Raven Prop P Discussion Threads

[holts] 18/3/2019 13:43

The large holdings by members of the board clearly must have a self interested influence on any such decision .

[kenny] 18/3/2019 12:24

bench2 - what price/effective conversion price do you expect the company to offer RAVP holders?

[bench2] 18/3/2019 11:49

The transition to rouble rents and assets is being matched by moving from U$ debt to rouble/euro debt to keep the blended interest rate down and match the liabilities in the same currency as the assets and income . I saw no problem of having a large fixed rate Sterling prior charge ( 12% Prefs ) when the rents were mainly hard currency , however the Board and Execs will soon realise that the cost of the 12% prefs and currency mismatch are too big a risk , and at 133p on a 9% yield I would expect them to buy in and cancel , or try to move to a rouble pref or offer to convert to Ords . Either way the days of this high coupon pref are numbered .

[igbertsponk] 18/3/2019 11:47

They've done some quick work reacting to the dollar leases problem "Our exposure to US Dollar financing facilities has reduced from 92% at the beginning of the year to 34% of the Group's secured debt at 31 December 2018".
Don't hang about this bunch. Sort out problems.

[kenny] 18/3/2019 11:25

Results for 2018 confirm the big FX paper loss. More importantly for preference holders the company confirms that vacancies are being filled and rental rates are staring to look firmer.

Looks like a very secure high yield investment because the coupon is covered by net operating profits and the class cannot be redeemed or converted unless in a class vote, at least 75% of RAVP holders (voting alone) consent to any redemption or swap for ordinaries.

[igbertsponk] 18/3/2019 11:10

Big holders (Woodford and Invesco) won't let the Prefs be taken out as they're vital parts of their pension fund portfolios.
Trade is good in Russia, just the US sanctions depressing the rouble. Once that blows over (it always does) there'll be a nice rebound.

[my retirement fund] 18/3/2019 10:48

Certainly buying the prefs back would be a quicker way in the long run to improve NAV as well as profit.

[bench2] 18/3/2019 10:41

Given the big move in assets and rents towards Roubles and the mainly U$ Debt moving to rouble/euros to avoid too big an asset / liability mismatch , how long will the 12% Sterling Prefs last ? Even at 133p , this is an expensive prior charge at a 9% yield. Fine when collecting hard currency dollar rents , but I suspect the board will either want to buy this in or convert it to a rouble Pref or Ords .

[igbertsponk] 18/3/2019 07:35

Decent results today. Offset of course by "annoying" rouble drop.

[kenny] 10/3/2019 13:50

The company’s annual results for 2018, which are due in early March, will show a BIG loss, which is entirely due to the depreciation of the ruble against the US$ during 2018.

This is of concern for the ordinary shareholders but of little concern to preference holders. Cash balances and underlying profits will be sufficient to sustain the coupon on the preference class for the foreseeable future.

Of greater relevance for preference holders, is what the results and director’s report say about a) details of lettings/vacancies, and b) any comments about the trend in rental rates.

[kenny] 23/2/2019 00:44

The CBRE Moscow region big box Q4 2018 research report has now been amended and expanded and is well worth a read. Register on their site free - hxxps://cbre.rentnow.ru/en/ - and you can then download the report, under the research tab.

I particularly liked this sentence:
“In 2019 we expect, that rental rate may increase by 8-9% compared to the Q4 2018.”

Therefore, CBRE have updated their 2019 rental growth forecast from 7-8% - see my post 74 above. From other research I have undertaken, I think rents and lettings are currently moving fast and this is the reason they have amended their forecast; within about 5 weeks of the previous forecast. I am quite happy with the revised forecast!

As set out in more detail in my post 74 above, rents rising - for the first time in about 6 years - will have a material impact on the security of the coupon on the preference classes.

Colliers have not yet issued their 2018 year-end research report but I am expecting it imminently - I will post once they do.

[igbertsponk] 19/2/2019 09:51

You should have bet!

[cwa1] 11/2/2019 12:10

Hmmmmmm. About 3p I reckon :-) If I were a betting man I'd go for slightly less that that though.

[igbertsponk] 11/2/2019 10:43

LOL - more than 3p?

[igbertsponk] 11/2/2019 09:59

Looks like we have competition for acquiring stuff at knockdown prices though

[igbertsponk] 11/2/2019 09:55

Moribund market, good to see Raven mentioned.

[igbertsponk] 11/2/2019 09:55

Ticking along nicely, can't help thinking a move upwards is imminent.
Any Warrant holders note they expire soon so convert or lose!

[tradertrev] 11/2/2019 09:49

Ah yes, Moody's. Weren't they the goons who said all Icelandic banks were AAA rated? Best to wait until a proper rating agency upgrades.

[kenny] 08/2/2019 23:41

Amazing to think that this gold project is so big that it could support the rouble irrespective of sanctions:

Siberian Gold Find Brightens Ruble’s Future
Wall Street Journal | 7 Feb 2019 | Thomas Grove

Sukhoi Log, widely seen as one of the world’s largest untapped gold deposits, could give Moscow a bulletproof currency backstop. “This is the Holy Grail of gold mining effectively, given the quality and given the scale.”
The news is good for both Polyus and the Russian government. Unlike other producers that move their bullion on world markets, Polyus sells its gold exclusively to large Russian state banks, which then resell it to the country’s central bank. Once mining begins, the bank can use the mine’s gold to support its ruble currency or sell it for extra foreign currency in times of crisis.
According to Polyus, Sukhoi Log is likely to be producing more than 1.6 million ounces of gold every year for more than 35 years, one of the longest lifespans of any mine globally.

[11_percent] 07/2/2019 11:37

RNS Number : 2833P
Raven Property Group Limited
07 February 2019
7 February 2019
Raven Property Group Limited ("Raven" or the "Company")
Preference Share Dividend (RAVP)
The Directors of the Company confirm that the quarterly payment of the preference dividend in respect of the preference shares of 1p each with ticker RAVP (the "Preference Shares") will be made, in accordance with their terms, on 1 April 2019 in respect of the period from 31 December 2018 to (but excluding) 31 March 2019. The record date for the payment of the preference dividend for the Preference Shares is 15 February 2019 with an ex-dividend date of 14 February 2019.
The Preference Shares will be entitled to a gross dividend of 3 pence per Preference Share.
A scrip dividend alternative (to be settled in Preference Shares) will also be available for all preference shareholders in respect of the preference dividend.
The scrip dividend circular will be available on the Investor section of the Company's website (www.theravenpropertygroup.com), and will also be available for viewing on the national storage mechanism ( Letters notifying the holders of Preference Shares of the presence of the scrip dividend circular on the Company's website and how to access it will be sent on or around 21 February 2019. The last date for receipt of completed forms of election (in accordance with the terms thereof) will be 8 March 2019

[cwa1] 06/2/2019 08:35

XD next Thursday for the record.

[my retirement fund] 05/2/2019 18:25

This ship looks to be a turning!

[kenny] 31/1/2019 14:14

CBRE have published their Q4 2018 Moscow warehouse report. In terms of the outlook for 2019 they state:

“General market trends and its active growth create prerequisites for further rental rates upturn. In 2019 we expect, that rental rate may increase by 7-8% compared to the Q4 2018.

As a result of the steady demand and low volume of new construction the vacancy rate will decrease to 4-5% and the shortage of warehouse space will increase.

The decline of vacant space will stimulate an increase in rental rates, which can reach 3,900-4,000 RUB/sq m/year by the end of 2019.”
====================================

It is great that someone has now quantified what might happen to rental rates in 2019. Also good to see a prediction that vacancies will fall again. If market rental rates increase by 7 – 8% in 2019 (being the first increase in 6 years), then that is going to be amazing for the company’s financial security. Of course, it is too early for anyone to forecast what market rents will do in 2020 but a long-term investor like me is looking forward to a continuation of recovery in the market!

To state the obvious, an increase in rental rates would lead to an increase in warehouse capital values. That has two beneficial effects for the company, namely, a) an increase in property values offsetting the 2018 depreciation of the rouble and making any refinancing they wish to undertake quite easy, and b) the various properties they purchased in 2017 and 2018 at yields of 12% or more, look like even better bargains.

[kenny] 25/1/2019 13:08

My current research suggests there is a definite upward move in the warehouse market both in Moscow and the rest of Russia.

Below is a quote from the CBRE Moscow region warehouse Q3 2018 research:

“As of the end of Q3 2018 vacant space decreased to the lowest level over last four years – the last time a lower rate was observed in Q3 2014. Significant reduction of indicator in absolute terms also occurred - for 9 months the market has absorbed 38% of the vacant space which was available to the market at the end of 2017.

On the background of vacant space declining we are witnessing another important trend - rental rates for warehouse space increased for the first time in the last six years. Despite the fact that this growth is moderate, it indicates the beginning of market transition from oversupply and price "bottom” trends to a market balance.”


I understand the "moderate" increase in rents referred to is 3% for that quarter. Imagine if rents increase by a total of say, 10%, over 2019. That would be a modest increase compared to the decrease in the last 6 years but, importantly, it would transform the outlook for Raven Property. Add in the 6% annual indexation on rouble leases together with vacancies gradually being filled, the result: the company's financial position and cash flow would materially improve.