Mountview Estates Investors - MTVW

Mountview Estates Investors - MTVW

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Mountview Estates Plc MTVW London Ordinary Share GB0006081037 ORD 5P
  Price Change Price Change % Stock Price Last Trade
300.00 2.51% 12,250.00 16:35:27
Open Price Low Price High Price Close Price Previous Close
12,300.00 12,000.00 12,300.00 12,250.00 11,950.00
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jonwig: H1 results. From what I can see turnover and profit fall are down to the sd rules introduced by GO, causing deals to be made before March 2016 rather than after. Will the autumn statement benefit MTVW at all? Possibly, as more BtL investors throw in the towel.
eggbaconandbubble: Jonwig, thank you for the link. It answers all the questions. good one. Brahms, my take on the current state on the Btl market especially in the SE is that everyone makes money except most likely the (new/recent/future)investor themselves. Over the last 20 years the landlords have done well in both income return and capital appreciation but as of late the returns have dwindled to a level that it is hardly worth the effort and capital appreciation must soon start to grind to a halt as well (SE & London anyhow)if not go in reverse! OK, loans are currently very cheap but can only and will start to rise. Rents are very toppy too. Legislation is getting worse, more onerous and therefore more punitive. Along with pensioners, BtL landlords are a sitting target for being squeezed by the Chancellor. On top of all that I wonder how many potential investors realize that on top of income tax on rental income that they will finally have to pay CGT when they sell their investment. At present, that is at an uncomfortable level (a property sale is always going to be in the higher tax band) but just imagine in years to come when there is the likelihood of a Labour govt.! And possibly under Mr Corbyn to boot. CGT could well be over 50% Now that the world and his wife are in the know and talking about BtL around the dinner table, I get the feeling that it is no longer an attractive investment. That said if as you say you have had your properties for sometime they no doubt are showing a handsome appreciation and great annual return on the initial investment. Under those circumstances maybe best to hold on rather than paying tax and then deciding what new investment to make! Especially if one has good long established tenants.
jonwig: I think it's just "stick to your knitting". they are good at buying regulated tenancies, and selling when the terms end, after refurbishing. If they didn't sell, they'd just become another BtL investor - which might be their strategy. (Of course, their existing assured tenancies probably come into that category.) I want to ask them at the AGM about future plans as assured tenancy opportunities decline. I think their plans may have to change in view of the dividend tax!
greatgiginthesky: Taken from the Sunday Times (for your interest) Raider takes aim at Grainger AN ACTIVIST investor has pounced on Grainger, the FTSE 250 landlord, and plans to push its management to squeeze more cash from its residential empire. Crystal Amber has built a stake of about 3% in Grainger, which specialises in buying regulated tenancies at a discount and selling them on at a profit when tenants die or move out. The activist fund is understood to be interested in realising £500m of future profits — known as the “reversionary surplus” — that are not yet factored into Grainger’s balance sheet. Market sources said Crystal Amber’s appearance could also flush out a takeover bid. Several suitors are believed to be circling Grainger, which is seen as vulnerable because of its sleepy market performance. Unlike those of many other property companies, its shares trade at a hefty discount to the value of its underlying assets. Its chief executive, Andrew Cunningham, a 20-year veteran of the company, is set to step down next year. The board is thought to have identified a successor, who could be unveiled in the next few weeks. Crystal Amber’s raid is the latest in a series by activist investors. Elliott Advisors, a US fund, won a messy fight against Alliance Trust in April, putting two non-executives on the board. With 4,000 properties worth £1.3bn, Grainger has one of the biggest regulated-tenancy portfolios in Britain. These tenants have the right to live in the homes at sub-market rent for life. Grainger buys the properties at an average discount of 30%, collecting rent. When it eventually sells, it collects the 30% profit, or reversionary surplus, and any house price inflation on top. Crystal Amber is thought to be planning to push Grainger to sell the surplus to an insurer or another specialist at a discount for upfront cash. Richard Bernstein, the fund’s boss, said: “We think this is a highly undervalued asset.” However, a source close to Grainger suggested it would resist the idea: “You can’t pick one part of the business and decide to unpick it — it doesn’t work like that.”
gargleblaster: Thanks jonwig, will check out chronic blog. For the interest of others, here is the more comprehensive IC update; After a relatively comprehensive interim statement, publicity shy Mountview Estates (MTVW) reverted to form with its full-year announcement which revealed virtually nothing about the landlord’s underlying performance, other than to reveal that trading remained positive over the year to March this year. There was no repeat of the revaluation on its trading properties contained within the interim figures, which showed that trading stock was worth £666m against £318m presented on the books. However, given the strength of the residential property market, it would be fair to assume that trading stock is now worth considerably more. Mountview owns a tenanted housing portfolio let on contracts signed before the rent reform laws in the 1980s. As a result, tenants cannot be moved out, and their rents are capped at sub-market rates. Significant gains on the value of the property are crystalised when the tenant dies or leaves. However, there have been no new regulated tenancies created for 27 years, so the portfolio is steadily contracting. No investment properties were bought or sold during the year. The company's reported book value rose 8 per cent to £73.80, but add on the surplus value in the trading stock revealed at the interim stage, and this rises to £163. MOUNTVIEW ESTATES (MTVW) ORD PRICE: 12,000p MARKET VALUE: £468m TOUCH: 12,001-12,300p 12-MONTH HIGH: 12,900p LOW: 7,501p DIVIDEND YIELD: 2.3% TRADING PROPERTIES: £323m PREMIUM TO NAV: 63% INVESTMENT PROP: £29.4m NET DEBT: 21% Year to 31 Mar Net asset value (p) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p) 2011 5,510 23.6 435 165 2012 5,826 22.8 448 165 2013 6,260 28.9 568 175 2014 6,810 35.4 730 200 2015 7,380 40.0 816 275 % change +8 +13 +12 +38 Ex-div: 23 Jul Payment: 24 Aug IC VIEW: Shares in Mountview were unmoved by the full-year figures but still trade on 26 per cent discount to historic adjusted net asset value. However, some of this is justified, as the shares are quite tightly held by the founding Sinclair family. For the long-term investor, there is still considerable upside potential. Buy. Last IC view: Buy, 9,250p, 28 November 2014
jonwig: gargle - an analysis on Stockopedia estimates £175/sh, but I don't think he's factored in any London inflation. You can read without registering: HTtp:// I'm an IC subscriber, so I'll pick up anything said. Their "Chronic Investor" blog was a bit scathing about MTVW a while back ... run like a private company and they don't talk to Investor's Chronicle!!
greatgiginthesky: If by "property valuation" you mean what price a property would command if marketed today free and unencumbered, then I agree that such a valuation would be a nonsense. The only sensible valuation is to take the current market value and employ a discount for the fact that the property is not free (sitting regulated tenant). Whilst the annual percentage discount applied might be the same for all properties owned, being effectively the required rate of return of the owner, the size of the discount will be affected by, inter alia, the age of the tenant. This makes each property very much like a Deep Discount Bond and here is where your comparison with Sovereign Reversions sits. Some useful information to know would be the total free market value of the trading properties that were valued and the discount rate used to determine current market value. Your input will be appreciated and such posts are useful for potential investors looking at MTVW for the first time.
jonwig: mad f - on balance, I think you're right to be cautious of others' stock suggestions. I've missed a few good ones, but also avoided some lemons. Actually, I first noticed MTVW around 1971 when I started looking at the FT share pages - it was the only share in the property sector which was quoted in £ (something like £6+7/8 or thereabouts). I had a broker, and in those days they expected to give advice and charge for it. I mentioned MTVW - he said he knew nothing about it except it was hardly ever traded and, anyway, he wasn't going to trade them for me! In those days there was no access to live news for ordinary folk and all I had was FT and Investors Chronicle. Then during the GFC and property meltdown I thought it might be a big beneficiary (low gearing tipped it for me). Patience might be paying off now!
jonwig: chri5 - tax is CT at 20% forward, not CGT, but -yes. I was told at the AGM (by one of the auditors) that the valuation would be on an "as seen" basis - ie. pretty run-down (or "sub-optimal" to be more subtle). So you'd have reversionary value on refurbishing and sale. (How much - have no clue!) As for Grainger, they are the biggest (or only) quoted company which does the same thing, and again they were mentioned informally at the AGM by one investor. I really can't comment on their appetite or abilities. The value of run-off over a period for smaller investors such as me is that dividends would be tax free but a cash sale would lead to a huge CGT liability. And no CEO appointment, despite the statement that they are looking hard. Strange.
jonwig: egg - "as is" is my understanding. But of course, property valuation is based on experience of similar properties. If, as is happening, regulated tenancies are being keenly sought by investors with development in mind, property values will be bid up. So it's inevitable that current valuations will reflect an element of potential. It will also mean that MTVW will need to pay more for a property, and margins will be tighter. Tenants are getting older and vacancies are happening more quickly now. This means MTVW's income will improve more quickly. (The eps figures for the last H1 seem to bear this out. And the steep dividend increase might reflect the fact that it's getting harder for them to spend their cash wisely.) However, because supply is limited, the income stream will dry up sooner. So MTVW needs to diversify or, effectively, go into run-off.
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