Public Services Properties Share Discussion Threads

[greedfear] 01/2/2013 13:27

Easy does it.

[fenners66] 31/1/2013 10:08

Can anyone help with the dividend tax credit question please?
Completing the tax return and have discovered the consolidated tax cert has these down as overseas dividends.
So have a gross dividend but am i able to claim any dividend tax credit?
Which foreign income box do I put them in on the return?
Thanks

[greedfear] 24/1/2013 16:29

Real buying frenzy because of it.

[fangorn2] 24/1/2013 08:49

Trading Statement is out for all you followers..

[hosede] 11/1/2013 15:37

I did say I thought the exit from the US post office business was welcome

[kimboy2] 24/12/2012 10:46

What the AR said was;

There are various pledges and covenants included in the loan agreements of the Group which are regularly reviewed and tested to ensure compliance at least annually

[davidosh] 24/12/2012 08:14

Was the £11 million omission from the interim report previously flagged up correctly in the annual report each year as it seems many saw that statement as a key safety net?

[kimboy2] 23/12/2012 21:17

Yes I am afraid I am getting like the asset manager and forgetting all the covenants.

The debt on the UK property is £18.5m. So in order for the guarantee to be called on we have to assume that properties producing an operating profit for EC of around £7m would be worth less than £18.5m.

IMV more likely to be worth £47m as in valuation, but then I would think that.

[scburbs] 23/12/2012 20:50

3) There are over 11 million reasons that is no longer an accurate statement!

[stemis] 23/12/2012 19:15

The problem is how easy will it be to sell the properties at any sort of 'reasonable' price? The tenants (European Care) covenant is very poor. That's the problem with the refinancing. I'm maintaining a watching brief in case they do manage to refinance and the share price fails (because of general cynicism toward the company) to reflect the change in cirumstance.

[kimboy2] 23/12/2012 15:42

Can't quite see why PSPI need recapitalising.

I presume you don't mean the German assets which have a loan to 2019/20.

The UK assets are valued at £47.7m and are on an LTV of 38%. The loan comes up at the end of the year. IMV the probability is that it will be sold by then but I think they will be able to re-mortgage if not.

If EC went bust then I suspect the valuation will not be that far out. We know that the operating profit is about £6.5m on the UK properties. That means if an operator bought them on a 100% mortgage they would probably pay it off in 10 years.

IMV it is a good time for an operator to be accumulating properties if they have access to funding.

[kenny] 23/12/2012 11:17

"I wonder if they have considered buy backs."

Kimboy2, I think your posts continue to be somewhat distanced from the reality of the situation. Any funds arising are required to pay down debt. If this is such a bargain why has Elliott, which is a multi-billion dollar US fund, not stepped in to protect their 46% shareholding? Could it be that they have, in effect, written off the millions they have invested in PSPI and are not willing to throw good money after bad?

If a 46% shareholder who has the ability to recapitalise PSPI out of their petty cash; is not willing to invest more to try and save the millions they have already invested through market purchases of shares at over 80p and underwriting a rights issue at 70p, I think that is a strong message to other shareholders about their view of any remaining value.

[kimboy2] 23/12/2012 10:29

Well I make the present situation;


UK New Ger Total
Value 47.7 35 82.7
Debt 18.5 15.2 33.7

Val yield 7.96 8.08

Debt due Dec-13 Mar-20
Feb-14 Mar-19
P/L
Rent 3.8 2.83 6.63
Lease inc 0.8 0.8
Interest 1.2 0.62 -1.82


Op profit 3.4 2.21 4.63

It will be interesting to see what the admin costs are.

They had £2m of cash in June. They will add about £3.5m from the german sale and £1m from the USA sale. There were some remaining liabilities to Esquire but these should be payable from cash flow.

That would give them about £6.5m in cash.

I wonder if they have considered buy backs.

[scburbs] 23/12/2012 10:10

Thanks Loverat. Not holding, but will continue to follow as there may be an opportunity at some point.

SteMiS, That makes much more sense than my interpretation that you had overdosed on Christmas cheer! Nonetheless the limited reduction in tNAV is because there was not much tNAV in those assets in the first place (the loss was c.100% of the tNAV related to those assets). I agree it was sensible due to the negative cashflow and parental guarantee on the Swiss property.

Kenny, A really pertinent point there on excessive fees based on inaccurate valuations. A legal claim should be being made IMV, although I suspect that the management company will hide behind the skirts of Colliers. Is there a claim against Colliers? The courts have opened the door, although I think it may be hard to prove here (despite being obvious!).

[kenny] 23/12/2012 09:40

For strategic review; read emergency sale of properties ahead of debt expiry.

I was really surprised how many shareholders believed that it would mean that any value would be released to them. A company, that has allowed its properties to be so grossly overvalued that it almost amounts to fraud, is not likely to have its shareholders as its first concern; rather it appears the management company were more concerned to maintain their fat fees.

I still believe there is no value remaining for shareholders - as I have posted when the share price was at 60p, 50p, 40p, 30p, 20p - this company is likely to go the same way as Southern Cross because the tenant cannot afford the rent and is also a company now controlled by its bankers.

[stemis] 23/12/2012 09:14

Actually, scurbs, I was talking about the period after they did the deal with Esquire.

We all know the strategic review was a disaster and the deal with Esquire destroyed any prospect of realising a share price at the level it was at the time. You only have to look at the share price to see that.

However the US properties were hardly an attractive package and the Swiss property property was, as you describe it, a dog. There really was never much shareholder value in these. Getting rid of them allows them to focus on the areas where they can generate value for shareholders. The German refinancing is one problem sorted, now its all about the UK properties. That's going to be a much bigger task.

[loverat] 23/12/2012 07:59

A good post there scburbs. I always thought you had the most realistic viewpoint here. When they announced the strategic review I believed that there would be a perception the fall was overdone - even though I thought the US and Swiss assets were unlikely to add very much, if anything. However, sadly no such decent recovery in the share price which I better understand why it did not materialise. I guess that might continue until we see what progress they announce next.

Keep posting your thoughts. I find them highly relevant and have learned alot about this this type of business.

[scburbs] 23/12/2012 07:40

SteMiS,

Christmas, the time of goodwill to all men, women, chidren [and companies].

"They seem to be making decent progress here, reducing net debt by maybe 45% for relatively little loss of tNAV."

That must be the most generous/giving statement of the year!

I don't think a company who described itself [at the start of the strategic review] as having "Conservative leverage - 50% Loan to Value² at 30 June 2011 (31 December 2010 - 53%) and compliant with all banking covenants." can ever have had a less successful disposal programme.

They went into the strategic review with £277m of property and £138m of net debt with NAV and adjusted NAV of 118p/148p respectively. As recently as December 2011, 3 months into the strategic review they came up with "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."

By the completion of the first UK sale, the NAV and adjusted NAV had cratered to 60p and 65p respectively. On 30 April 2012, they were reporting the UK properties that were sold were worth £154m at 31 December 2011. On 4 July they sold these properties for £87m, being the debt of £82m and the swap of £5m (44% below their carrying value). There was a release of £34m of deferred tax to soften the blow (you can make some great book gains on deferred tax by doing a terrible deal!).

The disposal programme has seen the UK and Swiss properties sold for the associated debt, the German properties sold for a few million more than the associated debt and the US properties sold for a few million less than the associated debt.

This means that what they have achieved is equivalent to giving the keys back to the bank and walking away from their obligations (in the case of the US properties they did worse than just giving back the keys and walking away!). Nothing has been achieved for shareholders other than the removal of the Swiss parental guarantee which was at risk of being claimed against due to this being a serious dog of a property.

What is left is undoubtably a more stable portfolio, but the rest has been given away rather than achieving any value for shareholders.

If they do have £3-4m pa of cashflow then there is still a good chance that they are undervalued and there does seem to be value in the German properties. As you say, the big issue remains the UK assets. What would happen if EC defaulted on the rent. Do they have the option of throwing EC out, getting a new tenant in and still having enough value left to permit a refinancing. As Kimboy2 has pointed out the rent cover is/was 177%, so it is possible there is some value, although with the £11.2m parental guarantee having materialised the risk is now higher as the option of giving back the keys is off the table.

The worst Director led (i.e. bankruptcies excluded) disposal programme of all time? Possibly, but surely at least the worst of the year. That doesn't mean that what is left is not undervalued and the German refinancing is certainly promising - the one genuine achievement since the start of the strategic review.

[stemis] 22/12/2012 13:34

They seem to be making decent progress here, reducing net debt by maybe 45% for relatively little loss of tNAV. The big issue still remains however the UK assets and debt. Is there any value here and what will their UK bankers do? They've 12-15 months to sort it out. Cashflow should be positive; maybe £3-4m pa. Not enough to make a huge dent in £18.5m of UK debt.

[hosede] 20/12/2012 16:21

I'm glad to see the US post offices gone: I could see big potential losses there. Post offices are "yesterday's men"

[kimboy2] 20/12/2012 09:43

I think that they could have half the market cap in cash by now.

.

[adam] 20/12/2012 08:50

ostensibly NAV £60m now with Esquire shares valued at nil.

i was disappointed with the sale price of the post offices. my understanding was that worth more if not post offices, and therefore surprising to sell at discount to NAV and 10% yield.

[scburbs] 20/12/2012 08:23

So if you add up the combined proceeds for shareholders from the UK, US, German and Swiss disposals the amount raised for shareholders is nil! What a great disposal programme!

On the plus side they have sold some seriously poor properties so hopefully what is left is the creme de la creme (relatively speaking!).

It is now just that pesky guarantee of the UK debt by the parent that is stopping this from being a buy based on the German property alone (assuming there are no other guarantees they have forgotten to tell shareholders about!). It would be interesting to know how the cost base looks and what sort of operating profit they can drive from the portfolios whilst EC continue to pay their rent.