Ing Uk Real Estate Income Trust Share Discussion Threads

[tiltonboy] 08/8/2008 08:29

flying pig,

I've been accumulating these from 52p down to these levels. Gearing of 47% (borrowings of £282m less cash of £64m)is acceptable, and with the portfolio more than 95% let, and a reversionary yield on the portfolio of 6.5%, the dividend looks as if it can be maintained at current levels, even though I have factored in a modest cut.

Cenkos have written a couple of notes on the sector, and even in their "doomsday scenario" they value IRET at 48p.

tiltonboy

[flying pig] 08/8/2008 07:24

£64m cash - implies c 19p per share.
Reasonable % of dividend appears to be covered by cash generated from rental income after costs and interest on loans.
Property value has to drop c36% by my back of envelope calculation to equal share price, with still possibility of dividend. NB Implies yield on property rising from 6.2% to over 9.5%. Seems improbable. I may pick up a few.

[kenny] 25/4/2008 11:55

Skyship, I am warming to IRET because most of its dividend IS paid out rental income and it overall management costs are not excessive in the context of the fairly wise moves they have taken.

[skyship] 16/4/2008 14:25

For those concerned about the ongoing dividend policy, bear in mind that the dividend comes from the income stream; and any shortfall can be made up from the Distributable Reserves. In our case, no shortfall there then:

========================================================================
9. Share Premium and distributable reserve
Share Distributable
Premium Reserve
£000 £000
Opening balance at 15 Sept 2005 - -
Premium arising on issue of equity shares 305,000 -
Expenses of issue of equity shares (6,390) -
Transfer (298,610) 298,610
Further issue of equity shares 32,198 -
Expenses of issue of equity shares (809) -
Balance at 31 Dec 2006 31,389 298,610

Repurchase of ordinary shares - (834)

Balance at 31 Dec 2007 31,389 297,776


By way of a special resolution dated 30 September 2005, the amount standing to
the credit of the share premium account was cancelled and transferred to a
distributable reserve. Royal Court approval was obtained on 17 October 2005.
Distributable reserves may be used for the purpose of paying dividends or buying back shares.
======================================================================

[skyship] 03/4/2008 16:21

Great news - £34m disposals - & at 10% PREMIUM to end Dec'07 valuation!!!

[kenny] 27/3/2008 23:37

Please see DGRE thread for details of a property company paying its dividends out of rental income and currently standing at a larger discount.

[kenny] 25/3/2008 20:53

No one is going to bid for these REIT's because they will have to buy out the management contracts (ING's in this case) - which therefore makes the deal uneconomical for a prospective purchaser.

If you are ING and taking 1% per annum out of this company, namely £6m per year, how much will you take to renounce your contract? Maybe £60m, maybe more?

The structure of these REIT's certainly leads me to believe there is a strong case of mis-selling especially as a number of them sold their own properties from one fund to another - earning themsleves a great "performance" fee on the sales on the other funds when they have not really created any value - just shifted the properties into this company and a whole new batch of punters who were willing to throw money at property when there was a bubble.

I hope you asked them what they do for £6m a year in the context of an additional £3m per annum of "property operating expenses".

[skyship] 19/3/2008 16:23

GSands - Hi again - All these companies are taking a hit today.

I've written to this Company posing a couple of questions, including Kenny's Management fee concern. I'll post their reply if received.

Personally I think we're unlikely to breach any banking covenants; and even if we do then force majeure would be no bad thing at the NAV discount pertaining here; and also in others such as MERE, IFD & IERE.

Quite a lot of smart money started to buy back into commercial property at the back end of 2007; and that buying is likely to continue throughout 2008. However I do think that yields will continue to harden, so we will in most cases see another 10-15% off end Dec'07 NAVs before the market turns to reflect lower interest rates.

What will be interesting is if any of the vulture funds start to make bids. Laxey are active and someone is stalking MAY; but bidders have to be a tad nervous!

[gsands] 19/3/2008 08:19

I've been looking at this tiddler today and came across this interesting pdf file:

[kenny] 14/3/2008 10:27

Please see the MERE discussion board for reasons not to invest in this type of fund launched REIT.