Quadrise Share Discussion Threads

[maddox] 30/5/2014 00:03

London house prices cannot keep accelerating at the recent pace - clearly. But given the market dynamics its difficult to see prices fall sufficient to damage the attractive investment case for QED.

IMHO with planning permission for 5000 homes the NAV can only head in one direction and you can currently buy at a discount of 20% plus. That provides a margin of safety.

Also, the recent disposals have provided sufficient head room to accelerate the build-out of this pipeline whilst maintain a very conservative B/S. Add to that no early return to dividends - so postponing another stress on cash resources.

The strategy looks pretty bomb proof to me - whatever happens to house prices, interest rates or credit liquidity.

Cheers Maddox

[trytotakeiteasy] 29/5/2014 23:27

STEVENLONDON3 - agree with that all the negatives on housing don't help.

But Quintain is effectively playing the ripple from prime central London out to Wembley. it also only has to develop the existing landbank to add value. As such it isn't necessarily a play on house prices increasing.

But agree we could see London house price fall headlines soon.... the ripple of prices to outer london in Wembley etc may still continue though

[stevenlondon3] 29/5/2014 12:30

Headline on page 2 of today's Times "London house prices set for a fall as market calms down". Such headlines I am afraid can't help sentiment.

[alan@bj] 28/5/2014 08:58

Latest from Investors Chronicle:-
Quintain(QED) effected a significant transformation last year - not least in the valuation metrics that have up until recently left it lagging behind other property developers. Finally, all the signs are now pointing in the right direction.

Book value rose 11 per cent to 115p, and the loan-to-value (LTV) ratio fell from 53 per cent to 38 per cent over the year to March. Following the disposal of its share in the iQ student accommodation joint venture for £106.4m this month, the LTV is now as low as 23 per cent. This gives the group significant headroom to finance further developments, although management wants to keep gearing below 50 per cent.

Disposals reduced net rental income from £12.3m to £7.2m, but Quintain now has all but 12 per cent of its portfolio in and around London. Furthermore, income is expected to rise significantly this year as the group proceeds with the development of its Wembley site in north London. Marketing of the 475 homes already completed has been highly successful, with average selling prices equating to £570 per sq ft - well above analysts' expectations.

Broker Oriel Securities expects adjusted book value of 128p a share by March 2015 (from 114p in 2014).

SHARE TIP UPDATE:
Quintain is now developing a sustainable and significant revenue stream as its development pipeline starts to deliver. The shares have fallen slightly since our recent tip (Buy, 110p, 16 May 2014), and at 92p - a 28 per cent discount to forward book value - look cheap. Buy.

[maddox] 23/5/2014 19:18

Hi guys,

Great results. Management Team have a clear vision and making some radical deals to restructure the business. They are well ahead of schedule.

However, the share price reaction suggests that not all their shareholders like the strategy. Each deal leads to a drop in share price Difficult to understand why, perhaps the lack of a dividend. Well if so there was no comfort on this point in today's presentation.

So this is giving an opportunity to get onboard a London focussed house builder at a 20% discount to the 115p NAV. With demand for housing as it is, and prices rising fast it makes for a compelling story. The key piece of data all the analysts were waiting for was the price per square foot being achieved to plug into their valuation models. At £570/sq ft we can expect analyst upgrades and positive commentary.

All in all looking very good.

Cheers, Maddox

[nil desperandum] 23/5/2014 09:57

Video presentation was a very nice format. Good presentations too.

[deadly] 23/5/2014 09:39

Some chunky trades at 92p, look like sales.

[scburbs] 23/5/2014 08:20

Wembley residential is where the growth is. Development land up 8.2% and £570 psf for early sales shows good progress.

The Wembley presentation from 2013 showing the £418m of gross profit left from Wembley valued the private residential at £500 psf. A change to £570psf (if achieved across all new builds) adds an impressive £192m to the profit potential!

Page 42 has what I was wanting to see about accelerating the next phase of Wembley. Planning due in September for 300 homes, construction expected in 2015 and completion 2018.

hxxp://www.quintain.co.uk/~/media/Files/Q/Quintain/reports-presentations/2014/2014-results-presentation.pdf

[alan@bj] 23/5/2014 07:47

Good post Maddox

[911man] 23/5/2014 06:14

Absolutely, there has been a lot of muttering about the wrong course for a while. I don't think Max has put a foot wrong, so far. The Business is in fine shape. They made the bold decision to execute on the LDO which although reasonably successful, will have major benefits to the housing values at Wembley. This is a critical time for them and if they can execute a lot of housing quickly, they will make a bundle.

There is also a lot of money to be made on the commercial side with the fund management side, so the loss of IQ will not make a massive difference to them on the P & L side. I really don't want a business with so, so returns. I am quite excited at the prospects. In fact more so than for a while!

:-)

[maddox] 22/5/2014 18:22

Hi Guys,

Well I'd guess that QED have decided that they can get better returns by recycling this cash into their Wembley development. In the light of the price of accommodation in London that looks an entirely rational decision to me. However attractive an asset class you find student accommodation I doubt that QED will find it too difficult to achieve a better return.

I have thus taken the opportunity of this dip to top-up. And if we've lost a few more stale holders - well all the better.

Cheers, Maddox

[mike24] 21/5/2014 08:38

today does look very cheap entry point @ 91.5
dyor

[scburbs] 20/5/2014 11:01

Absolutely they should be given the benefit for now (now feeling like a week long length of time!).

It is not a bad sale (also not a good sale) and they have a very important results release date on Friday. If they fail to clearly explain their revised strategy in the final results and associated presentations then that is when the questions really start. Until then any questions around lack of strategic clarity are just speculation.

[jl9] 20/5/2014 10:02

I agree with 911MAN. They should be given the benefit of the doubt for now. Following through on corporate strategy is important, but so is remaining flexible and open to opportunity.

[911man] 20/5/2014 09:22

Although the student market is a safe place to be, I wonder whether QED are looking at building a big PSR vehicle. Maybe the returns are better at the moment and as other student housing providers have said , getting new sites in London is almost impossible. We want QED to be a quick on the feet largely London based property investment/ development/ fund management house. This means they will sometimes appear to be bucking the trend, but I take QPs point that it was only recently, they seemed happy to be in IQ. I am happy with this as I want growth. Let's see what they say in the results. Could be today marks a very cheap entry point!

[maddox] 20/5/2014 08:54

Hi Guys,

If you particularly like student accommodation as an investment class you should have a look at Unite Group UTG. I'm a long term holder.

Cheers Maddox

[sammu] 20/5/2014 01:28

Brandeaux announced today that they are going to list their student acc.

[etarip] 19/5/2014 17:53

So much for the Investors Chronicle buy recommendation.
See post by alan@bj no. 6505
I do hope they come up with a better explaination why they sold the student accommodation vehicle, iQ

[911man] 19/5/2014 12:49

I resume you have exited QP?

[quepassa] 19/5/2014 12:28

This is the understandable source of frustration for investors.

As recently as 25th. November 2013, this is what Quintain wrote and said about IQ in both their interim report and interim presentation:-

1.
"Our student accommodation vehicle, iQ, has enjoyed another successful start to the academic year with lettings at 99.6% across the 5,183-bedroom portfolio. Currently 47% of the iQ portfolio is located in London, a city with 300,000 students, and we continue to view the sector as one that can deliver further
growth for Quintain." -Page 3 Interim Report

2.
"Outlook
Over the last twelve months we have substantially repositioned Quintain. As a result, the Company now has a balance sheet with a level of gearing more aligned to its assets and a portfolio to deliver value and sustainable growth for investors.
Whilst maintaining a financial structure appropriate to our underlying assets, the growth strategy will therefore be delivered through targeted investment in the following activities:
i. increasing the pace and ambition of delivery at Wembley Park;
ii. developing and investing in iQ; and
iii. expanding the London Portfolio.
Together, these activities give Quintain a clear route map through which to drive sustainable risk adjusted
returns for shareholders." Page 4. Interim Report

3.
"Next Steps
Moving to growth

• Accelerate delivery of Wembley Park
– next phase of residential development
– incremental retail and leisure
• Facilitate growth in iQ student accommodation
– invest for expansion
• Leverage our skills and experience in London
– invest in and develop a growing London Portfolio" -Page 46. Interim Presentation



So, in late November, they clearly state how important IQ is as part of their Strategy going forward. And just a few months later they flog it. Even though they reported to shareholders that this was apparently a key part of their business and central to their clearly defined strategy. "Targeted investment in the following activities......ii. DEVELOPING AND INVESTING IN IQ" .

It just looks daft that everything management said at the end of November in relation to IQ has been thrown out of the window. Either IQ was part of their repositioning strategy or it wasn't.

Some corporate spontaneity and opportunism can be a good thing. But, after the sale of Greenwich, this is in my opinion perhaps now entering the territory and business style of "ride 'em high, Cowboy" rather than pursuing their clearly spelled out business plan.


ALL IMO. DYOR.
QP

[911man] 19/5/2014 12:21

The market does not seem to like the IQ deal but there again, maybe some can't deal ahead of the results on Friday? QED seem cheap at this price (93p) and clearly Max thinks that PRS is a better home for long term money than the student portfolio. Only time will tell, but London needs rented residential property and yields are good. Nice low gearing in any case, so seems a safe place to put your money.

[aberdare] 16/5/2014 16:38

sold yours then eeza

[jaws6] 16/5/2014 16:05

eeza
Thanks.

[eeza] 16/5/2014 14:48

Going back to the low 80's.