Highcroft Investments Share Discussion Threads

[jonwig] 28/1/2022 14:25

Here:



72% warehouses of some sort.

[skyship] 28/1/2022 14:19

Just spent a futile hour searching for where I found this current info for their portfolio:

# Off. - 9%
# W'hse - 39%
# Ret. - 6%
# Ret.W'hse - 33%
# Spec. - 9%

Can anyone guide me? Doesn't seem to be in past two Interim & Annual Report...

[skyship] 27/1/2022 16:29

Kenny - as you say, we'll just have to be patient. Would be a nice bonus if they increased that divi.

[kenny] 27/1/2022 15:09

Skyship – reference your post 400 above.

I think the NAV at 31.12.21 could be 1236p albeit this may prove a bit conservative and I do not rule out a figure approaching your figure of 1267p.

On dividends, we could see 59p for the full year, or maybe even 61p if they have changed their previous policy of holding back some of the income. This compares with the 57p you have stated.

Of course, both of us are making estimates and will have to wait for the actual results at the end of March or April.

[skyship] 27/1/2022 14:13

Agreed, totally illiquid for most of the time; then along comes a flurry one way or another; and that represents the opportunity to take a position.

Agree re BREI - still looks cheap.

[madmix] 27/1/2022 13:43

I was tempted by HCFT, but it's just too illiquid. EMS is 50 shares.

In a reasonable size like 500 shares, I'm being quoted a spread of 905-949p.

BREI still my preferred choice. Much more liquid, and at a 23% discount at 93p.

[skyship] 27/1/2022 09:03

Taken from PCTN’s NAV Update on 26th Jan.:

“Continued strong investment and occupational demand in the industrial sector again led to very positive performance and a capital value uplift of 10.4% during the quarter.

Retail Warehousing continues to drive performance in the retail and leisure sector. Our retail warehouse portfolio is fully leased, off low overall rents and increased by 5.0% over the quarter, reflecting the positive underlying position.”

Of the 3 REITs so far declaring their Q4'21 stats:

# AEWU NAV + 3.8%
# BREI NAV + 9.5%
# PCTN NAV + 7.4%

EPIC, SLI & SREI keenly awaited.

The above 3 provides an average NAV increase of 6.9%.

If we translate that across to HCFT then we could see an increase from 1185p to 1267p and a discount at 938p of 26.0%. If you couple that with an unchanged 57p dividend and a yield of 6.1%; then HCFT looking to be one of the most undervalued in the sector.

[1tx] 18/1/2022 13:26

The two remaining empty properties are the Cardiff Office (Penarth Street) & the High Street,Oxford shop.Both seem decent properties but are in sectors that are difficult to rent at the moment.THe Cardiff property represents circa 4% of potential total rent roll and the Oxford Shop has an asking rent of £50k approx.Hotel Chocolat who previously rented it moved to a larger property nearby.

[skyship] 17/1/2022 13:41

The remarkable stats in this report surely suggest that the next NAV Updates for Q4'21 are going to be worth the wait. Unfortunately for us that may mean waiting until the Finals - perhaps end March. Increases in the 5%-10% range highly likely, with even the office sector showing a small increase.

First to report might well be BREI (c24th Jan.) & EPIC (c26th Jan.) Can’t wait…

At least for HCFT we may have a Rent Collection statement later this week.

[semper vigilans] 12/1/2022 13:47

Depends on whether any holder is prepared to let go of any stock - folks tend to hold on!

[crumppot] 12/1/2022 13:46

dip6666 - MMs normally have margin in stocks where there is a wide spread.

[crumppot] 12/1/2022 13:45

Negotiate on the price. MMs normally have margin the stock where this is a wide spread

[skyship] 12/1/2022 13:29

dip6666 - Well, they were on offer at 902.5p just a couple of days ago; so may come back to that, especially if a random seller passes through.

Perhaps take on half at 914p, then hope for a cheaper offer for the other half over the course of the next few days. If none appears, then take on the other half at 914p again. After all, 914p v. 900p is only a 1.55% premium...

[dlp6666] 12/1/2022 11:32

@Skyship

You note that "buyers need to be patient, not over-pay, perhaps wait to follow in after a seller."

Does that mean that you think 914 is too high (I can currently get that price on iWeb)?

If so, how low would you think worthwhile waiting for (perhaps 900, as per your yield/NAV estimates)?

Thanks

[williamcooper104] 12/1/2022 10:41

Like the assets here - it's just liquidity/spreads of the share price It's a good one to hold; less good to buy

[skyship] 12/1/2022 10:32

HIGHCROFT Investments (HCFT) – the next REIT to look anomalously cheap

HCFT is perhaps the smallest of the investable UK listed property companies, with Net Assets of £61.4m and a MCap of just £46.6m. It is a very conservatively managed company with antenna well attuned to the sector minefield; ie, where to allocate your funds – office, industrial, retail warehouse, retail etcetcetc.

Warehouse/Retail Warehouse (“W/RW”) together accounted for 72% of the portfolio at the Jun’21 Interim stage, with Retail at just 7%. This compares with 48% & 29% just 8yrs ago; and at that time they also had 4% in residential. So, they have moved the portfolio strongly in the right direction; and a perusal through the website also shows the quality of the tenant mix at each and every one of their W/RW sites.
The highlight of September’s Interim Statement was the 7.3% increase in the NAV to 1185p, a figure surpassing the pre-Covid high of 1175p. Less good was the fall in occupancy rate from 99% to 89%:

“At the period end three of our properties were void, representing 11% of our rental income. We are negotiating a new lease on one of these units representing 4% of our rental income, and we are actively engaged in seeking new tenants for the others.”

A post period completion on a sale takes their cash up to £6.2m; so news of an acquisition would be beneficial before too much earnings lag.
An obvious attraction is the yield. With last year’s dividend of 57p (inc. a 6p special dividend) the yield at 900p = 6.33%. At that same 900p the NAV discount = 24.1%. LTV is 31.4% and Debt Cost = 3.1%.

Trading is complicated by the fact that associates of one of the Directors, David Kingerlee, account for 41% of the equity; whilst another holding company with the awkward name of DG & MB Conn & Associates account for a further 23.2%. Conn (AKA Stewart & Wight Ltd) is a private property company and a long term holder which routinely adds c15,000 shares to their holding every year.

With the free float at just 35.8% of the 5.183m shares, ie just c1.85m shares, the Market is always tight and the spread usually wide; though not as wide as the headline figure. The spread at the moment is 888p-914p (2.9%) versus the headline figure of 870p-920p (5.7%).

Accordingly, buyers need to be patient, not over-pay, perhaps wait to follow in after a seller.

To summarise, HCFT is well managed, has an excellent portfolio and offers a yield and discount level now rather out-of-line with their larger peers. With talk of rationalisation amongst the smaller REITs, corporate action remains a possibility; and would likely deliver an immediate 33% upside.

A safe and secure high-yielder.

Last Annual Report - to Dec'20

[1tx] 05/1/2022 16:12

Google on address to see if new occupier!No idea on terms of lease obviously;HCFT did hint possible interest a little while ago.Opened late November I think.

[skyship] 05/1/2022 14:05

1tx - thnx for that. How did you find that out?

[1tx] 05/1/2022 11:55

The Ipswich Gym which has been empty since DW failed & failure to agree rent with Mike Ashley's gym group which took over some sites is now running under truGym who have a number of other gyms.Valued @ around £5m,although this includes the Orwells Motorbike showroom next door.

[skyship] 04/1/2022 13:44

Decided to buy back in here for a few; paid 899p.

With the discounts on most of the other REITs closing down to below 20%, the 24% discount here, coupled with the high yield, suggests value, in spite of the crazy spread.

[1tx] 11/9/2021 16:54

The third property void is I think the Cardiff Office property at 47 Penarth rd.

[semper vigilans] 06/9/2021 10:12

Only if they were bought in pro rata from all shareholders.
Edit:
Not sure that it would improve the spread or marketability.

[kenny] 06/9/2021 10:05

Another option is that they use some of the £3.5m from the sale of Andover to buy back some shares to narrow the 24% discount to NAV.

[crumppot] 06/9/2021 09:41

SV + SS agreed, the shareholders in conjunction with the board

[skyship] 06/9/2021 09:39

The controlling shareholder (c45%) has one representative on the board...