Highcroft Investments Share Discussion Threads

[crumppot] 23/11/2020 16:04

I fancy a punt

[spangle93] 23/11/2020 15:58

Not too much evidence of the recent significant post-vaccine gains in other REITS is visible here :-(

[hugepants] 13/11/2020 09:53

cheers. I think currently 81% rent collection is pretty good considering they have 13% leisure assets. And they have 99% occupancy. Some other reits Ive looked at have 90% occupancy or less and claim 90% rent collection. Same difference.

[nickrl] 11/11/2020 20:53

HugePants its been covering dividend well for many years and its tenants look pretty stable so im surprised its collection rates are only around c80% as other posters have noted above. As gyms were shut im surmising Nuffield Health may not have paid and they were 365k pa along with DW Sports before they went into administration and were bought by the philanthropic Ashley empire who won't be rushing to pay i suspect.

They covered the interim fine and even at 80% NRI they will be able to cover the 48p payout they settled on this year or c 7.5% on share price so good value.

[crumppot] 11/11/2020 17:02

It does look relatively cheap at the moment even if the property valuation comes down 20%

[hugepants] 11/11/2020 16:34

yep went ex 3 weeks ago.
It'll no doubt follow the market up at some point.

[spectoacc] 11/11/2020 16:24

Had a look earlier myself, then realised the recent dip was due to the XD.

[hugepants] 11/11/2020 16:17

Hasn't moved in this rally despite having a good looking portfolio ie. 42% industrial/warehouse and 27% retail warehouse. On a 42% discount

[spectoacc] 16/10/2020 17:03

Thanks @1tx, some good info there, which may confirm only the Oxford ex-Hotel Chocolat is the 1% vacancy.

But but but - why are they failing to collect 19% of rent (not including the Hotel Chocolat), including being unable to recover that 6 months on? Who are the ones not paying, particularly if you suspect Walstead are fine?

[1tx] 16/10/2020 16:25

The DW Gym @ Ipswich did go bust but it has now been taken over by Everlast part of Ashleys Fraser/Sports Direct empire.It is open and trading under Everlast name but what rent agreed no doubt will be advised.Reiss occupiers of two Oxford properties have CVA arrangement,but I think still in use.Hotel Chocolate(Oxford) did not renew lease earlier in year,moved to larger shop.The Coventry outlet once occupied by Restaurant Group is now occupied again by OOdles n Noodles a small chain.Walstead are the largest UK contact printers of magazines etc I understand.I am not aware of any problems.I got the impression when they bought the property in the longer term the company expected to have to redevelop part of the site,likewise the BA site which has high quality buildings.A few smaller occupants may in the short term struggle eg Norwich Cafe & Ipswich motorbike outlet but both seem well regarded busnesses.Overall Highcroft has a portfolio better than most and its bankers Handelsbank have renewed facilities.We wont see £10 anytime soon but neither will we see 2019 prices for most other property companies either!

[skyship] 16/10/2020 12:25

Good research Specto.

Sad to say that if I held, I would be out now. They look expensive against so many others on my propco spreadsheet.

[spectoacc] 16/10/2020 11:14

Have convinced myself it's Walstead, but no doubt it'll be "commercially sensitive".

Is that NAV discount enough.. Probably, if they resolve St Austell and the handful of others, everyone else keeps going/picks up again, and the valuers don't threaten the LTV in the meantime.

But better out there IMO.

[nickrl] 16/10/2020 11:04

The fact they've got 81% in already for Q4 and its stuck around c80% for previous two qtrs as you suggest it must the same tenants witholding. They provided bad debt provison of 195k for CVAs in the interims and there recivable increase is commesurate with missing around 20% of a qtrs rent.

Short of having morality any business can get away withholding currently even the likes of BA! (Ive no idea who it is by the way)

Halfords is closing 60 stores.

Bottom line is NRI had upticked a fair bit to c6m following acquisition of the BA building in 2019 and with outgoings of c1.9m they can certainly cover the dividend even at 80% but has too wide spread for me at nearly 10% (on ii).

[crumppot] 16/10/2020 11:00

Someone could ask them who isn't paying.
I don't see why they couldn't publish this information.

[spectoacc] 16/10/2020 10:31

Not sure where Avionic sit in the structure - bearing in mind it's now IAG - but even so surely not 19% of the rent. It is the 2nd largest "warehouse" tho, at 111,000 sq ft.

But I'd missed that the largest "warehouse", at 250,000 sq ft, is let to Walstead Roche, whom I'd glanced at and assumed to be a UK subsidary of Roche. They're not, they're a printer, of magazines/trade materials for the publishing industry. Unless they're printing Covid leaflets, can't imagine times are too great.

Might be doing them down - going since 1962 - but the 2018 accounts showed a loss and things surely won't have improved.

Still isn't 19%, but if Walstead are non-payers on 250,000 sq ft, it's going to make a hole, and partly explain why in 6 months HCFT only recovered 2 percentage points of arrears from elsewhere, with none of the usual "Paying monthly" comments. Add in say the bust gym, a bit of High St, and one or two of the nationals eg Dixons or Carpetright (& perhaps, as you say, Avionics), and might have sussed it. Would mean a few more % points possibly recoverable, but leaving a large hole.

What's a giant warehouse off the A30 near St Austell in Cornwall worth on the lettings market I wonder - doesn't look to be prime logistics territory but better that up for rent than High St.

[kenny] 16/10/2020 10:20

Presumably one of the big tenants is not paying (in addition to some of the small retail units). I wonder if it is someone like British Airways Avionic Engineering Ltd.
They did recently raise €2.7b but may be hoarding their cash until they have a clearer idea of when their market will improve.

[spectoacc] 16/10/2020 08:46

Yes, can only think they're counting just the ex-Hotel Chocolat as vacant, despite knowing DW Fitness is too. And hence perhaps DW's rent is within the c.19% uncollected.

But who else isn't paying, and what prospects of ever recovering it.. For what they've recovered from 6 months ago, doesn't look good, and what effect on valuations & c.31% LTV is to come.

Would need to see a big improvement in collections if/when the rent moratorium ends. Isn't expensive here, but then neither is discount unusual compared to other REITs, & not convinced the portfolio's as "quality" as it was.

[semper vigilans] 16/10/2020 08:36

Could be ‘occupied̵7; but not paying rent so no outgoings on those at the moment?

[spectoacc] 16/10/2020 08:20

22 properties, 29 tenancies. In order:

Jewson, SIG, Booker, ParcelForce all seem fine.

British Airways Avionic Aviation - fine on covenant, perhaps not when up for renewal.

Ikea, Booker, Walstead Group, Wicks, Pets At Home, M&S Food - seem fine.

Wisbech retail park - Halfords, Pets At Home, Currys/PC World, Carpetright, Dunelm - 3/5 look good, all appear to still be there.

Subway, Greggs, DW, Orwell - DW assumed to be the 1% vacancy.

Nuffield Health - a gym - again, good covenant but again, not a great sector to be in atm. Pity not a Nuffield hospital.

Cardiff, an office let to Keolis Amey (Welsh rail). Oxford office let to the BBC. Freehold shop in Leamington Spa let to "Mint Velvet". A tearoom in Norwich. A Hotel Chocolat in Oxford now listed as Vacant. And a shop/office let to Jigsaw.

Don't see many national chain culprits known to be taking advantage of the moratorium, yet rent collection only 81%? The industrial should be solid.

@crumppot above says Jigsaw CVA, DW Fitness bust, yet the Oxford shop is vacant too, so how only 1%?

There's a lot in the price with HCFT - there needs to be. Like RLE and others, what's easily discernible isn't in the RNS's.

Anyone else with local knowledge of any of the portfolio? The big questions are the 99% & the 81% - supposedly 99% occupancy yet a fifth of that rent not coming in.


Edit:
"I feel we have performed well in the first half and, having collected 100% of our Q1 rent, we collected a respectable 77% of Q2 rent and 81% of Q3 rent (due to date) so far."

That was in the interims, 3rd Sept.

"81% of the rent invoiced and due to date for Q4 of the current financial year has been collected (Q3: 83%; Q2: 78%)."

And that was yesterday's. So they've only recovered 2 percentage points of the missing Q3 19%, and 1 percentage point of the missing Q2 23%. Can't say that bodes well for recovering much of the rest, nor the latest gap? Could do with knowing breakdown of income per property - not difficult to see the likes of Carpetright choosing to withhold rent, but they're a tiny tenant among many.

[spectoacc] 15/10/2020 16:09

Thanks. And a couple more retail on top. But still 99% occupancy they say.

Would be good to know if some of that missing 19% is national retailers using the govnt rules not to pay up - in which case, it may well be collected when the moratorium ends.

[crumppot] 15/10/2020 16:05

Jigsaw in Oxford went into a CVA. DW Fitness went bust, not sure about others.

[spangle93] 15/10/2020 16:02

Skyship - a number of other REITS boost their apparent rent received percentage by including agreed deferrals amd planned payments. Here it just says received.

Nonetheless, I thought it would improve from the Sept interims

[stemis] 15/10/2020 15:54

Interim dividend same as last year (pre covid).

[spectoacc] 15/10/2020 15:51

Guessing a little bit of Retail & a little bit of Leisure has done for them maybe? Agree it's otherwise always been "quality".

First time I've seen occupancy not at 100%.


Edit - looked again, fail to see where they're missing 19% of the rent.

[skyship] 15/10/2020 15:45

"The board of Highcroft Investments PLC is pleased to report that 81% of the rent invoiced and due to date for Q4 of the current financial year has been collected (Q3: 83%; Q2: 78%)."

A surprisingly dismal picture compared to all other REITs. Surprised really, as the portfolio looks good on the face of it.