Picton Property Income Ld Share Discussion Threads

[flashheart] 17/10/2012 06:42

Thanks for that tournesol. An interesting and reassuring last para of your post and one which is very important in investing decisions. I am already a holder here btw.

[tournesol] 17/10/2012 00:14

I incline to the view that much of the recent share price weakness has been caused by market uncertainty about refinancing.

Now that those uncertainties have been dispelled, it seems to me likely that the share price will achieve at least a modest recovery.

I bought in today on a fairly small scale

Should add that I used to work with Nick Thompson many years ago and found him very impressive - I do like to invest in companies whose CEO is both honest and highly competent and this is one such

T

[colonel a] 15/10/2012 11:51

redsonning,
don't particularly disagree with any of the above but do suspect that the price weakness is largely due to the people {the market} being uncomfortable with the uncertainty.
And I agree that pretty much whatever level they set the dividend at the share price will rise - although if they hang about it may be rising from below the current level.
But I've just bought some more.

[redsonning] 15/10/2012 11:33

Whilst I think all the comments made are understandable, I tend to take a slightly different stance here. Picton has recently raised (including the zeros) around £230m of funding from a market which cannot generally be described as easy. And this funding has been raised at quite attractive rates, putting the company into a very well financed position for many years ahead, so clearly there are hard-nosed financiers who are satisfied with the soundness of Picton. This funding position now places it in a very good situation when compared with the main peer group property stocks.

The discount to NAV on which the shares trade, around 33%, is very large compared to the peer group. This cannot be entirely attributed to dividend concerns. For one thing the discount has been high for a long time (even when Picton was reporting a covered dividend). And secondly when comparing with the likes of IRP it does not take much analysis to see that the IRP dividend is probably going to be unsustainable too under the present financial structure. And yet IRP presently trades on a discount of just 10%. It's true that IRP has various more favourable factors, so that partly explains the difference. However the huge difference (in my opinion) is generated by the market's overall judgement of the overall sustainability of each company's ongoing mix of financial structure, gearing, management, dividend, and potential for growth in both dividends and NAV etc etc. There is no simple formula for determining where the net discount should be and so it fluctuates as the market gradually takes in the changing factors. The market for example has already taken in the fact that SREI is now improved following the change of manager and is continuing to move to a more favourable position as that manager gradually shifts the portfolio. On the other hand it is arguable that the IRP position (in terms of discount, not in terms of the company's actual financial position) is vulnerable to further widening of the present discount as the market begins to sense the dividend pressure there. On the other hand there is nothing much new to be known about Picton on that front. The dividend is, by many peer comparisons, already well covered. The decision on whether or not to reduce the dividend is largely a matter of choice for the Board about the mix between simply paying out cash or leaving a greater potential for future growth. Given the range in which they are likely to be considering, I think it unlikely that the dividend choice will now make any real impact on the level of price discount to NAV. Indeed there is even an argument that paying out a little less (and therefore improving the prospects for growing future assets) will result in a re-rating of the discount which may move the price upwards. For example, another well-funded company with broadly similar gearing and a well protected dividend is SLI. This trades at around asset value. The discount difference between this and Picton is so huge as to be pretty much unexplainable.

All this leads me to conclude that Picton is likely to be in for a positive re-rating as the market gradually takes in the improved and improving position of Picton, and this will eventually happen if the dividend remains unchanged or even if it is reduced somewhat. Either way Picton is a well financed company with a decent management and the market will gradually price that into the shares.

Of course all of the above is nothing other than my own thoughts on this matter, and not in any way intended to influence anyone else. Everyone needs to do their own research and come to their own conclusions about each situation.

redsonning

[speedsgh] 12/10/2012 16:55

Steady march down of the share price here in anticipation of the widely expected re-basing of the div. Rightly or wrongly I've decided to stay put for the long term - too late to sell now as my average is somewhat above the current level :o(

Assuming new full yr div of 3p, i reckon the price should settle c33p. The journey for the share price back up will be a long one imo seeing as it will be partially linked to them being able to raise the div again in the future.

[sleepy] 10/10/2012 16:41

Milord,
Each to his own I guess.
I don't normally attach any value to the unearned portion of dividends. I view the cost of the ZDPs as a charge against income.
A more conservative valuation of the properties here might be 10% lower which would knock the NAV back to c 43p
I find it hard to see where growth will come from in the short term - currently as most of their leases approach their end or breaks the properties are likely to decline in value.
Would see a recovery in the share price to the low 40s as an opportunity to sell
All IMHO
Sleepy

[lord gnome] 10/10/2012 12:13

Given that the ZDPs won't consume any cash for a few years, I don't see that as an obstacle, Sleepy.
I will wait until the dividend review before committing, but anything near a 9% yield, with quarterly dividends covered by earnings, plus a good discount to NAV and I will be in (I don't ask for much, do I). I have some pref shares to sell and I see these as a good surrogate replacement with added growth potential.

[sleepy] 10/10/2012 11:13

Would a 3p dividend be covered? After providing for the interest on the zdps?

[sleepy] 10/10/2012 11:13

speedsgh - SREI dividend not covered whereas 3p div from Picton presumably would be. I think you should make allowance for this in your calculation.

[speedsgh] 10/10/2012 10:41

Assuming there is a cut in the dividend to 3p announced in due course, where do people feel the share price will settle?

SREI is currently yielding 9% based on mid-price of 39.25p. A similar read across here based on a re-based annual div of 3p would indicate a price of c33p.

[tiltonboy] 10/10/2012 10:15

Hoping they will have a bit of a fall on the potential dividend cut, and will hope to pick them up below 35p.

[badtime] 10/10/2012 09:47

Tilts...interested in the ords?

[skyship] 10/10/2012 07:57

Agreed; and that may well satisfy FP's requirements in 159 above...

[tiltonboy] 10/10/2012 07:25

I expect the dividend to be cut to 3p per annum.

[flying pig] 10/10/2012 07:11

Looks a fair result to me. Lower funding cost and extended maturity.

Now for a progressive dividend policy and active asset management to make this a high yielding gently growing asset value stock for my pension pot.

[cwa1] 10/10/2012 07:06

Results of rollover offer and placing:-

[danny500] 01/10/2012 19:28

ok thanks hezza. im looking to buy a few more of these but not untill the review is known, possibly well find out with the next IMS later this month.

[hezza123] 01/10/2012 17:14

danny500: The meeting was mainly focused on the latest ZDP issue. The dividend for the ords is currently 'under review'.

[badtime] 29/9/2012 21:59

pffft...one shot one goal! lol
i thought u lot were noisy...only started cheering in last minute!...nice back six including the 2 assistants..extra one in midfield ..the ref! i'm not bitter though
:)

PS still top of the league.....
PPS info re yur meet?

[tiltonboy] 29/9/2012 20:49

badtime,

lol

[danny500] 28/9/2012 15:44

hezza, would like to know what we can expect re the new rate of divi and when are we likely to hear.

[hezza123] 28/9/2012 15:19

I may be seeing them on Monday too, so if there are any other questions that arise after tiltonboy's meeting, just post them up here.

[baner] 20/9/2012 16:30

at 36p implicit property yield is 9%+. assuming the refinance the ZDP as planned there is no need to skip the divi - as the market seems to believe. run rate property income enough to support management fees, cash interest and amortization - leaving more than 4p as free cash flow to shareholders - so a 3p dividend would be very safe, offering 8%+ as a well covered yield. trading at a 35% discount to TNAV this is clearly a buying opportunity triggered by the uncertainties re the ZDP refinancing. the interest cost on these really is of little importance - they did a heck of a good job bringing the cost on the larger loans down!

[bolador] 20/9/2012 09:15

Institutional switching from ordinary to coming issue of ZDP perhaps ?