Mapeley Share Discussion Threads

[loss-leader] 25/10/2008 14:58

I have been buying on the way down from 1000 (see how I got my name?)

It is my understanding that:
- MAY holds a property portfolio which pays more rent than it takes to service its current (considerable) debt.
- When this debt comes up for re-financing the bad news is that MAYs underlying assets are worth less than last time (and in the worst case less than the debt itself) and that no-one is lending just now, the good news is that interest rates are certain to head lower and April is still 5 months away.
- I do not see the rental income at risk and MAY have a reasonable amount of cash. I presume the reason that they have not used it to try to buy back the company is that they are holding this in reserve until the re-financing situation becomes clearer.
- We have a forced seller (and no buyers ?apart from me?) so I can see the price going down until there is a sudden 'event'. Either purchase of a significant portion of the company or collapse. When it comes I bet that none of us will be quick enough to benefit from it.

Watching with interest ll

[salpara111] 25/10/2008 12:06

It would appear that there are only 2 secnarios left here.

1. The market is seriously misspricing the asset

or

2. The market is pricing a high probability of failure or a massive dilution of current equity value.

I nearly took a slice at around £10! however I have managed to sit on my hands for the last 3 months and buy precisely nothing which has proven to be one of the best decisions I have ever made.

If someone could just let me know when we get to the bottom that would be great!

[tourist07] 25/10/2008 05:39

Haven't posted for a while. GSands, take a look at my post 1066, which makes it clear that they had no room for manoeuvre whatsoever after the April refinancing.

To suggest that they are "easily servicing their debts" is delusional. I sympathise with your losses (and I have plenty of my own at the moment) and hope they are manageable .... but ask yourself whether you have fallen in love with this share.

And you might also ask yourself ...
a) can we really expect to go through this financial crisis without several property companies going bust .... ?
b) how close to the front of the queue is MAY?

I suspect the senior debt is trading below 80% in the grey market and before long you might expect to see the vulture funds move in ... which means that reason and common sense will no longer prevail.

Looks pretty much like a done deal to me.

[gsands] 24/10/2008 20:56

Nick,

Re banks winding up over leveraged companies even when they are easily servicing their debts.

Why stop with Mapeley? Why not wind up all the private borrowers with negative equity, all the businesses (small and large) with uncertain outlooks and excess debt? In fact - why not just wind up everything with any risk what so ever?

Where would that leave them?
Is this a winning strategy for the banks?

[gsands] 24/10/2008 20:53

Alitak,

Yours is the most intelligent post on this thread for a long time.


FWIW:

[gsands] 24/10/2008 20:52

"What is more is that HMRC are closing hundreds of offices managed by Mapeley around the country in a bid to reduce overheads."

Where is your evidence of this?

Do you think Mapeley's tenants can just scrawl a note on the back of a fish and ship wrapper:
'We're closing the office down. We'll drop the keys through your letter box. Ta.'

[nashwan123] 24/10/2008 20:16

Mapeley are highly leveraged and if the banks were to call in their loans the company would be sunk. They owe more than they are worth. During the past 5 years with property prices increasing this leverage has been covered but is now fully exposed. What is more is that HMRC are closing hundreds of offices managed by Mapeley around the country in a bid to reduce overheads.Granted the books still look better than the current shareprice but if you factor in their debt, cost of serving the debt and loss of bluechip rents going forward I'd be very concerned.

[alitak] 24/10/2008 20:11

I said 6 moths ago that it's hard to believe how low prices of stocks go in a bear market. I was playing with the techies in 2001-2, got fed up with the chop and put my money into DOW at $1.50, sold out when it doubled a few months later. 3 years later it went over $30 a share. Moral is buy when nobody wants the share and turn off the quote machine.

[orchestralis] 24/10/2008 16:23

GSands - 23 Oct'08 - 20:53 - 1301 of 1313


I'm buying more at this price. This is about as daft as crude oil going to $140 a barrel over the summer.

Total madness.

I told you they would go lower

[ignoble] 24/10/2008 16:14

30p bid !
The Stock Exchange should be slapping the MM's wrists. They are there to provide & maintain an orderly market !

[nickcduk] 24/10/2008 15:50

Gsands-

Why would there be a firesale, when Mapeley have excellent cash flow generated from Government grade blue chip tenants and are meeting all their loan repayments?


Thats not the point in current market environment. Banks don't want leverage on their balance sheet. They don't really care if you can continue to make payments easily enough either. They just want rid of assets off their balance sheet.

[hamsterwheel] 24/10/2008 15:40

GSands - you'll be telling me next that because leases say everyone pays quarterly in advance that will stay the norm ?

[ignoble] 24/10/2008 14:22

Not sure Abbey would need that sort of publicity in this day & age ...but

[hamsterwheel] 24/10/2008 14:16

Too small a spread of tenants is a problem.
What if Abbey ring up and say "Reduce our rents 10% or we won't pay".
What could Mapeley really do about that ?

[gsands] 24/10/2008 14:13

Why would there be a firesale, when Mapeley have excellent cash flow generated from Government grade blue chip tenants and are meeting all their loan repayments?

[not manu] 24/10/2008 12:01

> GSands

Can you remind everyone what the last stated LTV is?

Also, can you tell me what the assets will generate in a firesale to pay off the debts?

[gsands] 24/10/2008 10:53

Mapeley, the property company, fell 52¼p to 358p on fear that Fortress, the hedge fund, may have to sell down its stake. New York: Stocks slipped in mid-session as worries about the economy reversed a bounce driven by bargain-hunters. After a postlunch revival, the Dow Jones industrial average closed up 172.04 points at 8,691.25.

[gsands] 23/10/2008 21:49

Because they are cheap.

In fact - since you are obviously well able to read company reports (unlike most private investors), try this analysis:

Imagine that you had unlimted funds.
From the company accounts work out all the income. And then the debt. And then value the equity.

Add the value of the equity and the debt together and imagine that you bought the whole company, delisted it and then paid off all the debts.

What would the business look like then?

What percentage return would you be getting on your investment each year?
I think you will be amazed at how good it would be.

I'll start the ball rolling by telling you that at todays closing price, the company is being valued by the market at £106m. So that is the price you would pay to buy all the outstanding shares (if it were theoretically possible) and delist the company.

Now how much debt would need to be cleared?

[orchestralis] 23/10/2008 21:12

GSands,

I would hold on for a while, these can go lower yet. Why are you so keen to buy at this particular level?

[gsands] 23/10/2008 20:53

I'm buying more at this price. This is about as daft as crude oil going to $140 a barrel over the summer.

Total madness.

[orchestralis] 23/10/2008 19:02

Had another listen to the half year results call in which

Nick stated that
"Mapeley had £74.7m of cash on hand of which £52.9m was unrestricted. management remain confidence of its ability to continue to generate strong cashflows in the future".

Jamie also mentioned that a resolution at the recent egm approved the buy back of 15% issued share capital and that
"The board believes that the current share price reflects a substantial discount to the value of the groups assets having regard to the security of income and long term growth prospects of the business".

[strutt12] 23/10/2008 18:16

I take it the dividend is in question here? hence the drop in price.

[hamsterwheel] 23/10/2008 17:05

Debt 4 Equity.