Lxb Retail Properties Share Discussion Threads

[tabhair] 09/11/2017 09:06

Rushden Lakes Link Road site is available.

I think it's very strange that we have not had an update yet, we were promised one when phases 2+3 of Rushden went unconditional and the performance bond associated with this was received. It seems like we've had quite a lot of material information since then. We have heard from npt about numerous lettings, we should have further information about the Highways England claim, there is the link road of course, there's the revised funding arrangement for Rushden Lakes that the company hinted at.

[tabhair] 03/11/2017 09:24

hxxp://www.rushdenlakeslinkroad.co.uk/

Not working incidentally.

[flyfisher] 03/11/2017 07:34

I guess the land registry will be able to answer your question.

[tabhair] 01/11/2017 10:46

I think the company has committed to providing an update on November 6th (the point at which cash from the performance bond is received), so they may just decide to provide a "big bang" update at that point. We will find out shortly enough.

With regard to a potential distribution at that point. We can speculate a little on what we might be able to receive. We know the company currently holds £19.7M of cash, we also know that the performance bond should bump that up by £15M, giving us £34.7M. They have said that £2.5M will need to be spent on Rushden, and if the previous interim was anything to go by, we might get about £800K in rent with £3M in costs going out the door. Subbing that out those two items, we get to just under £30M. I am guessing based on the 30-35p range of guidance that was previously given by management, that the differential relates to the unknown liability to Highways England. Best case, the liability is nothing, worst case it's £8M. If we then assume that maybe £15M of cash will be held back to fund Higher Newham, Stafford Cinema and Newco company costs for two years, then we're looking at a potential distribution of between 4p and 9p. Clearly, the outstanding Highways England claim is highly material in relation to any coming distribution. Also, my assumptions ignore any other cost overruns. The last 6 months of trading have not gone well, so I could easily see another 2p knocked off here. Maybe in a nightmare scenario, there is no money to distribute?

Naturally, that analysis just focuses on the currently portion of cash on hand that can be distributed. There is of course the value of Stafford and Sutton retail developments that the company hold, as well as other smaller assets (total value of property that will not go into Newco is about £50M as of most recent interims) which are expected to be sold prior to the incorporation of Newco in February next year. That's now just 4 months away, so the clock is clearly ticking on the disposal of these assets. If we take a 20% impairment on the total (leaves £40M) and then sub out the £25M in borrowings, that leaves us with another £15M of net cash (about 9p) that could be distributed, albeit at some point later. This is juts a guess, but given that only 4 months are left to the incorporation of Newco, I am expecting that the company will announce the sale of the Stafford retail development within the next month or two. The clock is ticking.

Just as a final aside, having done the sums on best case/worst case scenario's for the year end results. I have fully braced myself for what I expect to be very nasty NAV as of year end September 2017. If the Highways England claim has merit and the assets of properties held is marked down sharply, I could see NAV of 24p. In that scenario, I think the share price is likely to take another battering, even off of the current price of 20p.

[lufc5] 30/10/2017 22:25

opti is one to consider.

[shaker44] 30/10/2017 20:24

You have to laugh at the title of this thread. Maybe it should be 'Bled by investment manager'
Enough. This fails my test of would I invest here today? If not, sell.
Knowing what I do now about Chairman,BoD and investment manager, I wouldn't touch it with a bargepole. Newco will be more of the same and maybe worse. Handwringing by the board,excuses from investment manager while collecting extortionate fees,pi's tilting at windmills.
Time to take the losses on my 81k,offset against gains for cgt, and redeploy in a well managed growing business

[loglorry1] 26/10/2017 16:50

npt it makes perfect sense. I'd be interested to know the answer. I would have thought it was either yes/no but as shaker says I'm sure we'll get some waffle back.

[shaker44] 26/10/2017 14:03

Probably to you and me but not to the wriggle.

[shaker44] 26/10/2017 14:03

Probably to you and me but not to the wriggle.

[shaker44] 26/10/2017 13:42

Good luck with that!! Chairman Wrigley aka The Wriggler has a PhD in Evasion I think

[shaker44] 26/10/2017 01:11

'Management has lost some credibility'-
Well that is possibly the understatement of the year. Competent? Trustworthy? Dyor

[tabhair] 25/10/2017 21:00

1. The 2017 interim and Chairman's letter provides the most recent guidance on distributions.

2. Yes, broadly speaking I see the distribution as you do, although there is uncertainty over both the components now. The market seems to be pricing a distribution that is dramatically less, despite management guidance. Management has lost some credibility, so some loss is understandable, but the market reaction seems to pessimistic to me.

3. Newco will contain a very valuable asset in the Living Villages at Higher Newham with planning permission for 155 houses. The average house price in that region is £300k. In residential housing development, the traditional split between the £300k would be 1/3rd cost to build, 1/3rd cost of land, and 1/3rd profit. LXB already own the land, so effectively they could net £31M (155 x £200k) from this development alone. This is on top of the Stafford cinema/restaurant development and a few other minor developments that are also likely to be included in Newco. You are correct though, there will need to be more disclosure from the Board, I think we should get more information when we get the annual report next month.

[alan00] 24/10/2017 20:33

Thanks tabhair, much appreciated.

I have a few comments / follow up questions if that's okay:

1. Is this documented in an RNS or other company document? The latest I could find, seemed to indicate there may be options to choose from.

2. Thanks - I see that is mentioned in the 31/3/17 interim report, although think I read it slightly differently: £25m equity, therefore calculating assets £31m (100%), debt £6m (20%).

So if I understand correctly, if NAV is 32.5p, we could be looking at:
£30m / 17.6p cash and near cash
£25m / 14.9p NewCo shares

Is that how you see it?

In this scenario, clearly the value of NewCo is key, I hadn't appreciated that too much previously. Although if they do manage that cash / near cash distribution, the current Offer price isn't too much above it.

Is there really no prospectus / detailed documentation on NewCo? Seems rather close to the potential launch of the company, and would have thought investors would want to know the plan.

[tabhair] 24/10/2017 17:43

to answer your points, Alan.

1. Distribution of cash, near cash and shares in Newco will be done on a proportional basis to your shareholding. The cash and shares in Newco should be straight forward. The near cash component is less certain. In the past with a different company, I have received a debenture and stock in exchange for my shares when it was taken over. This sort of thing is rare but it does happen from time to time and most brokers should be able to handle it.
2. Newco is expected to start with equity of £25M. LXB intend to lever up slightly by supplementing this with a £5M loan to provide additional working capital.
3. The Living Villages project at Truro is definitely the most significant asset transferring to Newco, although the cinema/restaurants development at Stafford is also significant. There might be other small assets that go in as well, we will just have to wait and see will anything else go into it.

Chairman's letter is here - hxxp://www.lxbretailproperties.com/_news/notice_of_extraordinary_general_meeting_-21_september_2017-.pdf

[alan00] 24/10/2017 16:19

Hi,

I'm trying to get up to speed on the situation here, and wondered if I could ask a few questions. Any answers gratefully received.

Details regarding scheme of arrangement & NewCo:
- I've found minimal details on the RNS for y/e results to 30/09/16, suggesting shareholders will be able to receive either cash & loan note, or shares in NewCo, or potentially a combination of the two. Apart from a further mention at the interim results 31/03/17, I'm struggling to find many details as to how this will work.
- Is there any information on the likely value of assets / liabilities which will be transferred to NewCo? I think this is also relevant in terms of working out how much may be received as a loan note under the cash & loan note option. Is it expected to be a very tiny listed company, or will it seek additional financing to bolster assets, as currently it doesn't sound like much is lined up to be transferred.
- I can see the Living Village at Higher Newham was lined up to go to the NewCo.
- Any further information on the scheme would be helpful, as so far I haven't found much detail.

Where can I access the Chairman's statement mentioned in the 21/09/17 RNS? Appreciate it's meant to be on their website, but I'm struggling to find, if anyone has a link.

Anyone have a view on how much the Rushden Lakes highway work would have cost in total (originally)? Just trying to understand the scope of potential over-runs. The above suggestion that most (or all) of the variable part of NAV guidance could relate to the highway cost over-run, would suggest the extra amount could be up to £8.4m (5p per share).

Thanks in advance.