The Local Shopping Reit Share Discussion Threads

[eeza] 30/1/2015 13:24

Tilts is buying.

What else do you need. :-)

[stupidboypike] 30/1/2015 13:08

SKY, I'm tempted, but a little worried that project Renourver or whatever it is called seems to be attracting little interest, unlike the previous parcel. I'm slightly worried that what they have left is the dross and they got rid of all the good stuff in the first sale. Anyone any more positive thoughts? I wouldn't take a lot of convincing!! Best regards SBP

[skyship] 30/1/2015 12:10

Try taking a great big mouthful Tilts - no need for "politesse".

The drift has caused the NAV discount to open to really attractive levels - now at 30%+; so possible upside of 40% from 32p...

Can't compete with you as already at my MAX!

[tiltonboy] 30/1/2015 11:50

Just starting to take little nibble at these levels!

[badtime] 22/1/2015 20:26

Nice to see someone buy some shares

[cwa1] 21/1/2015 14:45

Wouldn't it be nice if they had some good news in time for this?

21 January 2015

The Local Shopping REIT plc ("the Company") confirms that copies of its annual report for the year ended 30 September 2014 and the notice and form of proxy for the Company's Annual General Meeting to be held on 4 March 2015 have been mailed to shareholders.

[eeza] 21/1/2015 09:47

Well they would say that, wouldn't they.

[redhill9] 21/1/2015 09:46

Only until no news becomes good news...?

In the Results announcement last month LSR said they thought a sale probable within 6 months so it's perhaps a little soon yet to write off that prospect. I think the speed of completion of Project Minard last year raised unrealistic expectations of a similarly quick sale of the residual properties and we may have to be patient. I'm continuing to hold as I think, one way or another, value will emerge.

[gfrae] 21/1/2015 09:15

No news is bad news....?

[badtime] 16/1/2015 17:19

Zzzzzzzzzz

[tiltonboy] 09/1/2015 13:37

I'm getting tempted, but it just doesn't feel right at the moment. Plenty of stock around at 32.33p.

[alanji] 29/12/2014 12:51

Looks like I came back too early!!!!

[skyship] 23/12/2014 17:49

Welcome back Alan...and congratulations on your covered bear trade.

33.7p is the price at which I made a small 10k top-up last week. - not a good trade. That accolade goes to CWA1.

[alanji] 23/12/2014 16:35

I reckon it was the auditor who insisted it was mentioned but how bizarre that the only mention is in relation to the co's status as a going concern. Of course the co would not want to give away information which might be of use to potential buyers but not to highlight the event which is currently of most significance to shareholders.......

I have been doing more digging and found this brochure (hope link works)on the Allsops website
It looks like it is Allsops end of year report and, interestingly, shows other "projects" up for sale which are also not shown under "currently for sale" on the website. This and the note to the accounts reassure me that Renouvier is still under-way and maybe, just maybe, an announcement is imminent. So I have bought back in and pleasingly for less than I sold for.

If you are interested in the figures, using 33.7p as the buying price and ignoring costs:

A sale at book value would provide a return of 28% (ignoring liquidation costs)
At 5% less return 12%
Break even is about 9% less than book value
15% less would be a loss of 21%
and it is quite possible a sale in excess of book value may be achieved.

[redhill9] 22/12/2014 14:28

Badtime, no response yet to my email but if LSR do respond I now just expect them to refer me to Note 1 which answers the point. I asked why they hadn't referred to the sale they announced in October and they can reply "We did".

[badtime] 22/12/2014 14:15

I'm waiting for the response to Red's communication

[redhill9] 22/12/2014 14:15

Skyship, perhaps if Renouvier doesn't proceed, and the sale of all of the properties piecemeal at acceptable prices isn't viable, then continuing as a going concern may be the only option left!

Yes, I also missed Note 1 first time round as well as I skipped over it assuming it was just standard regulatory wording until I decided to go through in more detail. It's almost as though they felt they had to say something about selling the remaining properties but hid it away in the Notes hoping it wouldn't be spotted.

Technically I suppose the "within the next six months" they refer to started at 30 September as that's the date of the results but probably more realistic to assume it starts from the time of the announcement last week, and even then we should consider it no more than an indication.

[skyship] 22/12/2014 13:10

Redhill - I concur with gfrae - thnx for flagging up Note 1 - I too managed to miss it!

Below was a pretty remarkable statement after their Project Renouvier timetable - "The directors believe a sale, which will generate proceeds sufficient to repay all of the Group's financial obligations, is probable within the next six months."

We will see what we will see; but however you cut it, yes, 33p seems an attractive level for good upside whatever the result. Though this little bit seems rather absurd - "...or continue to trade as a going concern."

[gfrae] 22/12/2014 11:55

Yes,I agree around 34p they seem a reasonable bet.

[redhill9] 22/12/2014 11:18

gfrae, yes agree about 9.25% being gross yield but I was thinking of it as a measure of support to the reported value of the properties, suggesting reported NAV may be prudent. The recurring profit isn't great agreed, but more than covers interest and costs (which appear to be reducing on annualised basis) and LSR is more about disposing of the assets at value then about ongoing profit.

Understand about the swap liability but thinking that if LSR do a deal on the whole portfolio (i.e. Renouvier happens) then some of that liability could pass across, hence my lower suggested NAV of 43p to reflect the cost of that option, but accept that may be optimistic. If Renouvier doesn't happen and portfolio is liquidated over several years (as LSR intimate is an option) then the diminution of that swap liability over the period will close the 5p NAV gap, and value emerge.

I see little downside from the current share price but potentially attractive upside and I'm happy with the risk/reward profile.

[gfrae] 22/12/2014 10:53

Redhill,the swaps are a real liability and therefore the 42p NAV figure is the correct one regardless of whether a purchaser takes on the debt or not.(LSR will either have to pay it,or compensate the buyer if he choses to take it on). The liability decreases, assuming interest rates do not fall further,the nearer they get to expiry.
The 9.25% yield is before interest,and all management costs. The actual net yield is what they call "recurring profit",which last year was pretty poor (see figs).
All depends on what they sell Renouvier for,and if.
Place your bets,please.
Thanks for pointing out that passage though,which I missed.

[rohkap] 21/12/2014 21:10

Projecting a capital return value for this stock is a nightmare task when there are so many unquantifiables and the company provides such limited information eg final close-out value of swaps, balance sheet items which will be accelerated through P&L post final sale, agents fees, amounts to cover company liquidation, negative carry from P&L etc, let alone speculating about proceeds from sale of properties.

The simplest way to have built up NAV would have been to let the swaps mature but thats not going to happen which is a real shame. I would want a bigger margin of safety than 33p.

[redhill9] 21/12/2014 17:57

Project Renouvier is mentioned in the results, but not by that name. Note 1 to the accounts regarding "going concern" includes the following statement:

During the year the Group disposed of a number of properties and subsequent to the year end began marketing its remaining property-owning subsidiary companies in a single transaction. The directors believe a sale, which will generate proceeds sufficient to repay all of the Group's financial obligations, is probable within the next six months. Should the sale proceed it is likely to be the directors' intention to liquidate the Company shortly following the sale of the remaining properties, repay all creditors and distribute all remaining monies to the shareholders. If the sale does not proceed then the directors will consider their options which include the sale of all the remaining properties in piecemeal over several years or continue to trade as a going concern.

Quote from the above: The directors believe a sale........is probable within the next six months. Sounds like an update to me, though perhaps not as "headline" as we might have wished.

I thought the suggested timescales for Renouvier were far too optimistic considering the number of properties involved and their geographical dispersal.

Also, regarding what NAV is appropriate to consider, let's not forget that the lower NAV figure of 42p per share is a technical figure assuming that the swap arrangements are broken. With Project Minard the loans moved to the purchaser with the sale removing the need to break any loans. If the residual loans move with a sale of the remaining properties then surely a figure higher than 42p is more realistically included in any forecast of liquidation value. The derivatives are carried in the balance sheet as a liability of £4.0m, equating to around 5p per share, which gives the higher NAV of 47p quoted in the results as "the NAV per share adjusted for the fair value of interest rate swap contracts".

With the current Offer share price down to 33.5p, a liquidation of 40p per share would give a return of 16.25% with the prospect of the annualised return being much higher % if the timescale is less than 12 months. If the loans are packaged with the properties and the swap liability avoided or reduced, a distribution of, say, 43p per share would represent 22% for anyone buying now and, again, potentially a much higher annualised % if the timescale is less than 12 months.

The downside is if the block sale doesn't proceed it might take a while for the remaining properties to be sold. However, ad hoc sales over the last year have been at more than NAV so maybe this wouldn't be so bad and attractive value would emerge. Also, LSR has cash on its balance sheet of £15.7m equating to 19p per share. Current debtors plus properties held for sale exceed total current liabilities by £0.3m before the swap costs, and with the LTV down to 56.1%, interest cover at 183%, and the yield on the portfolio at 9.25%, LSR doesn't look too bad to me.

[skyship] 20/12/2014 09:16

LSR's assets are very much tertiary - always have been, always will be.

However, with the commercial property boom seeping out to the regions and up the yield curve, then LSR property values will increase. A tightening of the yield from 9.75% to 8% results in a valuation increase of 21.9% - sheer rule of mathematics!

That is why an orderly disposal programme over, say, three years, might well prove an entirely acceptable alternative proposition.