The Local Shopping Reit Share Discussion Threads

[tiltonboy] 13/12/2016 15:15

I will re-check with the company.

Excess cash is currently there as a buffer in case they breach their covenants, which even they say is unlikely. As more properties are sold, and debt repaid, they should be in a position to do so, but it all depends what the bank have got in the small print.

[gfrae] 13/12/2016 14:47

Are you sure ? They certainly have some properties on which no debt is secured.

[tiltonboy] 13/12/2016 14:25

They can't do that until the bank debt has been paid back.

[gfrae] 13/12/2016 14:24

As almost all shareholders seem to want to sell, as the shares stand at a large discount to NAV and as the company has cash yielding virtually zreo,buying in or having a reverse auction for say 25% of the companies shares at around these levels could be beneficial to all.
Recurring revenue would hardly be affected as foregone interest would be negligible, NAV per share would increase.
The board could chose a period when further sales have been completed and subject to the share price still being at a substantial discount to NAV.

[hillofwad] 13/12/2016 13:42

Skyship All good news, Just goes to show they have been missing out on an active sales channel during 2016 where they could have very well shipped £20m worth of kit drip feeding it into the auctions whilst being sidtracked by some buyers who were no doubt had alockout agreeemnt whist trying to sub sell a chunk on before committing and the BODS have been stupid to allow that to happen 3 times!!!
Why wait til 2018? its clear that the £150 -£1m lots are standard fareat these auction houses and have been selling day in and day out
At least you have a sale at an auction , protect your bottom by having a reserve retainig the deposit at worst

[skyship] 13/12/2016 12:11

ACUITUS confirm the strength of the "private buyer" market:
============================================================

Buyers will be out in force in 2017 auction

With substantial unsatisfied investor demand in the commercial property auction sector, Acuitus expects to see buyers out in force at its first auction of 2017.

Acuitus auctioneer, Richard Auterac, comments: “Although this has been a tremendous year for the sector with more than a £1bn of commercial property assets being sold at auction for the first time since 2007, the reality is that there is still a lot of unsatisfied investor demand out there.

“This means that there are significant opportunities for sellers. However, we have seen this year that a common denominator among assets that sell well has been the depth of information provided. Accordingly, vendors should be instructing us as early as possible so we can ensure that the appropriate level of data is collated and can be professionally presented to potential buyers.

“We’d strongly recommend that sellers contact us as soon as possible if they are considering selling in early 2017.”

The final Acuitus commercial property auction of the year saw £41.125m of assets sold, and took the firm to £354m of sales for the year – its highest-ever total. The volume of properties which have sold at Acuitus auctions is up 23% year-on-year. Among the good quality investments sold on the day was a Barclays Bank on Godalming High Street in Surrey (pictured). Let until 2026 - with an option to break in 2021 -at a current annual rent of £57,600, it sold for £1.23m at a yield of 4.4%.

Richard Auterac commented: “Whether it’s buying a standing investment or a property which has asset management or conversion potential, investors and their advisers see that the high-end commercial property auction room can supply the product which fits their investment goals.

“If sellers can bring to market the right assets at the right price with the required depth of information, they can tap into this growing private investor demand.”

The first Acuitus auction of 2017 will take place on February 16th at the Radisson Blu Portman Hotel, 22 Portman Square, London W1H 7BG.

[hillofwad] 13/12/2016 05:40

The BODS strategy for the last 12 months under their own admission has failed, miserably They only managed to achieve paltry sales of £5m and got the portfolio away 3 times yet failed to deliver .This would normally warrant a sacking of either the agent or the investment manager . Sure its been a difficult year with Brexit but it seems they havent had their fingers on the pulse .

As they said having the portfolio "Under offer" 3 times has frozen sales prevented them from dealing with genuine enquiries for individual properties .It seems that only loud noises from disgruntled shareholders has persuaded them to change course. Too little too late .Some of those genuine purchasers of individual properties would have disappeared off the map forever since Brexit I am sure if they had changed course earlier in the year the eventual winding down of the company would be firmly on the horizon

I am also sure that the blame lays firmly at the door of Internos as I would hazard a guess Allsopps their valuers would have been suggesting for sometime to the BODS for that the auction route was the best method

Looks like they missed an opportunity at the December Allsops auction to have sold a few too as it went extremly well

The recent sales have shown a 1.75% gain over book ignoring costs This gain will be wiped out by selling costs would put the sales in at a loss.Lets not forget these are individual sales without discount for quantum .It doesnt augur well for achieving anything close to NAV .

The new road map does looks a little tortuous especially bearing in mind uncertainty ahead Allsops shifted over £600m at auction over the last 12 months so they could possibly increase the number entering the catalogue .Having said that at least they are ratcheting up the sales process which is a welcome move form the self enforcd inertia of this year


" Early 2018:

The Company will be left with a 'core' portfolio of approximately £55 million (based on current valuations), comprising 200 of the larger and better-quality assets in a tighter geographic concentration. Furthermore, time away from the market will allow us to reposition the portfolio and undertake asset management initiatives at the individual property level in order to achieve maximum value. "

This seems to be a whole load of bunkum surely hoisting the sale flag wouldnt have prevented them undertaking continuous asset managemnt initiatives to improve value


They havent got a crystal ball and who knows what the prospect of the market will be like in 2018 Surely the successof Allsops December auction should have encouraged them sufficently to load up the February Auction with the better quality properties The average lot size at Allsops December auction was £691k!
and they sold a singe lot for £4.06m which is higher than the most expensive in LSR,s portfolio

[hillofwad] 12/12/2016 19:14

I agree they should shift quite a lot close to Book Its just when they get down to such a size when the company,s existence no longer justified and sell a bag of liquourice allsorts where only a very large discount will entice.

[tiltonboy] 12/12/2016 19:01

Depends what you think will be in the rump. They have shifted 10% of the bottom end for roughly NAV. Only time will tell whether that works with the balance. I would hope the bigger, and better quality stuff might actually go for modest premia, given the underlying yields. It may take some time but I'm willing to be patient.

[hillofwad] 12/12/2016 18:35

Tilts mine are on this morning at over 29P . Just thought it was a positive statement and encourgaed those punters like some of the posters who think a liquidation is liklely to reach or exceed Soukop,ss 34p toputhteir handsin theri pocket Happy enough staying around 27.5 p but equally happy exiting at 29p and wishing everybody well onthe winddown Just think when they get down to the rump this will be difficut to shift without a 30% haircut I think my average is about 25.7p I am not greedy so 10% net for me sits OK

[gfrae] 12/12/2016 18:32

skyship as I replied on the Thal board.he could try and persuade the board of LSR to buy his shares in. Might suit all,and better for the board than having a disgruntled holder sniping at you. Somewhere around 26p perhaps ? He could then get back to what he knows best.

[skyship] 12/12/2016 17:20

gfrae - re yr 1799 - What will Soukup do now?

As you well know, there is no way a major shareholder can sell in the Market without destroying the price for the rest of the holding.

Soukup either has to:

# wait for a bigger fool to come along and offer to take him out at an acceptable level......remember he paid 34p for most of his holding

or

# wait for the game to play out and accept that his turn is going to be pretty limited - perhaps a maximum of 23% over 3yrs; more likely 10% over 18-24months when one of the past portfolio bidders returns to finish the game.

Mind you; he is unlikely to lose on his LSR investment, so for THAL holders this investment could be viewed as a good result after the game plays out!

Orinocor - I sincerely and genuinely hope you aren't a THAL holder too!

[tiltonboy] 12/12/2016 16:23

orinocor,

I picked up the 30k at 27.5p. You can hit my bid at 26.75p if you like.

[orinocor] 12/12/2016 16:18

Soukup paying 34p. I was hoping for a quick 10%-20%. However its now obvious Soukup did not really have a clue. He'll be licking his wounds for a long time with this one. The guy who sold to Soukup at 34p must have thought Santa was early this year.

[rcturner2] 12/12/2016 16:14

orinocor, what attracted you in the first place?

[tiltonboy] 12/12/2016 15:21

...definitely not one for you then orinocor!

[orinocor] 12/12/2016 15:08

We're different types of investor Skyship. I'm not interested in 10% GRY. It's a good return if you are a retiree or have a day job but if investing is your full time job then its extremely poor.

[skyship] 12/12/2016 14:56

Pleased to see some more considered posts later in the day after the first few needlessly negative!

See this from Orinocor: "Seems the NAV will start to decline as they sell more properties and cannot cover overheads. Nothing in theses results to get excited about. Dead money for the next 12 months."

Just in case any others are misled by the "dead money" bit, let me show why IMO that is a crass comment.

LSR is in liquidation mode. Accordingly one needs to evaluate on the basis of 3 inputs:

# Current sp
# Future perceived payout
# Timeline

What Orinocor has failed to realise is the importance of that last input - timeline.

Based upon a 28p share price & a putative 38p payout, the current GRY to 31/12/19 = 10.5%

Fast forward one year, then based upon the same portfolio valuations, the GRY rises to an exceedingly attractive 16.1%. Of course, what actually happens is that the price rises over the passage of time and closes in toward the final payout figure.

So, with no change in Fundamentals, one might expect the share price to rise over the year to something around the 31.25p level. For most of us that would be a good result.

[gfrae] 12/12/2016 11:59

maiken,they have said that they may pay a dividend which would be another way of distributing excess cash.A share buy back, would also be fine.
What will DS do now? Does he have the patience to hang around to hang around for another 3 or more years ? Given his views on the possible collapse of the bond market, for which see the THAL annual report,and which I share,maybe not.

[gfrae] 12/12/2016 11:44

tilton, we come to a similar conclusion either way.

[maiken] 12/12/2016 11:32

should some [not all]of the disposal proceeds be used for share buybacks? Using cash-flow to pay down borrowings will help de-risk but share buybacks in the market at, say, 30p would help those like gfrae and Hillofwad who want to exit and potentially enhance NAV for those happy to remain.

I appreciate funds from sale of properties held with the security pool have to used to reduce the HSBC loan.

[tiltonboy] 12/12/2016 10:36

Interesting few marks just gone through; did you take down for part of your stock hillofwad?

[tiltonboy] 12/12/2016 10:35

gfrae,

Recurring profit will likely fall, as fewer assets produce less income. Against that, interest payments will also fall, but expenses will likely rise as they market and process the sales.

My hope is that in the year to September 17 they have a modest, positive cash-flow, and that assets are sold broadly in line with their holding values. This should support an NAV of around 43p again at the year end.

2018 is more difficult to predict, but again I would hope that there is no dimunition in NAV.

Apart from the single largest asset, there is little difference in yield between the properties valued at +£101k (9.5%), and those at up to £3m (9.1%). This gives me comfort that some of the larger holdings may achieve an uplift to current values.

I'm increasingly comfortable that we will see 34p+, and I'm happy with the timeline, although would love to see it sooner.

[gfrae] 12/12/2016 10:06

Now that the interest rate swaps are gone and their interest rate is down to to 2.7% recurring profit should be running at 2 or 3 p per share p.a. even allowing for lower income due to sales.
When the small and geographically awkward are gone the rest should be relatively easy to sell in one go.
Even the pessimistic would bet on on a liquidation of at least 40p by early 2018.
Still dull.