Totally consistent with the long term strategy and in line with a comment Jones made in a recent interview about the value in listed companies. |
I'm going to funnel my SHED in to buying extra here, so hopefully LMP sells off a bit. |
Not far off NAV but I guess they will save on o/h's so should be earnings accretive but they have a lot to digest now. Also clearly reckon that Origina Mans nonsense wont contaminate our economy. |
Thanks for that - the RNS isn't showing on advfn!!! |
Details of possible offer for SHED |
Seems LMP has made a preliminary offer for Urban Logistics REIT (SHED), no terms given yet on brief SHED RNS. |
I wrote my last pst without looking at the company website, but my interest was piqued and i had a little delve. The company forecast 12p dividend for year ended March 25 back in the interims. So at 6% sort-of-index-linked yield the fair value is 200p, at 5.5% it is 218p. Plenty of info in the last presentation including the weighted average unexpired lease length of 18 years. |
Thank you! |
I appreciate the days of institutional RPI plus leases are behind us but the Secure Income portfolio actually contained a decent chunk of RPI plus leases with a very long leases plus Jones has long focussed on premium income growth backed by strong covenants. So i think using ILG yields as a sighter is valid I think that estimated yield of 5% you used is fair, and whatever the LMP strategy actually is, the fact is that the sector as a whole runs off 5 year swap rates. The conclusion is that we have as strong and secure a long term income stream as you will find in the sector trading on the cheap side of fair value. |
 @eightwonder - Yes, that's right. He's always repeating that quip about compound interest being the. . .well, you know! But it's the income growth that'll pull the NAV up after it. However, you're right I should have said investors are paying for strong income growth and the belief that the underlying assets are good quality assets.
As for assessing against ILG yields here goes: First, we need the Equivalent Yield on the assets (not the dividend yield on the shares).
Attempted worked example: The Equivalent Yield (only published twice a year) at the interims 30.9.24 was 6.4% overall. I can see the real yield on a 10yr ILG from YieldGimp (hxxps://www.yieldgimp.com/index-linked-gilt-yields) the 2035 ILG today has a real yield of 1.39%, call it 1.4%.That gives a yield spread of 5% for the LMP assets at 39.9.24 when the share price was 204p. The H1 results were issued on 26.11.24 when the share price was 190p. Today it is 179p which would imply a yield spread approx. 10% higher, i.e. 5.5%.
Pre the GFC commercial property traded at a ILG premium to 10yr ILG real yields typically between 4% to 6%.That suggests LMP at 179p is fairly attractively priced assuming the days of ZIRP* are firmly behind us. A different conclusion to those who compare the share price to the NAV.
*Between the GFC 2007/08 and the pandemic in 2020 the yield spread range was 6%-8%. An era of ZIRP and investors still scarred from GF.
But none of this allows for any canny acquisitions that are likely to come along.
What about the market? CEO Andre Jones says sentiment in CRE is driven by the outlook for 5yr swap rates (info is available on BOE website stats section) and 10 year gilts (not ILG). His view is that normal liquidity won't return to the CRE market until five year swap rates fall closer to 300bps to derive an all in cost of debt of c.5%, a level that allows most debt-led real estate transactions to work. In the meantime the greatest liquidity is in the smaller lot sizes - and that's what we've seen with LMP so far this year.
How would you go about estimating the value in LMP shares w.r.t. ILG yields? |
CEO is more about secure and rising income than he is about NAV growth. In a way you need to compare the yield against 10year Index Linked gilts. |
Thank you. |
My guess would be the ability of the CEO to identify and acquire attractive assets while selling the unwanted parts at NAV. A consolidator surrounded by lots of smaller assets trading at really deep discounts*. CEO's strong focus on growing the income compared to other diversified players which are too exposed to offices - e.g. LAND. Investors are prepared to pay up for this - they are expecting strong NAV growth.
*For example, PCTN and maybe even GRI look like possible targets - good quality assets/management with ability to grow rents yet shares are at unusually wide discounts. |
* quality of management and ability to generate longer term returns - at a guess.
Assumptions can be incorrect, needless to say. |
I don’t really get the price of this share, in terms of the relatively narrow premium of the 6% yield over long duration gilts. For anyone that would be kind enough to humour me, what key point am I missing? |
NL's large sale is suddenly looking very sharp.
You generally don't become that rich without making multiple good calls. |
Under water with ITM 'MWT and PEN so bit good this. |
IndeedHave to say; the orange man's been good for my broker account |
Highcroft was run and controlled by a savvy bunch of property pros and I suspect LMP wasn't the first to come knocking. I feel reassured that they chose to hand over the reins to this outfit. The bonus for LMP is that Highcroft have a new asset just come on stream, a DFD depot, at Roche in Cornwall. Instead of costing money in development this is now occupied and producing decent revenue which should impact noticeably on current year profits. |
nice, I suspect this is an LXI minnow repeat. 41% controlled by on person / family / company and so how from their side a slam dunk to widen out the portfolio and add liquidity to their holdings. Happy holder of LMP; would love to see this sort of deal have an extra zero on it the end to keep building their market cap and economies of scale. |
i was an existing LXI holder when we merged with LMP, in the same situation as you (carrying a small loss). I had the same hopes as you, but this has yet to materialise, I'm hoping this deal is the rocket fuel needed to give this share the lift it warrants! |
WsM812, I will be showing a marginal loss but, by taking the LMP paper, I hope to move back into profit as I see the price has come down from around 280P. |
Kudos again to LMP management |
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