Invista EUR Prf Discussion Threads

[badtime] 10/12/2013 12:11

I bailed a few weeks ago at high seventies..but these are beginning to look attractive again for punt money

[stupidboypike] 10/12/2013 11:51

Another fall today and so I just went through the numbers again. The last IMS said that they had received 27.5m of rent. Their loan is around 229m. The rent, therefore represents 12% of the loan. In this income starved world I really find it hard to believe that IERE can not arrange a refinancing that allows them to survive. As a pref holder, survival is all I need.

Best regards SBP

[blackpoolsteve] 09/12/2013 22:42

It appears AUMP is also managed by its 16% shareholder for only a small proportion of its debt. I presume the board are aware of this dual role,and will be mindful to pay the debt off sooner rather than later.

SRE looks to be greatly improved,so I wonder why Weiss is bailing out? Maybe its already made a profit,and moving onto the next target?

IERE/IERP - the outlook appears to be more optimistic than say ALPH,which looks to have been given a very bad deal by Barclays,at extortionate rates,as AUMP.
At least IERE is selling properties off to pay down the debt,so given the large discount to NAV ,this should work out better in time.

If memory serves me right,the prefs (IERP), are 70%owned by institutions,a comparison zeros are held by split cap trusts can maybe be made,so I take some comfort from that.

In general,property companies appear to be improving,but their structures are complex. I have held TRV for ages,and this now seems to be getting its act in order. Lets hope that IERE also improve,as AUMP finally appears to be stirring after years of comatose behaviour

[ydderf] 09/12/2013 08:30

If you look at SRE but perhaps more pertinently AUMP, it seem that the pattern is for very high interest non-secured or mezzanine financing debt to provide a major part of any refinancing. In AUMP's case the unsecured debt carries 16.5% interest!

This suggests that the income going to the prefs here would be at risk if there is a successful restructuring but that the capital element would be protected. It is hard to imagine any solution which would secure both capital and ongoing income to the pref holders but what do I know?

Ironically, now that the restructuring of AUMP has been agreed, there would seem to be scope for a resumption of dividends when the vacancies are filled. So AUMP seems to be a mirror image of IERP, with IERP divs at risk possibly and AUMP currently no divs but possibly good prospects. AUMP with a market cap of £6.5m and potential 'clean' additional gross rental income of £2.4m (and total nav of £18m) seems either too good to be true or (temporarily) anomalous ?

Any thoughts please?

[gary1966] 04/12/2013 17:40

Forgot that these went XD today by 4.488p. Softens the blow a little.

[chinahere] 04/12/2013 10:59

Mirako - that Liverpool building link was very interesting thanks.

It seems unfair (and possibly wasteful) that BOS won't negotiate on individual parts of their loan portfolio. I guess they prefer the ease and disconnection a larger sale brings.

Quite a bit of their assets are UK taxpayer's money so I hope they are getting a fair price on these sales.

Cerberus appear to be robust in their methods so it doesn't look good for IERE or IERP to me.

[gary1966] 04/12/2013 10:39

As usual my timing has been impeccable with my only purchase being last week at 78.5 & 79p. Not a huge position but still not pleasant.

GLA

[mirako] 03/12/2013 23:14

My guess is the divi is as binary as the rest of it. If they refinance with any kind of equity raise then the divi has to keep coming (why would you buy ordinary shares if there's going to be a cumulating, unpaid pref dividend senior to you). If they can't refinance they lose control of the assets, and there'll be no cashflow to pay the divi. It's hard to imagine circumstances where suspending the pref dividend makes enough difference by itself to allow a refinancing.

[langbarb] 03/12/2013 21:51

Thank you both, ultimately this is down to Cerberus view on Iere, very binary as scburbs said. It is possible, reading the downing story above that iere offered a better price to lloyds by lloyds sold to cerberus as they preferred a larger block sale. In this case there maybe a deal to be made between iere and cerberus somewhere between 75c and 1. A difference from downing is that iere is a large portfolio of properties while downing involved just 1 building, so cerberus might let iere get on with it.
Any take on the risk of a divi suspension?

[scburbs] 03/12/2013 20:58

Langbarb,

Its from the RNS.

"BoS has offered to grant IERET a short term extension to the Loan's maturity to 30th April 2014, in order to provide IERET with more time to explore different solutions with the new owner of the loan, on the condition that IERET agrees to a relaxation in the terms of the Loan's transferability."

[mirako] 03/12/2013 19:29

@langbarb

Of the Project Thames UK portfolio that Cerberus bought in May a number of the assets are already on the market. This building in Liverpool might provide a case study: hxxp://www.liverpoolecho.co.uk/news/liverpool-news/downing-loses-control-capital-office-5816315. The usual private equity style is "get to the assets".

However, per the Estates Gazette, Cerberus "is also thought to have agreed a handful of discounted pay-off deals on some of the loans in the portfolios, which allow the original borrower to buy back the asset at a discount". So a refinancing deal might still be possible.

[langbarb] 03/12/2013 18:35

Anyone has a view on Cerberus most likely course of action? Do you expect a fire sale to recoup the loan or them helping with refinancing to get PAR back? Anyone has experience of their modus operandi?
Also what are the chances of dividend suspension from the prefs? I have read interesting comments on this thread re. the clauses for suspension in the prospectus, but realistically here as a pre-condition for refinancing negotiations would you not think Cerberus will ask for divi suspension? Thoughts welcome. Disclosure: I hold small amount of IERP
Edit: how to you interpret the loan extension? If Cerberus wanted to put this into administration they might have not even wanted this extension... Do you read a willingness from Cerberus to negotiate a new deal?
And finally, scburbs can you help me understand what you say here: "They are no closer to a solution, but the good news is that Lloyds need something from them. This means they have a hand to play and some time to buy. I suspect Lloyds have alternative ways of transferring the loan, so it may be a weak hand and they might be limited to getting 4 months, but it is much better than being in default come 1 January!" I would have thought lloyds are out of the picture now and it's between IERE and Cerberus, what do you mean by Lloyds needing something from them and "alternative ways to transfer the loan"? Again I would have thought the loan is now Cerberus'? Sorry if my questions sound amateurish, but I would be really keen to understand this point

[mirako] 03/12/2013 18:32

Even if one expects an eventual 100% recovery on the prefs, I'd still expect a big drop in price if there's an administration, which is a reason not to hold now.

But I'd worry about the prospects of 100% recovery. If they don't do a deal that involves handing over the keys to Cerberus then presumably there's an administration. In that case, the court takes all the cashflows and supervises an auction, with endless costs and fees borne by the company. There's a primer on German CRE enforcement here: hxxp://www.whitecase.com/files/Publication/4cb81665-398d-40a2-9bfe-1f36d168ec4f/Presentation/PublicationAttachment/7686b052-4771-4cd4-a550-32633712dd44/Security_over_real_estate.pdf

Of course the upside scenario is that they raise new capital and refinance. Even then, though, I'd worry about a junior debt tranche being inserted above the prefs.

[scburbs] 03/12/2013 18:02

It is the sharp fall off after 20% that is the risk. In very rough numbers:

20% - 100% recovery for IERP
25% - 50% recovery for IERP
30% - 0% recovery for IERP

[chinahere] 03/12/2013 18:00

The recent 50% discount sale makes one think..........

[kenny] 03/12/2013 17:31

There is about €100m difference between the property values and loans. So even if the properties are sold for 20% less than their current value, preference shareholders would receive 100p in the pound e.g. full repayment.

[joan of arc] 03/12/2013 17:16

Mirako "....then the prospects for shareholders are dim."

For both ords and prefs? Surely the prefs can now get at least 70p in the pound back.

[mirako] 03/12/2013 15:18

I had a modest holding here but have sold out today (which was painful and may make me look stupid in due course).

It seems to me that if they couldn't refinance when there was the prospect of some debt forgiveness on the senior loan then the chances of doing so without debt forgiveness are not great.

What did it for me was this line in the RNS: "...in order to achieve, through engaging proactively with Cerberus, the best possible outcome for shareholders". The PE strategy is workout and foreclosure and they won't forgive a penny. If their plan is to engage with Cerberus, rather than achieve a 3rd party refinancing, then the prospects for shareholders are dim.

[mega_trader] 02/12/2013 17:54

Also Cerberus have just bought EUR1.03 billion worth of various property loans (at historic lows in an un-matured market) I doubt they will be offloading and flooding the market devaluing their own investment.

4 months to save money, secure new tenants, sell property, in an improving market environment.

More buyers for Iere today. Iere just got a whole lot cheaper imo.

[kenny] 02/12/2013 15:48

For the 4 months that the loan extension runs and because the interest rate hedge expires on 31 December, the company saves €3.2m in interest. That is a handy bit of extra income.

[mega_trader] 02/12/2013 09:26

Someone started buying iere on the dip. ALPH secured a deal recently, share price rose greater than 50%.

[cerrito] 02/12/2013 09:08

AS a IERP holder I was half expecting a IERP share price fall this morning if IERE management are saying they want debt relief on their senior secured loans which would imply a wipeout of their junior debt like IERP.

[kenny] 02/12/2013 08:51

...also the fact the big holders of ordinaries as well as pref's have not been stampeding for the exits is indicative that refinancing is likely. Indeed someone seems to be absorbing the sells. There are also other options e.g. a bid for the entire company by a group of property investors.

[kenny] 02/12/2013 08:45

Let's not lose sight of the fact IERE's loans are 70% LTV with some cash on the side giving an effective LTV of about 65%. So there was unlikely to be a big difference between IERE's and Cerberus's offers to Lloyds.

Third party refinancing with a capital raise seems the most likely outcome.

[mega_trader] 02/12/2013 08:13

Things looking more positive for iere then? Looking at other property co's, refinancing is a matter of when not if, so could turn out to be good.