Peel Hotels Share Discussion Threads

[topvest] 03/6/2016 13:02

Thanks - very interesting. Patience needed by the sound of things. Sounds like there is a pal, but whether it will come to fruition is anyones guess.

[cockerhoop] 03/6/2016 12:49

Seems clear what you have to do David :-)..........for the good of Peterborough!

[deswalker] 03/6/2016 12:22

David,

Re Nottingham, there appears to be us then a head leaseholder and then a freeholder. As things stand the head leaseholder is not willing to support our application for change of use to student accommodation but we will keep working on him. So no progress in last two years. RP actually said it would be more profitable flattened as a car park. But it is no longer loss making and is small fry in the scheme of things.

Re shareholders, two from Scotland including the 5% man, me from Yorkshire, one from Suffolk, the recently retired NED, two from London including Charles Peel, and finally the mercurial guy. That makes 8.

Peterborough had a stellar year before (maybe because of Mello) so comparators were tough last year.

Des

[deswalker] 03/6/2016 12:14

A shareholder.

Another two shareholders (both in the hotel trade and one an old friend of RP who owns about 5%) clearly had the same person in mind as each other for this Directorship and even said his initial began with R but would say no more.

Before he left the mercurial guy who had been eavesdropping on me saying to the table that I hope they sell the lot for NTAV and we can all go our separate ways, walked over to the table and made his statement towards me with a smile. Once he had gone it was these other two shareholders who then said words to the effect of "it appears he is aware or what we are aware of, if it comes off".

Make what you will of all this.

The impression I get is that a Reverse Takeover by a larger company wanting a listing is much more likely than a pure cash sale and this Directorship might be the start of such a deal. Under such a scenario we could be looking at much more than 170p in the medium term but we do not get a clean cash exit that many such as me would like. This is all speculation, but I just get the feeling that the Peels want to leverage their contacts and shoot for bigger fish rather than a simple cash sale even at double the current price !!

RP's brother was there and I had a few words with him to the effect of, "any chance of doing another Peel Hunt with this one". I seem to recall that he and his partners sold that business to KBC for £200m. Needless to say he had a driver there to take him back to London whereas RP drove himself in a very nice Jag :o)

[davidosh] 03/6/2016 12:07

Thanks Des.

I am pleased Nottingham is no longer making a loss but with a thriving student population I do think it may have been better to convert to a student accommodation block and sell on to a big institutional investor or property fund as they are paying good money for long term student spaces.

Maybe Peterborough suffered with no Mello event there in the last year lol

How many shareholders were there btw ?

[cockerhoop] 03/6/2016 11:14

Cheers Des,

Was the 'Mercurial Guy' from the company or a shareholder?

[deswalker] 03/6/2016 10:47

I was at the AGM on Wednesday.

No issues. Bournemouth, Leeds and Carlisle had a great year, the latter benefitting from the floods. Peterborough, Bradford and Newcastle were slightly softer than the year before. Dunfermline is mildly profitable and has a great manager in charge, and Nottingham is about breakeven which is much better than a few years ago. Not sure about Wallingford.

It sounds like Bournemouth was a very good buy.

Trading in the current years remains solid and our net-debt is now below £10m.

Some new non-execs will hopefully be added in the coming months and there seemed to be some feeling in the room that this could well be a catalyst for both a rerating of the shares and also the possibility of a corporate action. They seem to be targeting some particular individual who wasn't named but some shareholders clearly thought they knew who it was. One mercurial guy made noises as if to say "the shares will rise this year, you sell out at 150p if that's all you want but let the rest of us stay involved for the long term". All very cryptic .... but I'm just reporting what was said.

Within the current portfolio we would still like to redevelop Nottingham in due course but that isn't going anywhere in the short term. Mr Peel said that the only possible purchase would be the freehold of Carlisle but the freeholder wants too much money.

Apart from that we enjoyed a nice lunch and heated discussion about the upcoming Referendum.

Hopefully next year's AGM will be oop North as Wallingford was a six hour round trip for me. But it was certainly worth the effort.

Des

[bobthetrader] 30/4/2016 20:55

Good results again! Very consistent at the moment.

Could this be the year they put the business up for sale? I think many shareholders would accept 150p, even though it's probably worth way more. Although the larger investor may be more reluctant to let go at that level. We may also hear talk of an interested party this calendar year, all guess work of course, but time will tell.

[topvest] 30/4/2016 08:10

Yes, I do think there is some value here. The current directors are quite aged to be running such a demanding business. I've said a couple of times that I would expect them to try and do a deal whilst the going is good and I'm sure they are aware that the business is cyclical and weathering another recession wouldn't be great fun at their respective ages. So, I think some deal may ultimately be done or the hotels possibly sold. Difficult for them though as they are fantastic stewards for the business; real old school Buffet style owners and so they won't want to sell their legacy to some greedy buyer with the wrong ethics.
I agree with the 125p target. I'm not inclined to sell at £1 but would be at £1.25.

[lanzarote666] 30/4/2016 07:05

Based by what I can see on the market, hotels are selling for between £60,000 and £70,000 per room. I accept that there will be geographical differences across the UK.

Peel has 730 rooms suggesting a value of between £44m and £51m which if accurate reflects well compared to the balance sheet valuation of £35m.

This remains one of my core stable holdings backed by the property values. Steady up trend with a fair dividend in the process and no obvious downside whilst interest rates remain low.

I feel pretty confident that we will see 125p in the next twelve months at some point, but whether Mr Parrish gets the opportunity to take up his ten year option to buy shares at 163p by May 2017 depends upon the arrival of a game changing event. NAI.

[topvest] 29/4/2016 13:05

Yes, results quite strong after a poor H1. Dividend OK and in line. Sensible to keep paying down debt strongly as well IMO. Properties are at cost, but whether that is much below the market value is anyone's guess given provincial hotels are hardly a cracking investment.

[arthur_lame_stocks] 29/4/2016 12:27

Any comments on today's results? Pretty good I thought, it looks like the minimum wage increase is not hitting them yet, if it does at all as I feared.

Does anyone know if they have ever revalued their hotels upwards or if they are in the books at cost + capital investment - depreciation. I may have asked this question before so sorry if it's already been answered.

If the properties haven't been revalued then these still look pretty good value to me and the management expect another successful year.

2p dividend is not bad either.

Arthur

[cjohn] 24/2/2016 12:08

I've held here since buying in a couple of years ago. I see no reason to sell at current prices ie at less than 2/3rds stated tangible book value.

[bobthetrader] 04/2/2016 21:33

A_L_S.....I agree.

However I would guess they have already made plans as a result. This has been clear for sometime now. Also all hotels across the UK will have the same wage structure, (ie mainly minimum wage employees), and therefore the same problem over the next few years.

There is one point, which I may be wrong, that is to say, I thought this living wage was for employees over the age of 25. I would think that the majority of staff are younger than this and therefore have less of an impact, again I may well be wrong.

It's possible most hotels will increase their prices to compensate, should it be necessary. They may have increased their wages already in order to anticipate the rise. Also costs were up on the last set of results.

Anyway all will come clear in the next few months.

[topvest] 04/2/2016 21:19

It's always been a big question mark as to whether the assets (at cost) are worth significantly more if revalued. I think the answer is probably not as these are provincial hotels and who wants those! I do think the Peels will want out before the next recession as they are too old to ride another serious downturn like the one they have just been through, but that's just my view. Very pleased by the rebound though. Think these are worth about £1.50 if I had to guess!

[deswalker] 04/2/2016 21:11

Regarding the NAV, the assets are valued at Cost + Capitalised Capex - Depreciation. But over the years considerable Capex has also been expensed through the P&L which ought to constitute a further hidden upgrade to the market value of the properties which is not reflected anywhere in the accounts.

Comments regarding wage pressures are important and will require careful management.

Finally, there might possibly be the option of a change of use planning application for Nottingham into student accommodation which could also offer hidden value.

Like most I just hope that the Peels want to sell out sooner rather than later and are not seeing this investment as a way to mitigate inheritance tax.

[arthur_lame_stocks] 04/2/2016 19:10

Be interesting to know whether the properties have ever been revalued upwards as the market has risen or whether they are all in the books at cost. As far as I can see they are in the books at cost which gives some reassurance that the asset backing is sound.

One point worth considering is that the minimum wage goes up by about 7.5% this year. If you look at Peel's wage costs you will see that the average salary of their staff is about £12k a year so as you'd expect it's a low wage industry. I wouldn't be surprised to see their costs go up substantially this year and if the Torys keep their promise of a £9 national living wage by 2020 wage costs at Peel could skyrocket.

Just a thought.

Arthur

[bobthetrader] 04/2/2016 16:47

We appear to have rebounded from the drop in price, back to where we started.

Still way undervalue in my view. Looking forward to the new financial year, could be an interesting 12 months ahead, if a buyer comes along.

[bobthetrader] 26/1/2016 14:46

Pleased to see I'm not alone here, and I agree holders of this share will in time be rewarded with a fair reflection of the company assets, at the very least.

[davidosh] 26/1/2016 10:39

This is one of those stocks where you will wake up one morning and find there is an offer on the table and the company is being taken off the market to be part of a larger hotel group.

It is illiquid so weak holders worried about the market turbulence will take the share price downwards I am afraid.

[topvest] 25/1/2016 20:01

Well I'm staying put. It's unlikely and bad news has leaked to be honest. More likely we have a seller wanting to get out for their own personal reason. I suspect they are doing OK and we will get a reasonably positive update and a dividend with the final results. Value will arrive for those with patience.

[bobthetrader] 25/1/2016 16:06

Investors still selling, and we are down at approx £12 mil m.cap.

I can understand why a small number of holders would want to find a stock that is showing signs of upward momentum, but we seem to have more than a few at present.

However I don't understand why, when we have a business that is in my view worth approx 180p-200p/share, and that's without considering future profits. Also it is very possible that at any time a take-over of some description could take place.

There are so many AIM stocks with a poor balance sheet compared to this one, yet their share price keeps rising, I'm amazed. All the more reason for my post 265.

If there was a profit warning, we should of been informed via an rns by now. If the share price were stable an rns would not be necessary.

[bobthetrader] 21/1/2016 18:04

My only negative thought concerning Peel Hotels is the lack of trading up-dates between results.

We have two updates a year,(final results & interim results). It would be good if they could provide a guidance to their current progress, one between each set of results.

I'm sure the next results will be good, but we will have to wait a long time before we are given them. I'm sure a rough idea of where we are at, and any interesting news would keep us investors more content while we wait. Results 6 months apart does drag on!

Just my thoughts for a very quiet thread.

[davidosh] 05/11/2015 23:18

Nothing yet agreed but the next big Mello event is probably going to be held in a Plaza hotel.

[playful] 05/11/2015 18:37

The manager of our Midland hotel has been on the regional news tonight telling us the opening of the new Bradford shopping centre directly opposite the hotel is going to be a great boost for business.