Ing Uk Real Estate Income Trust Share Discussion Threads

[flying pig] 25/2/2009 19:44

The retained AAA status will almost certainly swing the matter - bondholders do not want to be holding in "default" bonds!

This is expected good news for the longer term. Dividends may be restrained in the shorter term.

[chopshs] 25/2/2009 15:38

ING advised me in Oct last year that they don't own the debt. See my post 51 above.

Skyship - indirect property investments are shares or units held in other property funds or perhaps shares held in property companies, i.e property investments where the owner does not own the physical bricks and mortar. I know that the F&C trust has held a couple of indirect investments. Does this clarify? I can't see that IRET will be losing any sleep over this restriction.

Sleepy - could be opening negotiations but if so, would they have had all the legal doc's drawn up? To be honest I have no prior experience of companies having to negotiate with bondholders so am not sure on this. If this deal isn't approved then I certainly expect the bondholders to hold all the cards in early April once the Q1 NAV is announced.

[sleepy] 25/2/2009 13:48

Done deal or opening negiotations?

[lord gnome] 25/2/2009 13:38

I wouldn't be at all surprised to discover that ING were the lenders to their own fund. If, however, they had suspected anything dark, they would have nailed the trust to the floor to protect their own scrawny necks. Looks good news to me. Just a case of sitting this one out and waiting for the world to turn - it could be a long wait, but hopefully we will continue to receive our dividends, which is why I invested here in the first place.

[skyship] 25/2/2009 12:58

Looks to be really good news IMO. Though I don't understand the meaning of this clause. Can someone possibly elucidate.

* Remove the Company's ability to hold indirect property investments within the Securitised Loan Facility for the purpose of the various financial covenants.

Frankly it seems as though ING have negotiated this well - or are ING the lenders as well? If not, then it ceratinly shows what an appalling job Invista did for IERE!

[chopshs] 25/2/2009 12:42

Looks positive for IRET. On a quick examination the changes look a bit one sided to me. I presume some of the major Noteholders (whoever they are) have agreed to this in principle and it's pretty much a done deal.

[flying pig] 24/2/2009 17:45

ING UK Real Estate Income Trust Ltd
24 February 2009

FOR IMMEDIATE RELEASE
24 February, 2009


ING UK Real Estate Income Trust Limited
("ING REIT" or the "Company")


Proposed restructuring of the Company's Securitised Loan Facility


The Company announces that it is seeking to amend several of the covenants in
its Securitised Loan Facility. To that end, a meeting of the Noteholders has
been convened for 18 March 2009 to consider the proposed amendments.


The principal proposed amendments are summarised below, but shareholders should
note that Standard & Poor's and Fitch, as required by the underlying
documentation, have both confirmed that the 'AAA' rating of the notes issued in
relation to the Securitised Loan Facility will be maintained if the covenants
are amended following approval by the Noteholders.


Summary of the principal proposed amendments to the covenants


* Increase the loan-to-value covenant from 50 per cent. to 60 per cent. until
January 2012, when it will reduce to 55 per cent., falling back to 50 per cent.
in July 2012;
* Increase the interest cover ratio from 1.5 times to 1.75 times until maturity of
the Securitised Loan Facility in January 2013;
* Increase the loan-to-value ratio at which level cash (other than rent) can be
released from the Securitised Structure and passed to the Company from 35 per
cent. to 50 per cent.;
* Reduce the Company's flexibility to make non-core investments, residential
investments and undertake developments or major upgrade projects within the
Securitised Loan Facility; and
* Remove the Company's ability to hold indirect property investments within the
Securitised Loan Facility for the purpose of the various financial covenants.

The Board has already undertaken a number of initiatives to manage the business
during this period of market volatility. The Company repaid GBP82 million of
debt in 2008, following an asset disposal programme as well as reducing its
dividend to ensure it is fully covered by earnings.

The Board believes
that the implementation of the amendments to the Securitised Loan Facility, if
approved by the Noteholders, together with the activities already undertaken,
will strengthen the Company's ability to withstand market conditions. Further
information on the detailed changes and the documents sent to Noteholders will
be available on the Company's website - www.ingreit.co.uk
The Noteholder meeting has been convened for 18 March 2009 and the Company will
provide a further update to shareholders following that meeting.

[skyship] 02/2/2009 18:05

1.0p/share Interim. xd 11th Feb'09:

[flying pig] 26/1/2009 12:45

I started to wade thro the notes documentation but it is turgid stuff. Hope to have a view in due course - soporific ................

[chopshs] 23/1/2009 21:18

The loan notes appear to be listed on the Irish Stock Exchange. The following link appears to be the listing document/legal agreement.



Just had a cursory look: Page 164 deals with Loan Events of Default. Probably some other interesting stuff in there but it's a bit heavy (unless you're getting paid for it!)

Can anyone determine the price that the debt is trading at? Sedol numbers appear to be BOVR5X7 and BOVR5Y8.

I've got this information from the internet.

Btw, I don't think IRET buying the debt back at a discount (on the secondary market) will help, unless they could afford to buy it all back, which they clearly can't.

[lord gnome] 22/1/2009 15:49

Nice update. Looks to be in better shape than some of other property investments. This will survive, not so sure about my CHI though :-((

[sleepy] 22/1/2009 11:33

Made it on the LTV covenant!

Looks like they are planning a dividend in February

Wonder if they have tried to buy back their debt at a discount?

[skyship] 20/1/2009 13:16

Hi Tilts - a bit of a hairy ride these small property companies. I've bt back into UKCM yesterday and today - obviously with nil gearing, a 10% yield and a 24% NAV discount its a safer play for a corner of the SIPP - as well as a good trade - at least it has been hitherto!

I halved my IRET holding back at 22p and am thinking of buying those back. Can you say whether NUMIS are reasonably positive on this one?

[tiltonboy] 20/1/2009 11:23

Kenny,

I haven't I'm afraid.

[kenny] 20/1/2009 11:16

Do you have a link to it, thanks?

[tiltonboy] 20/1/2009 09:02

Numis have issued a 43 page research document on Property Investment Co's. Skip read it so far, but looks worth getting hold of.

[skyship] 19/1/2009 11:21

Elsewhere the NAV Statement from MERE makes grim reading in terms of LTV status; but surprisingly positive in terms of European asset values - though values which are very much trade estimates and not based on any real transation activity. Their opinion is that valuations fell only 5.5% in QTR 4'08 - the same figure as IPI recently declared apparently.



Accordingly it will be more than interesting (for me at any rate!) to see the IERE stats on Wednesday - assuming they give us an update to 31/12 and not just to 30/09.

[sleepy] 19/1/2009 10:59

Perhaps wrongly I have the view that, at least up to Sep 2008, the IRET portfolio has been relatively conservatively valued.

[chopshs] 19/1/2009 09:29

Sleepy - Good point re the RNS. They had the Dec valuation when that was written...
IPT and IRP announce today portfolio valuations down 14.3% and 13.1%. Assume IRET in line with these and they have just avoided the breach.
Edit - Also I just remembered that they had exchanged on a £4.7m sale at the end of Q3, so that together with the further 7.25m will have helped.

[sleepy] 18/1/2009 01:38

The announcement reads to me as if the company believes that it remains within its debt covenants

[nickcduk] 17/1/2009 22:35

I did some calculations a while back which suggested IRET could withstand 13% falls and stay within covenants. The disposals since would allow another 3-4% leeway. The 4m or so in cashflow for the last quarter would allow another 2% or so. They may however have broken them on the basis that the swap valuation will have led to a large negative number. Here are some rough calculations assuming a 15% fall.

Property Value (15% fall and including 15m disposals) = 404m
NAV (Assuming no loss on 2 disposals as it would be a minor figure) = 206m
FFO = 4m for the quarter
NAV + FFO = 211m

Based on the above calculations we have a LTV of about 48% but in reality with the swap losses it may have slightly edged over 50%. I disagree that lenders will be quick to jump on IRET. They are in relatively strong position and can make disposals to remedy the covenant issues.

Worth bearing in mind the yield that IRET portfolio is now trading on. At end 2007 the yield on the portfolio was 6% and reversionary 6.63%. Disposals have been made at a considerably lower yield than that average so lets assume the reversionary figure is the one to use for the current portfolio. Assuming a 15% fall in Q4 the running yield on the portfolio will be 9.15%.

I would argue with property yielding that high we shouldn't have too much more downside ahead of us. Especially now that the bond market is looking a lot stronger than it was. Owner occupiers, cash investors and pension funds are likely to make their move soon as the attraction of property versus gilts and interest rates becomes extreme. At that point a decent recovery in valuations wouldn't be particularly far fetched (circa 10-15%). Thats when IRET and its ilk are likely to multi bag. In the meantime the dividend being removed wouldn't be a bad idea.

[kavnish] 17/1/2009 20:20

Hi All

An interesting analysis. The LTV is unlikely to have been breached in the December quarter. In a no disposal scenario calculations had suggested March. The accelerating trend on the IPD index is unlikely to continue as we are now seeing yields of circa 9% for commercial yields.

The IRET portfolio is valued at circa 7% , assumming a slighly better portfolio then we could assume a yield of 8.5%.

THis suggests potential for 20% asset sales. or 100 million pounds of assets. I think the doomsday scenario is 90 million.

The dividend cut was completely the right move. THe options are fairly simple

i) Raise new Money
ii) Sell Properties
iii) Buy back debt below par and enhance LTV
iv) Negotiate with SPV and offer a higher interest rate.


From a shareholder perspective i don't mind any of the above . The implied yield is ridiculously low, the dip is large sellers being forced to liquidate.

The stock rallied 15% today.

Keep heads clear and think about fundamentals, look for triggers for more asset disposals. UKCM is a no risk option , IRET has risk associated but look at the return profile.

[asmodeus] 16/1/2009 21:21

IRET up 15.2% today, apparently.

[chopshs] 15/1/2009 17:19

IPD monthly figures for Dec out today. Monthly capital value decline was 5.8% which makes a bit over 15% for the quarter. Expect all the UK PIT's to reflect this in updated NAV announcements shortly.
It will be surprising imo if IRET are not now in breach. I've had no response from them as to the consequences and I guess this will come out in the RNS.
Expect the dividend to go.

[pictureframe] 14/1/2009 08:28

Down again - anyone have an idea where the support would be?