The Local Shopping Reit Share Discussion Threads

[skyship] 14/4/2014 18:50

The Minard portfolio is being marketed @ £80m. If that is at current valuation, then every extra £1m adds 1.21p to our NAV.

Let's record our guesses for the sale value. I'll record & post/update the numbers. My guess is for £84.8m - adding 5.8p to our NAV.

[rohkap] 14/4/2014 18:19

Sure-figures are ballpark but think I'm roughly right. P12 of annual accounts showed Hsbc Ltv of 82%. From that you can work out market value (approx 81 I think). Total assets of approx 169mm, back out owned assets of £8mm and you get approx £80mm for Barclays funded assets

[eezymunny] 14/4/2014 08:48

Interesting post Rohkap. Could you point out where in the AR you get those numbers? I can't find the LTV for the HSBC stuff itemised. YOur numbers conflict with my numbers from the downloaded NOS accounts. Help appreciated!

[eeza] 13/4/2014 20:25

Minard brochure

[skyship] 13/4/2014 18:55

Rohkap - great post - thnx - will take a look.

[rohkap] 13/4/2014 10:18

I think £80mm is around the current market value of these properties (ie in line with NAV). In the last accounts, LSR stated the LTV for the HSBC funded portfolio so I backed out the MV of the Barclays funded properties (after factoring in the outright owned properties of £7.9mm) and get to approx £80mm.

I think the sale should raise more than £80mm guide price as there are not many places you can get this kind of running yield plus leaves some upside on the table for the buyer through asset management initiatives (Internos are offering to manage portfolio for buyer). I would be annoyed if they sell for lower. What will be interesting is if the sale does well, will they try to repeat with the HSBC portfolio and take a hit on swap break up costs (£3-4mm left now?) or will they wait for swaps to expire. Also interested to see how they plan to distribute proceeds of this sale.

Incidentally for those who are interested, the portfolio is being marketed under the moniker Project Minard by Allsop. There is an interesting and informative brochure on their website.

[skyship] 04/4/2014 14:26

gfrae - thnx for that...

[eezymunny] 04/4/2014 13:11

That's gfrae. Still not clear to me what cash goes in and out and when so, for these derivatives, and how, if at all, that would change on a sale that included the debt packages. However, any reduction in the liability a bonus I guess.

[gfrae] 04/4/2014 11:45

The debt it appears could go with the assets,or paid down with the proceeds of sale.
Buying back the derivatives would require a one off cost but result in lower net interest payments.

[gfrae] 04/4/2014 11:41

They can buy the derivative contracts back when they chose,or allow them to expire.

[gfrae] 04/4/2014 11:39

Swap liability reducing at approx. 1p per quarter until 2016 when the contracts expire.They are also repaying debt from net recurring income at a rate of approx 0.75p per quarter.(£2.4m p.a.)

[eezymunny] 04/4/2014 11:38

Any idea, anyone, what happens to the derivatives in the event of a sale, and passing on of debt packages to the buyers? I guess they stay with LSR but really have no idea of the link between debt and the derivatives hedging the rate on that debt.

[badtime] 04/4/2014 11:34

statement re press comment

[skyship] 04/4/2014 10:44

Don't forget that the Interims in May for the period to 31st Mar'13 showed the EPRA NAV as 56p. Since then asset values have increased markedly, asset management will have progressed some values and the management costs are down.



The NAV with the Prelims will be shown to have been an aberration; and I suspect we will see considerable interest in the LSR portfolio now up for sale.

[eezymunny] 04/4/2014 09:58

Yes agreed Redhill but if they just clear out stuff at book value the NAV here is 41-48p depending on what happens with swap liabilities. Any amount they sell above book gives leveraged upside from there and obviously the opposite is true if they sell below book....but a marketed value of £80m vs book of £66m allows me a modicum of optimism that there is more upside (perhaps spectacularly so) than downside. Not without risk, obviously!

[redhill9] 04/4/2014 09:52

EezyMunny, don't forget that the £80m is just a figure quoted in a news article, plus it is likely to be on the high side of what LSR would actually sell for - a bit like putting your house up for sale for more than you expect to get.

[eezymunny] 04/4/2014 09:46

I've just downloaded the NOS Ltd and NOS2 Ltd accounts. NOS is a dormant co with just a 20k net liability. NOS2 has properties at book value of c. £66m (net current assets approx zero). So these are being marketed at £80m.

Upside here could be quite spectacular if they sell near that price and other c. half of portfolio achieves something similar. On the other hand if noone want to buy them???!!!

[bondholder] 04/4/2014 09:24

The article mentions 8.5% -presumably yield so a valuation multiple of just under 12. On that basis ( no idea if the stuff is actually representative of the LSR average stock !) given this years rental income of £15m you would be looking at £180m asking price for the whole of LSR portfolio,before deducting outstanding loans. Of course asking prices may not reflect selling prices........

[eezymunny] 04/4/2014 09:09

Nabbed a few of these for the EezyMunny portfolio today FWIW



It would be nice to know what the book value of these properties is (I guess it's all the properties in NOS and NOS 2) but that is not itemised in the annual report. Anyone have that info? ie are they marketing them at a premium to book?

[redhill9] 04/4/2014 09:05

I've just been revisiting my notes on LSR, in particular the incentivisation of Internos to sell the properties quickly and for as much as possible. I'd broadly remembered that they will get a fee of 5.7% of cash returned to the Company's shareholders in excess of 36.1p but what I'd forgotten is that this trigger point increases by 8% annually - a real spur to get a move on. Also, their sales fee trebles from 0.5% to 1.5% if they achieve over £150m (roughly 10% below latest asset valuation).

As a shareholder I'm very happy with that package - one of the biggest risks with liquidation situations is the time it takes for liquidation to occur. It seems to me Internos are very strongly incentivised to work on shareholders' behalf, and yesterdays report in CoStar indicates they are getting on with the job.

Incidentally, although the share price is up this morning to 30p/31.5p currently, it's worth noting that the stock market hasn't been made aware officially of this potential block sale and I assume LSR won't do so until there is at least a buyer in negotiation at which point the share price should hopefully react further.

[skyship] 04/4/2014 08:42

Bondholder - thnx for that - also heard it on the Today Programme this morning. Certainly provides a better backdrop to LSR's big sale.

[jswjsw] 04/4/2014 08:35

I actually see this as positive for LSR.
The Internos portfolio is not on the same level as the one that that article talks about, and if, as they allege, people are returning to the high street in 'buy & collect' scenarios, occupancy is likely to rise.

[bondholder] 04/4/2014 07:53

OMG just seen this -not like the usual doom mongering !

[skyship] 04/4/2014 07:50

Tilts - well done you - I assume you won't be selling at 32p again this time around!

[tiltonboy] 03/4/2014 18:44

I must have 20:20 hindsight then...lol...