Public Services Properties Share Discussion Threads

[loverat] 02/4/2012 16:13

MCF

Good move. Investors were lucky to get out at a decent price. Curious why it started off so high. Perhaps it was the vague way the RNS was written which made it difficult to sink in without reading it a few times.

[maxcashflow] 02/4/2012 16:06

I dumped all mine this morning first thing. I'm now suffering confirmation bias: glad to be out now I've seen the share price reaction! Seriously though, it was the yield which was keeping me here and with that gone this has turned into a different type of play. I'll sit out for now.

[scburbs] 02/4/2012 15:57

European Care & Lifestyles (UK) Ltd now has its 2010 accounts on Companies House.

Turnover was £123m (vs £122m) and EBITDAR £24.5m (vs £30m). Operating loss was £18.6m (vs £6.6m).

[loverat] 02/4/2012 15:07

Not even a dead cat bounce. This one looks screwed.

[hosede] 02/4/2012 14:53

It's all very well talking about new tenants, but the "real" tenants are the elderly people/patients in the homes paying fees (or being paid for by the govt.) I suspect they are likely to stay put. What happened to SCHE's tenants/patients when they went down?

[goliard] 02/4/2012 13:44

Hugepants, that argument doesn't work and they don't mention the share price. Maximising shareholder value might be seen as returning a few pence to shareholders and merging the rest and I expect that is the reality. That would be better than doing nothing and allowing the company to fail, but it is hardly a great result.

[woodcot] 02/4/2012 13:30

I'm out of this one, sold out with a 25% lost. No point in crying over spilt milk...I've moved half of the PSPI money into other companies this morning.

Good luck.

[kimboy2] 02/4/2012 13:28

The EC accounts value the leases they have on the homes at £90m on an existing use basis. I reckon that is about £1m each home. It would be interesting to see how Colliers calculated that.

[adam] 02/4/2012 13:14

It is their fiduciary duty to maximize shareholder value, so the statement tells you nothing.

[hugepants] 02/4/2012 13:01

Worthless? So why did they release an RNS today, with the share price at 63.5p, saying they were aiming to maximise shareholder value (that implies to me they think 64p undervalues the business).

[kenny] 02/4/2012 12:59

As I posted some months ago, the basis of valuation of the properties is not market value but current use value - a value that assumes current tenants can pay their rents in full plus any future RPI increases.

I also pointed out that other nursing nomes which were for sale, were on much higher yields, therefore, being implied confirmation that the method used by PSPI had lead to an excessive valuation of PSPI's properties.

If the company now wish to sell or merge the properties, then "real" market value will no doubt be used. Also, for any nursing home that is un-economical, the property/land then has to be sold as a big property or development land; the excessive current valuation will, in my view, be shown to be madly out of touch with true current value.

It is hard to know if after all these adjustments, there will be anything left for shareholders.

[goliard] 02/4/2012 12:48

Maybe, but if the NAV is reduced by half then there is no equity left and therefore the banks lose anyway. Not sure how this can be worth any more than the equity in the oversees assets now, but you also have to factor in the debt. I would need to run through all the numbers and to be honest, I don't have the time or inclination to do so, but it does feel like PSPI is essentially worthless now.

[davidosh] 02/4/2012 12:37

Even banks can be persuaded to relax whilst new tenants are found if it is in their long term interest to do so surely. PSPI are in a different position to SCHE as owners and with relatively low gearing should be able to negotiate their way through even if the NAV per share is ultimately reduced to half what it was.

[horndean eagle] 02/4/2012 12:33

The properties must be heavily over-rented. I would guess any new valuation would reflect that. ECH could just walk away and PSPI would be left in the situation DJAN found themselves in post SCHE collapse. If there is legal recourse it would take a while to resolve and time is one thing PSPI don't have with debt rollover coming up. ECH do hold the stronger bargaining position here.

[loverat] 02/4/2012 12:12

That may well be a very good question.

[hugepants] 02/4/2012 12:07

They drone on about challenging conditions for the UK care home sector but its been like that for several years now. On 19th December the said


"...The Directors believe that the Company's current share price of 51.5p does not adequately recognise the value of the cash flows of the underlying assets, and are therefore considering whether other owners and/or corporate and financing structures could better reflect that value..."

Whats happened since then.

[kimboy2] 02/4/2012 11:26

AISI

The overseas assets have equity of about £26m and are not likely to be affected much.

The UK assets were valued at £191m and had £85m of borrowings against them. If these assets were given a simlar discount to Daejan's when they had to find a new tennant for SCHE they would be valued at £121m.

The overall net asset value in this situation would be about £60m.

[joe say] 02/4/2012 11:25

Quite right Nigel - and effectively a statement of one of the duties the Companies Act puts on directors

[adam] 02/4/2012 10:53

Yes, terrible update and surprising in the context of the strong bid up to the announcement. I was also surprised at strong bid after the announcement so took the opportunity to get out at a small loss. I think Elliot have sacked RP&C and will make the running on this now and it is anybody's guess as to what the equity value is. I suspect it will happen after a de-listing.

[loverat] 02/4/2012 10:50

Amazing share price action. People even buying when this opened and now dumping their shares at 35p.

[envirovision] 02/4/2012 10:49

from a value point of view, one would hope they could take their time to sell the non core stuff at a fair price rather than a knock down or fire sale.

[stemis] 02/4/2012 10:44

I don't see PSPI being wiped out. Elliot own 46% and are unlikely to just give their equity away. The key thing about the 'merger' (more likely reverse takeover) is the relative valuations of the businesses. Whatever profit ECH are currently making will be enhanced by the avoided rentals which current comprise the PSPI P&L. The share price is currently being driven by uncertainty. PI's are just dumping their stock at any price and there are no buyers. It's got nothing to do with valuation.

[hosede] 02/4/2012 10:21

unfortunately I have to agree with that Scburbs, but the people in the care homes still have to be cared for, so there has to be an ongoing business. So I also agree it's not a wipe out situation. should have sold first thing, but at under 40p I'm inclined to hang on and await developments. There cannot be a merger without shareholders having a vote! Maybe I'm being naive, but in any merger shouldn't PSPI have the "upper hand"? : they hold the assets - what do ECH have to offer

[scburbs] 02/4/2012 10:09

Well done, SteMiS! I think you have been very lucky there! I was amazed it opened in the 60's, although I didn't quite expect it to go down to 35p.

Unfortunately, there is too much uncertainty to buy at any price as there is no secure yield and no certainty on the impact of any merger.

What seems almost certain is that it is not going to remain a high yield property play.