors if it wants to try to keep operating...

in Spain, the justice system does not work !!
and appeals can be made at every stage.....taking years

ind. property in spain has little or no demand at present...unlikely to change...26% unemployed..and wages have been cut by govt. and companies....legally !!!..there is little money in people pockets to buy stuff....

[sharpshare] 04/11/2013 13:22

Estimates of net debt indeed are estimates.

Here are my estimates:
Bank loans at 30 June 2013 per balance sheet of GBP 120,691,000
GBPEUR rate at 30 June 2013 was 1.1668 so debt in EUR was EUR 140,822,258
Duren sold for EUR 57,000,000
Hotel sold for EUR 37,500,000

est for net rents in last 4 months say EUR 2,300,000
Current debt around EUR 44,000,000?

[profitaker] 04/11/2013 12:26

Sharpshare

The total LBG debt (ex Duren & Dusseldorf) is EUR 68m, cash at bank EUR 15.7 (GBP 13.3m @ 1.18), so net debt of EUR 52.3m.

I don't think they'd want to use cash at bank to pay down LBG debt, especially as they've now got an 8 month finance extension.

So I think it'll take the sale of Frankfurt AND Kaiserslautern to be debt free and return money to shareholders.

Personally I think the Europort is worth about EUR 53m, this based on the write-downs at Duren and Dusseldorf.

[sharpshare] 04/11/2013 12:09

So if all 3 non Spanish properties are sold at June 2013 valuations then shareholders could get about 150p per share in cash plus:-

Scenario 1:
Panrico keeps paying GBP 3,000,000 rent per annum for the next 16 years.
ERET might stay listed debt freee and pay GBP 2,500,000 or 7.5p per year in dividends (assuming costs of GBP 500,000 per year).
If the market applies a dividend yield of 10% then the stub could be worth 75p?

Scenario 2:
Panrico stops paying the rent.
ERET gets vacant possession and sells the properties.
Cost was around EUR 52,000,000.
Valuation in June 2013 about EUR18,500,000? or about 47p?
Plus 1 years rent from the bank say another 9p?

Scenario 3:
ERET sells at about half original cost say about EUR 26,000,000 or about 66p per share?


Scenario 4:
Rent not paid
Properties go to auction with no reserve price.
Get back between EUR10m and EUR30m or even EUR50m? 25p to 75p or 125p?

[sharpshare] 04/11/2013 11:49

Want to buy or rent warehouses or offices near Frankfurt Airport?



Nice pic of the Schenker warehouse. Building 34C?

Top 3 tennants disclosed in the ERET 2012 acounts include:
Schenker DB paying about EUR 2,080,000 per annum
LSG Sky Chefs paying about EUR 733,800 per annum
Fedex paying about EUR 733,800 per annum
Tennants are on short lets as is typical in Germany for this type of space.

The latest accounts value Europort Kelsterbach Frankfurt at over EUR 50 million.
ERET no longer discloses exact valuations for each property like they used to.
We have to guess.
Here are some historic valuations disclosed by ERET in the past for Europort.
March 2007 EUR 125,000,000
June 2007 EUR 125,000,000
Sep 2007 EUR 125,100,000
Dec 2007 EUR 125,300,000
Mar 2008 EUR 125,300,000
Jun 2008 EUR 121,300,000

If the laset June 2013 valuation is around EUR 62,000,000 and if the complex is sold at this price then the net debt of about EUR 44,000,000 could be eliminated and about 45p cash could be returned to shareholders leaving ERET debt free and owning 6 rent generating properties worth around 160p?


pic of building 34D Europort (top pic)?

Fedex Customer Invoice Services building 34K Europort?


LSG Sky Chefs units 19 to 23 Europort

another nice pic

[profitaker] 04/11/2013 11:48

I still can't decide, from a shareholder value / saleability point of view, what the best outcome for Panrico would be;

a) Panrico go bankrupt, all leases are forfeited, and each unit can be sold (or re-let then sold) individually

b) Panrico successfully restructure, and all 4 units continue to be occupied (on long leases) by a Tenant of doubtful credit quality

Any thoughts ?

[sharpshare] 04/11/2013 10:42

SPAIN: Baker Panrico trims job cut plans

[flyfisher] 01/11/2013 16:22

Good take profitaker. Which shows the importance of spain and france towards crystalizing shareholder value.

At la gaude IBM has yet to decide on relocating and I have read that the local council are considering occupying part of the premises , whilst in spain , panrico remains in discussions about its future . I think that fears of panrico closing down are a little overdone , Oaktree capital own panrico and are experts in turning round distressed companies . Their remit is to restructure .
An extract from their recent conference call gives an example of their restructuring methodology.


''Chesapeake is a great example of Oaktree's expertise in identifying the distressed opportunity, investing high up in the capital structure, restructuring our holdings in the equity and bankruptcy, and lending our portfolio enhancement expertise to create value for we what we like to call a good company with a bad balance sheet.

In 2007, then publicly traded Chesapeake suffered from a number of managerial operational challenges. These resulted in deteriorating financial performance, which together with leverage and integration issues following prior acquisitions caused its debt to trade at distressed levels.

Our Principal Funds took advantage of this opportunity purchasing the company's senior subordinated notes and senior revolver at a discount. These debt purchases gave us a blocking position that allowed us to lead Chesapeake restructuring when it filed for Chapter 11 bankruptcy protection. With the help of our in-house portfolio enhancement team, it took our revamped management team only a year to restore the company to its former profitability. Operational improvements, cost saving initiatives, and two complementary add-on acquisitions improved Chesapeake's trailing 12 month EBITDA approximately 70% during our ownership. Proceeds from the sale gave our Principal Funds 3.8 times our invested cost and a gross IRR of 41%.''

[sharpshare] 01/11/2013 15:48

News on Karoo Funds (17.5% shareholder in ERET)

[profitaker] 01/11/2013 15:13

n1mgn

It would take the sale of Kaiserslautern AND Frankfurt to be debt free and have about GBP 11.3m in surplus cash (my estimate).

That would then leave the offices in Nice and the Industrials in Spain. Current gross income from these is GBP 5.3M, or 16pps. Hope that helps.

[n1mgn] 01/11/2013 14:50

One more good sale , Kaiserslautern or Frankfurt and we debt free , Does any one have the income numbers of the remaining properties , once debt paid off I reckon they buy back shares at nav from the revenues , I am trying to work out what I have missed , it surely got be nearer 2 quid than 1 Thxs

[nigelwestm] 01/11/2013 13:17

Oh sorry. Wrong thread!

[spob] 01/11/2013 09:42

118p









1 Year

[gary1966] 01/11/2013 09:01

Sorry Profitaker I need to go and learn to read properly before asking the question, and that is with me getting my glasses from Specsavers!! :-)

[profitaker] 01/11/2013 08:23

Gary

Dividends were suspended a while ago and the declared company strategy is to sell all properties and return the proceeds to shareholders. As you've correctly read, there won't be any returns until the LBG loan is repaid.

[gary1966] 01/11/2013 08:12

Announcement re re-financing the other day said that all proceeds from sales had to be handed over to LBG and any surplus rental fees also. This term is in place until all liabilities are cleared with LBG. Does this mean that dividend payments have been suspended until all debt repaid as this would count as a distribution to shareholders, which the announcement says they can't do.

TIA

Gary

[profitaker] 01/11/2013 08:09

The retail unit at Kaiserslautern must surely be next. With a new 15 year lease signed to Contipark after the June '13 valuation, they should achieve more than book value.

Then Frankfurt Europort. That should go as it'll then pay down all LBG debt in one fell swoop, and then some. Fairly high void rate (22%) but I see no reason why they shouldn't achieve the June '13 valuation. And they've now got 8 months in which to do it.

There is a deferred tax liability of GBP 2.855m in the June '13 accounts. That would be reduced or eliminated if the Properties were sold for less than book value. So a bit of a cushion there.

[sharpshare] 01/11/2013 07:23

Hooray!
EUR37.5m Cash from the hotel sale has arrived.
Debt reduced and interest percentage cost on entire debt now lower.
Senior debt now EUR 101.8 million.
This represents more derisking.
Well done Schroders.

Cash from the retail property sale in Duren of EUR 57 million should arrive soon.
That should take debt down to EUR 44.8 million.

Remaining 7 properties worth around EUR 132 million at 30 June 2013 valuation.

Market cap at 120p is about EUR 47 million.

The gap between market cap and equity value is where potential profits are lurking.

[nigelwestm] 30/10/2013 09:23

This is due for a proper re-rate now! Should be closer to 160p, which would give a more reasonable (but still generous) discount of about 20 percent.

[mozy123] 30/10/2013 09:21

Great news!

[sharpshare] 30/10/2013 08:48

Well done Schroders!

Loan extended with Lloyds bank.

Interest rate drops from 5.42% to 3%

Interest rate swap rolls off on 4 Jan 2014 so no more liability there which should raise NAV about 7p per share.

No more nasty swap and fx hedges. Nice clean balance sheet. Properties and some debt. Net loan to value now about 32% (subject to completion of existing announced sales)

FX liability now certain giving an potential NAV uplift of about 2p per share.

Potential 7p uplift in NAV from reduced exit and termination fees is a bonus!

This deal significantly reduces the financial risk so we might expect an upward rerating in the share price.

est NAV about 207p
share price 108p to 113p
discount about 94p
discount 45%

Massive 45% discount makes ERET look undervalued compared to HSTN, SGRO, RDI which are trading at premiums to NAV
Also undervalued compared to APT, TEIF?

[profitaker] 30/10/2013 07:43

They could extend for another 6 months, and another, with Lloyds. Or find a lender prepared to take a longer term view. Disappointed that there won't be any shareholder distribution yet, but more than happy with todays announcement and the options it brings.