Every large buy is also a large sale. Isnt that how the stock market have largely worked for the last 40 years with matched trade order books? It is only the small trades that still use market makers for retail customers etc. where buy and sell are meaningful.The only potential bidder who has done due diligence has declined to bid. Cannot see many bidders wanting to follow their failed attempt. Suspect very little will happen now for a while - but you never know. |
No offer forthcoming, so a bit of a drop today down to 33p. I wonder what comes next, whether there are other interested parties. There have been some larger buys in the last few days and today only small sales. |
GRIO had been trying to sell off the ground rent assets at something around NAV to various insiders.When the shares were trading at a 70% discount to NAV back in November it is not that surprising that at least one of them thought they would be better off buying the whole company at a discount rather than buying selected assets. In addition, as Victoria Property stated, a purchaser will internalise a lot of the future expenses that GRIO would occur by continuing to be a public company - so there is an additional gain for someone there. A lot of these expenses are fixed and won't scale down as they sell off the assets and so will become quite steep for shareholders in proportion to the assets in a few years time. |
Anything over 40p gives me a decent return, although it has been quite a ride, watching it drop to 21p. I don't see much downside in adding some more, since there's clear interest. makes me wonder if the insiders know something regarding the future of Ground rents. |
From the RNSs yesterday, it looks like the Board are doing a good job in extracting a better offer, even without a counterbid. I'd be happy with a sale in the low/mid forties.Long-term interest rates also finally coming down from their peak about a month ago which helps the value. |
I dont think Gracefavour has the muscle to bid for it. But there are at least 4-5 large private ground rent corps in the UK who has the financial means to buy it. Lots of synergies, kick-out the fund manager of GRIO, cut down on the legal / advisory cost for the regulatory and building safety part. |
Gracefavour Limited have a 10% stake built up recently and could be a possible additional bidder.They are another direct investor in ground rents.They paid around 30p for their stake so suspect wouldn't be thrilled with just 34p. |
That was some very good news.
I think other bidders could arise here. |
Ha, and there's your answer - 34p cash offer, unapproved as yet. |
Peel has parked a big buy order around 22.5p, two days in a row now. The annual report with update on the strategic plan is allegedly coming very soon. |
They've just sold their largest asset broadly in line with the 30th September 2024 valuation. This reduces debt by 38% and substantially derisks the stock. Still not for widows or orphans but maybe some value to pick over for the brave. |
I'm thinking the same |
Yes, that's my thinking too. Everyone hates it, so I'm sensing there could be some value here to pick over. |
Think there seems to be such little interest in GRIO that share price probably hugely undervalues it. |
Maybe someone can explain the EGM more clearly, but it looks like an attempt is being made to try to sell the freeholds to leaseholders for as good a price as possible. should be in mutual best interests in many cases, so hope it goes well.
if they achieve it, what kind of realistic NAV per share are we looking at here? |
Looking to the future if you mean mean beyond 1 year..,.the valuation that the manager places on these assets is not that important. The share price strongly indicates that most people are not placing a lot of weight on it.The important thing will be the cash flows over the next 10 years. The rental income is fairly reliable but some of the other outgoings are 'materially uncertain'. |
Looking to the future the key question is whether the market has got GRIO's extent & valuation of commercial + institutionally (eg charity housing association etc.)held leaseholds correct. Has anyone got a handle on this in terms of SP? Sadly we can largely forget the private residential element. |
Indeed, but this is Labour.
My guess is, all future will be Commonhold, and they'll do the previous Tory plans on existing leasehold.
Either way, GRIO has been uninvestable for many years IMO (not hindsight - do a search). |
The quote is ambiguous about whether any reform applies to future home purchases (which is easy to enact) or historical arrangements (which is very difficult). |
Commonhold makes far more sense:
"Leasehold and Commonhold Reform Bill
This draft bill goes further than the Tories’ Leasehold and Freehold Reform Act, which was passed earlier this year. It will abolish the system of leasehold and replace it with a commonhold system — where those that live in a property each own a share of the freehold.
Analysis: In opposition Labour was critical of the government for not going far enough in leasehold reform. However, this is just a draft bill and is unlikely to be an immediate priority." |
If I understand correctly the Westminster estates didn't used to make money from lease charges (usually peppercorn) but rather when they gave permission to the council to change social housing into luxury flats. They could do this because the leases stipulated they should be used only for the working classes - so they argued they could charge a big premium to change the conditions. They lost this argument in court. It is not relevant to GRIO.The loss of contractual rental income has always been compensated at open market value since the 1967 law hasn't it? That law is still in force. |
Not if they get to buy them for peanuts. |
My post 219 tried to outline how things looked a few months ago.
Seems that there have been a few changes.
Marriage value seems to have gone, but not sure that's significant for GRIO as leases tend to be very long rather than near the 80 year point.
The commercial element has been upped to 50% from 25% so that probably brings more assets in scope for GRIO. My estimate of what is out of scope is about the same as the debt, so protects Santander but not the residual for shareholders.
The £250 cap has gone but Labour must surely bring this (or similar) back on to the table. The market is likely to still be dysfunctional for that reason.
Like Specto says, the current changes may be enough to create demand for lease extensions, but I suspect most will wait for Labour to plant their flag first. |
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