 ""The Company continues to operate in an increasingly challenging regulatory environment, and we are working hard to protect both our leaseholders' interests and our shareholders' investments. Since Schroders' appointment in mid-2019, and our subsequent new Board appointments from late 2019, progress has been made to reduce risk and manage historic, legacy issues. Given this uncertain outlook, and the forthcoming Continuation Vote, the Board and Schroders intend to consult with shareholders to determine the best strategy for managing these various complex issues and optimising value for shareholders.""
"To do so, we are adopting new Government guidance to verify the extent and cost of building safety remediation that is required across the portfolio, and the party, or parties, responsible for such costs. This is challenging due to the rapidly changing legislative environment and increased demand for specialist building consultants."
"Despite the Polluter Pays principle,, the BSA also places responsibility for remedying unfunded, residual defects upon landlords such as the Company. This could impact the Company. Consequently, understanding the extent of this residual risk is the purpose of the verification exercise outlined above"
None of that suggests full kitchen-sinking, and nor does the fact they wouldn't get anywhere remotely near NAV if they attempted to sell.
But agree on director pay.
Think I misread Beetham, seems the sale did indeed resolve the issues. It's legacy issues elsewhere they're talking about. Have edited post above so as not to mislead.
"Having resolved the highly complex legacy litigation at Beetham Tower in Manchester in August 2021, the Board and Manager are continuing to deal with legacy issues relating to historic transactions and portfolio activity carried out prior to the current Board and Manager's appointments with the Company. These legacy issues are granular, time consuming, and generally relate to disputes concerning legal title, disrepair and property management." |
Think we have the fairly typical situation in which potential liabilities are stated at the highest conceivable level by professional advisors for their own safety.
Only time will flush these out so I will go for a continuation and hope for the yield to continue!!
What majority is required for continuation? Some suggestion in the statement it had to be unanimious - but that can't be right.
Don't think we should vote for Directors pay increase!!!! |
@andy246 - many of the assets have open-ended and so far unquantifiable liabilities - not convinced there's a market for some of them at any price (eg the Beetham liabilities, supported by the rest of the portfolio).
At the mercy of govnt diktat - which hasn't gone in their favour so far - and have absolutely zero chance of getting anywhere near to NAV.
Perhaps sell the few good assets, return that money to shareholders, and "bad bank" everything else? |
The consultation proposal seems a scam, with the asset manager benefiting the most by the changes.
The company should be placed in liquidation, giving Savills the mandate to the sell the portfolio at a fair market value (maybe that's a 10-20% discount to Sep-2022).
At a minimum, management should place for sale the best assets and realize the full value and buy back shares at a 50% discount to NAV. |
Had a bargepole feeling to it, tho fingers crossed for holders.
Eg:
"..To more accurately verify the valuation adjustments used in the forthcoming audited year end accounts to 30 September 2022. To do so, we are adopting new Government guidance to verify the extent and cost of building safety remediation that is required across the portfolio, and the party, or parties, responsible for such costs. "
"In order to protect shareholders' interests, we and other institutional owners are also making representations to the Government in order to encourage greater fairness towards landlords who have not developed the assets.."
(Good luck with that).
If I thought there was genuinely 92p of NAV, and was a holder, I'd vote for the money back. But no chance of getting anywhere near that IMO.
"...Until market conditions and liquidity improve, we believe that the portfolio may not be realisable on acceptable terms.." says very clearly that the NAV isn't really the NAV.
Loan maturity in Jan 2025, which realistically they'll need to address a year from now. Have lost track of debt levels but falling NAV won't help. What would you lend to GRIO at?
Beetham Tower must rank as one of the worst purchases ever.
Dividend looks under threat:
"....Combined with the potential costs associated with the matters described and a rising interest rate environment, means the long term sustainability of the dividend may be impacted."
Getting incrementally more money in from ground rents, but being hit on all sides with remedial costs etc.
Interesting that the dramatic change in Gilt yields has largely passed GRIO by - they've got much bigger problems. |
Trading update a sad read. I will vote for continuation given the chance. |
Just purchased a few more
In addition to the yeild and discount
Many of the rents are index linked which with current inflation will see a larger than expected rise in income |
Calton, at the current price I think it's a buy.
- 5% dividend yield fully covered by the underlying ground rents income
- Share price is currently at a 40% discount to NAV, so it leaves some margin for any future impairments
- Continuation vote needs to happen before Aug-2023, so either the discount to NAV is greatly reduced by then, or the vote will fail and the company will be placed into runoff
- A short term catalyst could be the restarting of the buyback program, which was paused in Feb-2022 due to regulatory uncertainty. Since then, the share price has dropped another 25%
hxxp://pandora-capital.com/GRIO.html |
Hello Hello - what's going on with this company? Hold or sell- if so when? |
There are very clear negatives here. Beetham Tower. Leasehold changes reducing future rental income and fees (fees seem to be around 20% of income and the leasehold changes proposed would seem to eliminate most/all of these.)
Not clear what the Schroders selling is driven by? Could this be IT savings scheme or is it a discretionary holding? Questor appears to have advised to hold given it previously recommended as a buy.
Weighted lease length is 343 years so rent should be protected for a while! I don't tend to produce discounted cash flows out quite that far. The leasehold changes seem broadly similar to those announced in early 2020 by the law commission so should be reflected somewhat in recent auctions and the valuer in the NAV?
Not sure when the above is fully reflected in the price? 40% discount certainly builds in quite a few negatives. |
Has taken me until Private Eye's arrival this morning to realise the reason for some of the rise is that leasehold reform got no mention whatsoever in the Queens Speech.
As there'll likely be another of those along after the GE, that gain may get reversed - and far, far more than reversed if the comrades gain power, whether solely or with the SNP. |
Fair enough - I continue to hold in my SIPP to give inflation protection over a lot of years into the future. I think the industry might consolidate once the legislation becomes clear (3-5 years????). |
Agree not fatal. Far more pressing bear points on GRIO:
1. The Manchester cladding court case, which they could walk away from (separate subsidiary) but which wouldn't look at all good
2. Uncovered divi (separate issue to having paid previous divis "illegally")
3. Govnt finally getting round to legislating on leasehold reform
4. Small size of the co/disproportionate fees/inability to grow when trading at (theoretical) discount to NAV
Bull points:
1. Some inflation protection - cheap compared to Linkers (for a reason..)
2. Asset management initiatives - fewer than with most property plays, but they're proving there's still some |
Not a rise I've been buying but yes - with Brexit ongoing, there's a distinct lack of Parliamentary time (or will) to get on with leasehold reforms.
Not sure what to make of this, other than that it's no surprise from GRIO:
"In addition, the Company also intends to regularise the position with respect to historic dividends, in relation to which the Company has recently become aware that such dividends were made otherwise than in accordance with the provisions of the Companies Act 2006. In order to put the potentially affected parties in the position which they were always intended to be, the Company is proposing to waive any and all claims which it has or may have in respect of either current or former shareholders, or current or former directors, in relation to such dividends."
I assume today's distributable reserves issue relates to not having the historic profits to be paying out divis - ie paying from capital?
But glad to see that, as a former shareholder, the company intends to waive any and all claims it has against me, in relation to the dividends it paid :) :) |
Some recovery from lows of c78p. Sensible asset management initiatives and quieter on the political fron for ground rents. ?gap fil to 94p next stop? |
hxxps://www.propertyindustryeye.com/labour-outlines-its-plans-for-leasehold-reform-as-criticism-continues-over-government-inaction/ |
Not sure new house leasehold ban makes much difference to GRIO. But I see they're continuing to pay out of capital - c.1.6p earnings, c.2p divis (made a loss but only due to yet another revaluation downwards of portfolio).
No mention I could see of previous legal problems re Manc block?
Still feels a bargepole stock to me, but it has a price - based on 1.6p for Half Year extrapolated up to 3.2p, perhaps 60p/share? Costs will be eating into it now they can't realistically expand.
Edit - sorry, the Half Year Report did talk about the Manc legal problems further down:
"In January 2019 a High Court judgment was handed down against North West Ground Rents Limited ('NWGR'), a wholly owned subsidiary of the Company. The damages associated with this judgment have yet to be determined in a separate hearing, for which a date has not yet been set.
NWGR continues to evaluate what the next actions and consequences of the judgment may be. NWGR is reliant on the financial support of the Company to finance further legal action and to comply with the judgment. The Company continues to review its own obligations in regard to NWGR and NWGR's obligations under the judgment."
And
"Due to the legal action and uncertainty of its outcome in September 2018, the value of the Building was reduced to GBP100,000 in the accounts of NWGR. NWGR continues to pursue Carillion's insurers and sub-contractors under collateral warranties. NWGR has no external third-party debt and is ring-fenced from the wider group.
During the period, NWGR incurred costs of approximately GBP1.1 million in relation to the judgment and will incur further sums as part of seeking to comply with the judgment timetable. NWGR is reliant on the financial support of the Company as its parent to finance further legal action and any decision on future funding requests will have appropriate regard to shareholders interests together with the interest of other stakeholders."
Which sounds to me like they might attempt to walk away from NWGR! But not before having incurred £1.1m - and more - in costs. An utter fiasco for an Investment Trust, and are any similar grenades lurking elsewhere in the portfolio? Not what shareholders signed up to when they invested in GRIO.
Changing my target price to "below 50p, bordering on uninvestable". |
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