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[nexusltd] 23/11/2022 18:20

@ Williamcooper. Good points, thanks.

[williamcooper104] 23/11/2022 17:29

So - I think it all comes down to the sustainability of their rents The administer of circle has said that some of the rents of some of circles properties are unsustainable - we don't know by how much and what post admin rental levels will look like and how typical that is across the estate (my guess would be quite typical)

[williamcooper104] 23/11/2022 17:27

They bought at 5.9 and value at 5.6 That's a discount to what genuine 25 year index linked rents to good covenants would have traded at - c4.5 - and also limits a bit their sensitivity to yield shift The £95 per bed looks good relative to average B&B - but per bed implies around £1.3k per property which in many parts of the country will likely be more expensive than a regular tenancy At full deployment they were targeting >7 yield on equity (assuming 35 LTV) On current share price that looks to be c11 percent net income returns

[walterwhite1] 23/11/2022 17:12

Delayed and closing trades are worth a look :-)
Bought here at 61 this afternoon. The 'report' was garbage as far as I can see. Shorters with their dirty tactics is all

[williamcooper104] 23/11/2022 17:07

Debt covenants are set at 50 percent against a target debt level of 35 percent That really leaves little room for yield shift and any downward setting of rental tone (should it occur)

[nexusltd] 23/11/2022 16:21

@danny. Thanks. So arrears are normal in this type of REIT.

[zoa] 23/11/2022 16:20

I guess that the IC report was a warning, as usually there is no smoke without fire and it should not be forgotten that warnings usually come in 3's, so too early to get back in, best to wait until all the dirty washing has come out.

[wskill] 23/11/2022 16:20

Spec this has come at an opportune time for my accounts as losing nbmi which I have now replaced with home bit of luck for a change.

[danny500] 23/11/2022 16:19

Local housing allowance and universal housing credits paid in arrears

[nexusltd] 23/11/2022 16:02

@Williamcooper. Quarterly in advance certainly the case for commercial property; accounts show a credit line. HOME accounts might imply contracted rents are collected in arears. What do other social REITS do e.g., SOHO, CSH?

Edit: Looked at CSH
CSH 31st March 22
Trade receivables 5.0mn, Property value 969mn

HOME
Tenant receivables 6.1mn, Property value 713mn

So HOME looks slow at getting the rent in.

[williamcooper104] 23/11/2022 15:59

I think the difference between HOME and CSH is that CSHs external manager appeared to be developing and flipping properties into CSH - a most lovely business model Where's HOME are buying off developers and not taking that profit in conflict to HOMEThe fee arrangements between HOME and its manager are standard with the standard conflicts of interest

[spectoacc] 23/11/2022 15:56

@wskill - I'm all for shorters, shorting is just the same as longing (one a sell/buy, the other a buy/sell). But agree some of these "reports" are nearly as bad as the rampers, eg spurious bid rumours.

There's next to no risk for shorting, releasing a "report", then closing again. Even if the whole thing's nonsense (and I can completely believe there's some truth in it, as there very much was at CSH), people will sell first, ask questions (or get answers) later.

If the rebuttal is as obvious as HOME have implied, they need to come out with it very quickly.

[bozzy_s] 23/11/2022 15:54

Is 27 Neswick Street, Plymouth lined with gold? Extraordinary to see the transacton on Zoopla - last sale £11.657 million, current value £196-217k.

Sounds absolutely fine. Nothing to worry about!!! Hope whoever's behind the dodgy dealings gets properly dealt with. And of course the big question, is that £200k property on HOME's books at £11.657 million?

[blackbear] 23/11/2022 15:52

Wouldn't want to be short overnight

[williamcooper104] 23/11/2022 15:50

Rents usually quarterly in advance

[nexusltd] 23/11/2022 15:47

I've just re-reviewed the Feb 2022 interim accounts. This is what I see.
Beds FY 31/08/21 3,846
Beds Interim 28/02/22 8,103

Estimate average beds in 6 months to 28/02/22 = 3846 + (8103-3846)/2 =c. 5,975
Given average weekly rental across portfolio £95
Estimate six-month rental income = rent£95*weeks26*beds5975 = 14.75mn

From interim accounts six months to 28/02/22
Six-month rental income = 17.5mn (not out of line with estimate)
Operating cash flow before finance costs & corrected for straight lining rent = 12.6mn

Are contracted rents due monthly or quarterly?
Tenant receivables 6.1mn

[loglorry1] 23/11/2022 15:30

The statement re rent collection looks spurious: it claims 70 days of debtors at the last period end (vs 30 day contracts) - but the portfolio had more than doubled within that period, so historic revenue is not representative of revenue going forward. Also the company has just issued a trading update stating: "The Company has collected 100% of rents due to 31 August 2022".

see:

[williamcooper104] 23/11/2022 15:18

Yep - >two months rent on average late looks alarming Some tenants just always pay late even though they always pay; but to have your entire rent roll >2 months late - that's alarming

[loglorry1] 23/11/2022 14:48

Short reports always sound convincing as do rebuttles! I doubt it is all squeeky clean but equally I have a feeling Viceroy have overcooked it a bit. I suspect they will cover on the drop then re-short the rebuttle and put out something else and re-cover.

[spectoacc] 23/11/2022 14:41

Agree on the valuations point - just a Land Reg thing? - but the web of cross-holdings and possible non-payment of rents, as well as the accruals, does suggest a potential house of cards. I really don't know tho - very rare these shorters aren't on to something, but it's how serious the "something" actually is.

[loglorry1] 23/11/2022 14:41

Ps. I also think a fraud where you buy a 113K house for 13m is just too obvioius and would quickly be found out. I doin't think anyone is that daft.

[loglorry1] 23/11/2022 14:38

The 13m price for a single property in a job lot is hard to explain. I've seen similar strange prints in land registry data though.

I find the short report a bit weak.

The main part seems to rest on charities being to skint to keep up with rents. In my experience charities especially housing ones are always skint. They get bailed out by local gov generally as the alternative is local gov having to provide housing.

[williamcooper104] 23/11/2022 13:10

Looks like when they've bought a portfolio of properties they've put all the capital contributions onto one property