Mckay Securities Share Discussion Threads

[scburbs] 20/5/2013 18:40

Housemartin2,

The banks have a January 2016 break on the swaps. Given the swaps are very long dated then if interest rates have not moved up the liability will be close to the current £42m (85p per share!). They really should be doing something about this - it is the single factor which stops me buying MCKS.

The break is described as a counterpary bank credit break - I am not sure whether there are any conditions required for the bank to exercise the break (e.g. if there has to be an increase in credit risk for the bank to exercise) or if they are free to exercise as they see fit. If there are conditions they should say.

Until it is resolved (or interest rates have normalised) the EPRA NAV should be taken with a pinch of salt. At the basic NAV of 150p they do not look like a compelling investment.

[housemartin2] 20/5/2013 18:02

Can't immediatly find it but don't the swaps expire sometime ? The point being that it is not entirely in MCKS hands.
I do not understand how swaps work in practice but I felt that the further away the swaps expire the better chance there was for interest rates to rise and the loss on the swaps therefore diminishing ? Am I on the right track here ??
The notes to the interim statement appeared to imply that any loss crystalised on the termination of the swap was 'covered' by other financial tools. Again ??

[jonwig] 20/5/2013 12:15

FY results are on Wed 29th.

pativ - what Col A means is that the 'real' NAV is about 150p, if the swap negative valuation is included in full.
However, 230p is the 'income-generating NAV', if you like.
I'd be surprised if they ever crystallise the swaps loss.

[colonel a] 20/5/2013 12:07

If you think 230 is a real NAV take a look at the likes of SREI & PCTN where they have recently sorted out their swaps.
I hold MCKS but like many other propcos the discount has closed {or even reversed} recently.
If it goes to 180 based on current assets I will be very happy but I will sell.

[patviera] 20/5/2013 11:23

WOW just had a reread of some rns here...nav about 230p and a fantastic yield which will only improve with the recent disposals.

This should get to 180p v soon...this is my top property pick

[housemartin2] 09/5/2013 14:59

Sorry confusing ! Better read as -
The sale is only 11% of his fund's holding in MCKS. Retains over 2m shares in MCKS

[housemartin2] 09/5/2013 12:03

Only 11% of his fund's holding in MCKS. Retains over 2m shares

[jonwig] 08/5/2013 14:21

coolen - it's 250,000 shares within his pension fund. I doubt it's a significant disposal, and surely not a transfer out.

Relax!

[coolen] 08/5/2013 13:17

On the surface, Perloff appears to have become less bullish since his recent purchase at around this price -if so, any reason do you think ?

If not, is Perloff just punting in and out ?

[skyship] 08/5/2013 09:07

Perloff slightly reduces his holding:

[housemartin2] 01/5/2013 13:30

Er a bit over excited on 25th April clearly !

[housemartin2] 25/4/2013 12:56

Jonvig, yes I knew but could not get a decent picture off the site this morning so thanks for this. Well given its more than 1 floor then the footprint is less than 0.3 acres so I think that makes me even more excited about the potential value of the rest of the site.
What do you think about Office to Residential for other McKay properties ? obviously only a minority of holdings could qualify but its all in London & SE where strong pressure for more housing and a real economy going on. Change use/ flog off / buy-develop more offices / faster rent growth / faster divi growth for us. yum-yum

[jonwig] 25/4/2013 12:11

Housemartin - this is the old convent building they've just sold:



... and this shows the IBM offices:

[housemartin2] 25/4/2013 11:59

Bodes well for the rest of Pinehurst Park if 13400 sq feet ( which I think was one storey, tell me if I am wrong) is enhanced by such an amount on getting residential permission. The whole site is 2.8 acres and 13400 sq ft is c0.3 acres.
Looks like change of use was not too difficult to obtain with this Authority given the timing between acquisition and change. However its several years before the IBM lease expires and a lot can change by then (esp politicians)

On a more general footing, office to residential is currently in favour. I wonder how much of McKay's Estate could lend itself to further enhancement

[jonwig] 25/4/2013 08:15

You're right, Lord G.

That's one thing about housebuilders' balance sheets: "strategic land holdings" tend to have no residential planning permission and are valued accordingly.
When the permission (inevitably) comes, the values are raised a good whack.

[lord gnome] 25/4/2013 07:51

I think that just shows the difference between residential land values and housing land values, jonwig. My district council has just purchased land adjacent to an industrial estate for £200,000 per acre. Last year, when the developer had ambitions to get planning permission for housing on the site, their price was £1,000,000 per acre.

[jonwig] 25/4/2013 07:32

Value a building at £750,000 and sell it within a year for £1.2m.

How come? Residential use. Housebuilding in the SE must be back in boom mode.

[sleepy] 27/3/2013 18:37

Decreasingly oversupplied might be more accurate?

[jonwig] 27/3/2013 17:42

If it were so simple - getting the 10yr might have been a coup compared with 5yrs and no concession. Long leases help with the banks, though that's less of a problem here.

And, of course, 2 yrs on ten might be an improvement over the market's three yrs on ten: 'increasingly undersupplied' = 'decreasingly oversupplied' - semantically, anyway.

[lord gnome] 27/3/2013 16:54

Good spot Housemartin2. I've noticed that with some other Property companies. They announce new and extended leases and highlight the higher rent levels obtained, but the news of the extended rent free period is hidden in paragraph eight. When you do the maths and calculate just how much rent they will receive over the life of the lease it amounts to no meaningful increase at all. Who do they think they are kidding?

[housemartin2] 27/3/2013 16:26

Interesting to see that the RNS mentions Maidenhead in the same sentence as ' an increasingly undersupplied regional market' This is clearly not undersupplied enough as to not require a 2 year rent free period on a 10 year lease !!

[jonwig] 27/3/2013 14:38

Today's summary RNS shows their strengths in refurbishing second-grade SE properties and achieving lettings renewals.

The discount to nav still seems to reflect their hedging exposure, but it's related to *rising* rates so could even be disposed of at a profit next year ... or next ... or ...

[wirralowl] 28/2/2013 16:14

play of the week in shares mag today, highlights 38% discount to NAV and a prospective 5.9% dividend.

[coolen] 21/2/2013 21:04

The trouble with department store Beale is that Perloff is just after the property assets although I suspect he may have a bidder lined up for the retail, ie. viewing Beale as a potential break-up situation.

Heaven knows why he bid 36p a share, although it has given him a foot in the door and, yes, nav is twice the present share price, in theory.

MCKS looks more straightforward in that I suspect Perloff feels it is just too cheap. Having how got a stake, he may feel he has an option to offer McKay cash if they ever need finance on the cheap through an equity issue.

Chart looks interesting too, I would guess, if it nudges up just a few coppers more.

[jonwig] 21/2/2013 07:32

coolen - I hadn't come across BAE before, but I see what he's after: over 46p of NTAV per share (though that's down from 80p or more a year ago).

I presume you hold them - and good luck. Not in my line, though.