Matrix European Real Estate Share Discussion Threads

[tim00] 23/2/2010 18:19

NAV is EUR 124 million. Just within the figures I mentioned in an earlier post of 123-130 million.

[tim00] 23/2/2010 18:13

It appears there's an enormous spread between bid and offer, no doubt reflecting MM uncertainty as to how the accounts will be received. I haven't found any problems in the accounts, they look OK to me. Nothing to affect the outlook.

[tim00] 23/2/2010 17:31

The IZD sale would appear to be neutral with respect to NAV as reported in the accounts. I'm now projecting NAV of £3.17 at end-June 2010, assuming a 1% fall in property values, the exchange rate stays at current levels and the LBG shares are acquired at £1.30 each.

[tim00] 23/2/2010 17:28

First point is that cash is substantially lower than I projected, but mostly due to an accounting trick. EUR 13 mn of cash has been deducted as part of the cash sweep on IZD, which is more than reported hitherto. This cash has been added back into the line for property held for sale (ie IZD). The cash will effectively be returned once IZD is sold, returning cash back towards my estimated levels. There are no problems that I can see in the accounts re rental income etc, there are just several areas where assets are slightly below expectations. An example is that goodwill has been written down slightly more than expected (goodwill reflects the tax advantages from holding properties within SPVs, I imagine falling asset values has reduced these tax gains - not an item to worry about).

[karldinnel] 23/2/2010 16:48

thanks for that. I'd also appreciate some calculations from Tim that factor in the IZD sale...

[tim00] 23/2/2010 16:46

It will take some time to digest the annual report, I'll report back with my view later. The NAV is slightly lower than I had estimated, but not by a lot. I need to go through the report in detail to see what's going on.

[geng] 23/2/2010 16:46

Well from the horses mouth Nav at Dec 31 2009 was £2.93 per share !

At £1.17 we're at not even valued at 40% or Nav - Even 50% of Nav would be £1.46

It appears there is no catch - so it's free money !!

[karldinnel] 23/2/2010 16:39

Sounds like a done deal to me:

"To that end the Board is pleased to advise that the IZD Tower
in Vienna is under offer and the sale, if successful, is
expected to release in excess of €60 million of cash (as
discussed in the Manager's Report). It is intended that at
least €28.7m of the proceeds (as required by the LBG
refinancing) will be utilised to degear the LBG portfolio
(split equally between the senior and mezzanine tranches)
which would increase LTV headroom from 9% to 14%
based on December 2009 values."

[karldinnel] 23/2/2010 16:34

Anyone got any comments on the annual report? They seems slightly positive about the outlook for the market...

[tim00] 23/2/2010 11:26

The buy-back of the LBG shares is a done-deal as far as I'm concerned. It just depends what price LBG want before they sell.

[karldinnel] 23/2/2010 10:29

Good point phil.

[phil1969] 23/2/2010 10:24

Share buy-back. With market cap as low as it is, spending £10m-£15m on a buyback would be the best of both worlds, far better than giving away cash by way of a special divi.

Depends how many shares the directors hold and how skint they are, also LBG still hold 3.8m shares as far as I can tell.

Then when a divi can be sensibly reinstated you could be looking at 20% more for your holding.

[karldinnel] 23/2/2010 10:12

Good to see that there are still quite a few buys today. I'm glad that others are now recognising what a bargain MERE is with its huge discount to NAV. And so nice of Mr Market to keep the share price low for another day...

[tim00] 23/2/2010 09:06

No doubt there are silent thread readers, I am myself on many threads. Any general views on what MERE should do with any surplus cash?

[sand dollar] 23/2/2010 08:48

How times change, a few months ago we were concerned that they might breach their banking covenants, now we are wondering what to do with the surplus cash, happy times. Being a long term investor and really looking for yield, I would be happy if they are able to bottom feed and snap up some bargains.

[karldinnel] 23/2/2010 08:28

I wouldn't be happy if I invested money in a company only to be given it back, but I would be very happy to take money out of a company that other investors had put in.

One of my chief reasons, initially, for getting involved here was because cash on the balance sheet amounted to more than 100p per share when the shares were only 50-60p each!!!

[tim00] 23/2/2010 08:17

Special dividends are not a good idea in my view. Why invest money in a company just to be given it back? Investments that secure the future dividend stream at a high level would be more sensible, especially for long term investors Karl! I wonder what the manager has been doing behind the scenes? Fascinating to find out the company's plans over the next couple of months.

[karldinnel] 23/2/2010 07:53

I understand that buying cheap properties now in good locations makes sense, but personally I would prefer to see a special dividend. Surely that would be a good short-term way of drumming up interest in the shares...

[tim00] 23/2/2010 06:49

MERE had previously announced that part of the LBG refinancing required it to repay EUR 29 mn. I had assumed the RNS yesterday was an additional repayment of 29 million, but one of your articles Karl says it's the same EUR 29 mn. So it would appear that MERE plans to become highly liquid, effectively saving all of the EUR 60 mn since the degearing could have been financed out of existing cash. If true, this suggests to me that the company might want to buy a high yielding property or two. It shouldn't need to hold that much cash.

[n1mgn] 22/2/2010 18:31

we should expect a statement this week from the company , re the audited results , the company stated they should be realeased feb 2010 , this should at least give us the cash positoin forgetting izd and the nav ( pretty much at the recent bottom of the market), if it is what i expect should easily cement todays closing price , what will be interesting will be the izd annoucement when /if it happens and what the company has decided to do with all the cash burning a hole in its pocket , lets hope the guys round there arent greedy and give us shareholders some money back/ or at least buy back a substantial amount of stock .surely with the financing all sorted till 2014 the company has got to trade at a premuim to its cash balance ,

[tim00] 22/2/2010 17:00

Interest rates are being fixed out over the length of the loan, probably around 4.5%, we'll find out the precise rate when the results are published. But yes, finance is cheap relative to rental yields, which is why Benko is chuffed with IZD.

[phil1969] 22/2/2010 16:55

Putting NAV to one side, I haven't gone too far back in the posts but surely MERE is in a fantastic position with current interest rates on Tranch A at approx 3.5%

This must be at a huge discount to the finance previosly in place.

Interest on the loan is Eur10m p.a

Returns on MERE's top 6 properties (taken from previous top 10 but not incl Vienna) tops Eur 20m.

I know I haven't dug very deep but these figures are very encouraging,

[a75] 22/2/2010 16:46

been out today. i meant youd make a good partner Karl if i were that way inclined. let you do the research and then run away with your hard earned cash. my prediction for today is below. tomorrow id say £1.10 without hard news. will check iii out. this is definitely 1.50 within 3 weeks

A75 - 21 Feb'10 - 14:10 - 1302 of 1360 edit
be nice to know the average discount to NAV is in this exact sector. WE always compare with IERE ....which i know is a good comparison but there must be others analysts are looking at. My bet for tomorrows close with an approx 205m sale is £1.35.. with just more positive speculation £1.15

[karldinnel] 22/2/2010 16:18

If you want a good laugh. Go and visit the MERE thread on iii. People there (presumably new investors) are already getting twitchy... Don't they know that share prices rarely go up in a straight line?