Mountview Estates Share Discussion Threads

[jpjp100] 25/7/2016 08:10

I wonder if Sinclair might take the group private?

[jonwig] 23/7/2016 06:51

greatgig - I do agree buybacks isn't their style - too much 'City-inspired financial engineering'.

I've just looked back at their results to March 2009: interesting that they saw an urgent need to reduce borrowings (wrong reason - they expected interest rates to rise, and that's where they were persuaded to take out the swap).

During the year 2009-10 they saw the opportunity to make purchases at low prices and even made record profits. the 2011-12 year was when the increased borrowings.

I think they are positioning themselves to make more purchases when the Brexit air gets clearer - they say as much in the current AR. That's where they have scope to increase debt again.

For myself, this is one of my largest holdings, so I'm not too keen to buy more at the moment. And not sell!

[greatgiginthesky] 22/7/2016 16:59

Mmmm, I think a share buyback unlikely as that would increase the percentage holding of the Concert Party and further reduce liquidity for the rest of us. Debt reduction is either because there are insufficient satisfactory properties available to buy or because management is being ultra-conservative (whenever was it not so?).
Interesting comment in the Chief Exec's report about the dividend having multiplied 26 times over the last 26 years. This seems to be the best indicator of the future.
I am contemplating adding to my holding at current levels (£100 per share).

[catsick] 16/6/2016 11:44

Results look sound, I think the shares are wobbling on brexit and general property weakness, debt is now super low, I think the best use of funds now will be shares buybacks if we see the shares below 100 , the ltv now is probably only 5pct of true nav, with debt so cheap now a still conservative 25pct would seem to make sense now

[jpjp100] 16/6/2016 08:28

In this era, it is nice to see a company run along such conservative priniciples

The prelims give CRS, which has compared MTVW with GRI in previous analysis ( more ammunition for its attack on GRI's cost base

In the prelims MTVW reports

revenue £79.765m
gross profit £53.014m

Administrative Expenses £5.148m

Profit before tax £48.388m

In the last half year results, GRI reported Profit before tax of £36.6m after administrative costs of £16.2m

Sure, it isn't comparing apples with apples, but it isn't so far off

[jonwig] 16/6/2016 07:22

FY results look very sound:



Dividend balance HY:FY was signalled at H1 stage.
Decent revaluation of investment property and a disposal.
Further fall in borrowings from £60.2m to £39.7m.

Full annual report will have lots more detail.

[greatgiginthesky] 07/6/2016 08:36

Whilst the buyer writes the cheque for SDLT, it's the seller that pays it.

[jonwig] 16/5/2016 14:16

Yes I,d agree with all that.

[catsick] 16/5/2016 10:59

I think the shares here have been soft as the sentiment seems to be turning against residential property and developers, I think mtvw are positioned well though, it is the high end market that is taking a big hit but apart from the properties in Belsize park which are all around the million pound mark and represent about 5 percent of the portfolio most of the book is much much lower value and so not so hurt by the stamp duty grab, the average property was bought for 100k and is now worth 200k with a sitting tenant and then 300k when the tenant dies/moves out I think this sector is probably pretty safe and with rates staying super low still represent a good long term real return

[tmfmayn] 18/3/2016 08:47

Jon -- all this has prompted me to revisit the annual report and the accounting treatment for MTVW's trading properties. Here is the relevant text:

"(k) Inventories – trading properties

These comprise residential properties all of which are held for resale, and are shown in the financial statements at the lower of cost and estimated net realisable value. Cost includes legal fees and commission charges incurred during acquisition together with improvement costs. Net realisable value is the net sale proceeds which the Group expects on sale of a property in its current condition with vacant possession. Where residential properties are sold tenanted, net realised value is the current market value net of associated selling costs. There were no such sales during the financial year. The analysis of the Group revenue as at 31 March 2015 is on page 36."

It is not 100% clear, but "cost includes legal fees and commission charges" suggests that the books carry the trading properties with SDLT included in their book-value cost (i.e SDLT is not charged to the P&L during the year of purchase).

Net realisable value of the trading properties is based on vacant possession, which should always be higher than cost.

So as I see it, the existing NAV will not be affected by the higher SDLT and the future NAV will simply have future purchased properties valued at cost with the higher SDLT included.

As such, the effect of paying higher SDLT will be felt -- in cash terms -- from when the higher bands are introduced...

...but in terms of MTVW's accounting profits, will only have an effect in the P&L when the property is sold in the years ahead (the effect will be a lower gross margin to reflect the higher original SDLT cost).

Agreed, I don't see the higher SDLT as having a more long-term effect. A lot of other events will happen between the time MTVW starts paying the higher SDLT and when it starts selling those same properties.

[jonwig] 17/3/2016 18:00

Mayn - the stated NAV will be dragged by new properties being valued at about 3% below cost, which will be part of the PL account. A very small part, of course, in the scheme of things.
I think you're right that MTVW will have more muscle to buy at depressed prices, if some BtL individuals decide it's not worth being in the market.

[tmfmayn] 17/3/2016 08:34

I think MTVW will have to pay the extra SDLT.

From that document's Q&A at the end:

"Q24: Will a company be subject to the higher rates of SDLT?

A24: A company purchasing a residential property will be subject to the higher rate of SDLT, even if the property will be its only residential property. There are no special exemptions from the higher rates of SDLT for companies. However, the higher rate of SDLT will not apply in circumstances where the company is subject to the 15% rate of SDLT."

The financial effect of the extra SDLT won't be felt in MTVW's profits until the properties are sold in the years ahead. In the meantime, perhaps there will be less competition buying regulated tenancies and so prices may become more favourable for buyers.

And I see at least our MTVW shareholding won't count in deciding whether we are buying a second home:

"Q26: I have a share in a limited company which owns a property for rental to tenants. I am purchasing another property which I will own direct. I do not own any other residential property. Will I have to pay the higher rates apply?

A26: No, shareholdings in a company that owns residential property will not be counted when determining if an individual is purchasing an additional residential property, although the company may be liable to the higher rates if it purchases residential property. As this is your first purchase of a residential property the higher rates will not apply."

[jonwig] 16/3/2016 20:41

dan -interesting question.

It might ... the relevant document is here; maybe someone can interpret it more precisely:



If it did, gross profit could be reduced, but the cost could be partially offset against corporation tax, and CT will reduce to 17% in 2020 I understand.

[dandanactionman] 16/3/2016 20:03

Question if I mayI believe that in the budget the chancellor has said that extra stamp duty for 2nd properties will now apply to corporates as well.If this is the case will it effect mounts view?

[greatgiginthesky] 16/3/2016 08:23

My thanks also. The suggestion of a spin-off of the regulated tenancies division is a statement that the division is undervalued by the market now. By implication the same will hold true for MTVW.

[jonwig] 15/3/2016 19:20

Thanks for that, Mayn - I wouldn't have seen it.

I was talking to a couple of people at the MTVW AGM who knew the Grainger business well, and said they were in a mess, mainly because they were stuck with the German properties. A year earlier, the idea was floated that Grainger could buy MTVW.

[tmfmayn] 15/3/2016 16:31

Mention of Mountview today within Crystal Amber's half-year statement:



"The Fund welcomes and supports Grainger's actions to streamline the business and cut costs; however we remain concerned both with the pace and scope of cost cutting. We note that last year Grainger, with a £900 million market capitalisation, incurred administrative costs of £42 million. Mountview Estates, a company in the same sector with a market capitalisation of £450 million, incurred administrative costs of £5 million. Neither is the Fund convinced of the merits of investing £850 million into the private rental sector rather than reducing debt, particularly at the time of global financial uncertainty for asset classes.

We continue to believe that further significant value can be realised through either a spin-off of the regulated tenancies division or a sale of Grainger."


Crystal is an activist fund and does not seem entirely happy with progress at Grainger. Interesting that Crystal wants Grainger to spin-off its regulated properties -- such a transaction might provide a good value benchmark for assessing Mountview.

[jonwig] 26/2/2016 09:00

"Disclosure of Home Member State".

Needless to say, this comes from the EU as part of its "Transparency Directive" and of course, the FCA has to implement it.

[jonwig] 02/2/2016 06:46

I gather that London properties in the upper price ranges are softening (Brexit fears, poor Arabs, ...) though that shouldn't affect MTVW's properties. Might prospective buyers be hit by new BtL stamp duty rules, though?

Does the chart say anything about support at 11,200p?

[eggbaconandbubble] 01/2/2016 15:07

Hello peeps, everybodies!

Seems that the interest rate rise is now being put back to sometime never, well, 2017 from what I can gather so hopefully this year will be at least the last hurrah for London property and MTVW share price going up to....?

Wishful thinking?

[jonwig] 02/12/2015 15:54

LOL - gotcha!

OK, 18,000p = £180. (Edited.) I'm not at all used to talking in big numbers, you understand.

Sorry.

[eggbaconandbubble] 02/12/2015 15:49

180,000p!!!!!

Wishful thinking!

[catsick] 02/12/2015 15:49

Yes those are interesting accounts, especially the info that the properties they sold for 33 million had a book value of 11 million and had been revalued last year at 24 million in the exercise that implied a true nav of 160 it really shows that these are stunning value ....

[jonwig] 02/12/2015 15:23

Ben - thanks.

The basis of this is that they have put the H1 report on their website in a more complete form than the RNS states. Nowhere in the RNS does it say that a fully-audited report with notes would be available ... so I didn't look!

Anyway it's here:



The gist of ST's article is that the "real" NAV is nearer 18,000p because of the increase in sale values carried out in the period.

A year ago, that was attracting corporate action rumours, but the board has poured cold water on these. So there we are, a solid hold, maybe.

[ben value] 02/12/2015 13:03

Tipped in the IC today