First Property Share Discussion Threads

[stevegrass777] 06/8/2021 06:56

RNS New property fund mandate, Good to see management are still attracting new clients and an investment for first property in the new fund as well putting some cash to work.
Retail is probably a very undervalued area at the moment.

[m_kerr] 25/6/2021 09:57

Agree totally catsick, as I explained extensively. You're going to get panic and swings in value when you have a high number of retail investors with an illiquid small company.

[catsick] 25/6/2021 07:44

When is a loss really a profit ? Its a very interesting restructuring and shows why these shares should really trade at a premium, most reits have been doing hail mary rights issues and diluting shareholders to death, but the structure of non recourse loans and ample cash held separately from the assets shows that when there is trouble you can play hardball with the banks and only pay 63% of what you owe, the profits from the sup par repayment are not reflected yet but the assets write down is, the net effect of this is that if asset prices return to normal in a year or two then the crisis has just added a 9m euro windfall to profits..... compare that to hammerson etc who have destroyed shareholder value through capital raising

[roycecooledge] 25/6/2021 07:18

Good review from Simon Thompson last night in Investors' Chronicle https://www.investorschronicle.co.uk/ideas/2021/06/24/investor-overreaction-presents-buying-opportunity/

[m_kerr] 24/6/2021 16:21

stalker - gross debt is about £24m post period end, as after the gdynia property loan was restructured, they paid off €4m of the €16m outstanding (the €16m was negotiated down from €25m previously outstanding, so a €13m total reduction there). so this means cash balance of around £12.5m (accounting for the €4m gdynia repayment), and therefore net debt post period end of around just £12m, which is actually a substantial fall. this compares to £41m of directly held properties. plus all debt on each property is non recourse to the group.

on the dividend, they could have paid it out of cash on hand, but it's probably best for the group to retain capital at the moment, until they are able to lease the space in gdynia, and CH8 (the space they guaranteed to the buyer).

[stalker_boy] 24/6/2021 15:19

Looking really weak. No divi, debt increasing. Come back in 12 months

[baner] 24/6/2021 15:06

This smells……………;……

[m_kerr] 24/6/2021 14:46

here's my take: the results don't include the loan restructuring of the gdynia property, which takes €9m off net debt, this will increase profit by the same amount in the next set of accounts. they have however included a £7m impairment of the property value (the equity of which was only held in the accounts at £0.5m), which leads you to believe there has been a massive fall in property values across the board. stripping out this effect, there was a 14% fall in the value of group properties, almost all of which was on blue tower (27% fall). under the group's structure, each directly owned property and investment in 3rd party funds has it's own separate, non recourse debt, which eliminates the possibility of one property falling into negative equity and wiping out equity on others.

next, collection rates across the portfolio are high. high 90s for group property, and similar on a weighted basis for the funds managed. however they need to lease the gdynia property that they purchased.

finally, it's unwelcome that they may be on the hook for some time on that rent guarantee on CH8 (just over £1m a year).

[friskymickey] 24/6/2021 11:44

Could this be prime for take over now?

[blobby] 24/6/2021 07:49

Results were not what I was hoping for unfortunately. 35p to 24p is quite a big fall :-(

[m_kerr] 16/6/2021 18:46

the eviction ban on commercial property extension for 9 months is not great news for landlords. although no direct exposure, they do manage funds with some retail warehouse exposure. maybe this will present an opportunity to pick up good deals. they're biding their time that's for sure.

you can see what sort of properties they are looking to buy in the UK here: us7.campaign-archive.com/home/?u=687eed6cff08356a1da5a723a&id=5b70d0644e

[fanshaw] 12/6/2021 16:47

Lifestyle company.

[leopoldalcox] 12/6/2021 14:15

Seems to have firmed up recently. Hopefully we will have news soon of capital redeployments and possible another couple of funds under mgmt

[m_kerr] 30/4/2021 18:33

i've done a bit of legwork, and assuming 60% LTV on the investments in 3rd party funds, the overall discount the current share price assumes is 24% on the gross assets, which compares to 4% for global worth, who are office investors in poland and romania. the fly in the ointment is that until that cash is invested, at the moment they are effectively just covering their operating costs and debt amortisation, though paying back debt does increase NAV.

[stevegrass777] 29/4/2021 22:08

Yes good point about share buyback, it's hard to see any other investment being at such a discount including property.
Something has got to happen shortly it's just to cheap.

[m_kerr] 29/4/2021 21:41

they dont own any london property, they tend to invest UK funds in the south east just outside of london. IIRC the offices fund (£143m AUM, Fprop share £2m), invests in places like borehamwood and crawley, the thesis being that the rents are far lower, but within 30 mins train journey to london, as you mention, a lot of offices in those regions have been converted to residential so supply is now tight, which has led to rental growth. habib has said that the easy PDR conversion opportunity went some years ago, but it does at least provide underpinning to office values that doesnt exist in shopping centres for instance.

remember that as they presumably handed back the keys to the gdynia property, (€25.5m carrying value, €25m debt), the remaining £32m group property has just £19m of debt, add on £20m of cash, and £28m of third party investments, all in for £37m fully diluted is a very low valuation to say the least. they should be buying back shares aggressively at what is currently a 40% discount.

[stevegrass777] 29/4/2021 19:39

It does seem very undervalued, do you know if the plans to allow offices in London to be converted into residential will effect fpo, I know they have a fund that invested in London offices and I think fpo have a stake in it.
So maybe they will get something from these plans.

[m_kerr] 29/4/2021 19:16

very strange - the rally of the last few months has completely passed FPO by, in fact it's at best flat on november levels. other companies with european office exposure include SERE (up 25% since november), sirius real estate (up 30%), global worth (up 25%). i think this is partly because there isn't a fairly regular stream of trading updates (the last RNS was the results in november). trading volume today of 0.06% of shares outstanding too. i said it before but the fact it's not a reit means many UK income investors are totally unaware of it. none of the above affect the underlying value of the company.

[m_kerr] 14/4/2021 16:47

Globalworth, who have significant poland and Romania office exposure,were bought out today by CBRE today, albeit at a 20% discount to NAV (share price currently higher presumably in expectation of a higher bid). Circle property , a UK office owner, reported just a 1.8% portfolio decline.

[stevegrass777] 13/4/2021 20:22

Agreed at this price you are getting great value, and I'm sure the share price will be re rated over time.
I'm looking for more deals here, after the last property sale they have fire power for buying cheap properties.
Hopefully they are working on something.
Once a new purchase comes along the market should catch up.

[m_kerr] 09/4/2021 17:14

finally bought some. at this price the equity and investments are at roughly a 65% discount. given that the gdynia property accounts for a huge chunk of the leverage, assuming the lease was not renewed and they handed the keys back, the remaining directly owned properties (£31m) are at 50% LTV, meaning the current share price discounts the assets by about 30%. IMO, some of the assets are underpriced or at the very least conservatively valued, e.g. the romanian industrial asset is in the books at €3.5m despite generating €0.33m of net operating income.

i see minimal downside here over a reasonable time period given that each property has separate non recourse debt. if they are able to ramp up the AUM managed for third parties, and it becomes clear that values are not in freefall, the shares should rerate upwards.

[m_kerr] 27/1/2021 17:03

drifting down a bit, almost hit my target price.

[m_kerr] 29/12/2020 15:25

i'm not doubting some funds will be raised, but i highly doubt there will be £200-300m extra any time soon. main reason being their stock in trade for funds is UK offices, where there is some uncertainty going forward because of work from home. however, they have been agile in the past, so if they felt that way they'd pivot elsewhere.

[stevegrass777] 24/12/2020 22:53

I disagree, I think they will easily find Co investors, simply because they have always managed to do this in the past, probably because they have an excellent track record.
We will see in the new year I suppose.
It will be interesting what projected returns will be from new investments, they always manage to gain better yields and better loan terms than I can manage personally in property investment.
Good luck all and have a great Christmas and New Year