Raven Prop P Discussion Threads

[kenny] 20/11/2021 13:41

Not a good week, specifically for ordinary shareholders. Both oil and the rouble were down materially and the rouble is within a few kopeks of its level at 30.06.21.

If these levels persist, the company’s cash flow will be squeezed and the ability to pay dividends on the ordinaries, via share buybacks, may not be fully funded by cashflow but rather by part of their cash reserves. Because of the JV – which is weighted in favour of the directors – they have to keep paying at least something each year on the ordinaries to finance the debt of the JV. Remember, the directors put not one penny of cash into the JV whereas the company injected about £15m and even paid £1.5m of legal costs which should really have been paid by the JV or the directors.

Interest rates have increased substantially and bear in mind that interest rates are the most significant factor in determining the company’s net income. Having jumped by 0.75% to 7.5% in October, the view seems to be that in December they will be increased to 8.5% because, since October, inflation in Russia has risen again; to 8.1%.

Of course, one has to consider the offsetting factor of warehouse rents rising materially during 2021. Unfortunately, this is going to be slow in feeding into an increase in income. The average of lease expiries over the next 3 years, 2022 to 2024, is 13.5% per annum of the total portfolio – that is 244k out of a total of warehouse property of 1.8m sq. m. I have ignored possible lease breaks because I assume no tenant is going to exercise an early break of their lease, when the consequence is a large increase in rent at any other property they move to.

An increase in rental income is, therefore, going to be slow to feed through to the bottom line whereas, with all of the debt at floating rate, the increase in interest cost is immediate. The company has interest rate caps in place at 7.6% with a weighted average term to maturity of 1.8 years but the rise in interest cost to 7.6%, from 4.25%, is still going to be substantial.

In summary, my view is that investors in RAVP have to be prepared for the possibility that the share price moves, more or less, sideways for an extended period of time. However, the trend over that same time period is that the security of the coupon on RAVP is slowly improving.

[rayg5] 19/11/2021 16:05

Given the choice of a buy to let and RAVP there's no contest

[rayg5] 19/11/2021 16:03

I'll be doing similar when I've sold.

[rayg5] 19/11/2021 16:02

Fair play sponk

[igbertsponk] 19/11/2021 12:40

Indeed, but I sold a house on Monday and only got the dosh in the right place yesterday!

[igbertsponk] 19/11/2021 12:13

Even an order at 123.6 hasn't been taken.

[montyhedge] 19/11/2021 12:12

Now have pay 123.60p I had a order on to buy at 122p, oh well.

[igbertsponk] 19/11/2021 11:12

hard to buy they is.

[kenny] 19/11/2021 11:09

Today, the rouble is almost back to where it was on 30.06.21 e.g. the last balance sheet valuation date. One of the most volatile currencies in the World.

[igbertsponk] 18/11/2021 12:01

Header updated with 2022 pref divi dates.

[kenny] 18/11/2021 11:39

As I have posted before, the rouble is extremely volatile and unpredictable.

Recently it reached a 12 month high against sterling but within a few days thereafter, it dropped over 3%. That wipes out about half of the currency gain since 30.06.21.

In my opinion, it is not possible to predict with any certainty, its level as at the valuation dates of the end of December & June.

[montyhedge] 18/11/2021 10:24

Can't get cheaper than 123p.

[igbertsponk] 18/11/2021 08:12

Ex div and after not shifting first thing has now dropped the full thruppence.

[rayg5] 15/11/2021 13:31

But good luck with that anyway.

[rayg5] 15/11/2021 13:30

Of course it might not drop by the amount of the divi.

[montyhedge] 15/11/2021 11:57

rayg5
I will wait for ex get them 3p cheaper, in for long term, had these since 2011 slowly accumulating. Also in a ISA tax free income.

[rayg5] 12/11/2021 12:39

Still cheap, Monty. Go on - you know you want to.

[montyhedge] 12/11/2021 11:55

Always have a nibble now and then, I want them at 120p, can't get below 126p, but I suppose yield still 9.52%, I'm tempted.

[holts] 12/11/2021 07:27

Putin about to be behind a few local difficulties ?

[kenny] 11/11/2021 15:02

Today, the rouble has reached a 12 month high against sterling.

[rahosi] 11/11/2021 13:15

Test Sale 1.257
Test Buy 1.2675

[cc2014] 11/11/2021 13:02

Why would the management want to redeem the prefs?

They pay an interest rate of 12% whilst the Russian government base rate is 7.5% and likely to go up to control inflation.

Seems fair and reasonable to me.


Meanwhile the buying continues and the offer moves up again. Nice.

[gfrae] 11/11/2021 10:14

Kenny, nor do I at the moment, though if the share price ever goes to a price that reasonably reflects the underlying assets and prospects, it may regard the Prefs as expensive and wish to buy them back by either issuing new ordinaries or raising more bank debt.
As many of the same institutions own the Prefs and the Ordinaries they will look at what is overall best for them and presumably with their agreement they could be cancelled.....remember what happened to the Convertibles.

[kenny] 11/11/2021 09:53

gfrae - I don't think redemption of the preference is a possibility - ever. If any debt is to be repaid, it will be bank debt first but being lowly geared is not managements objective. Also, the company has a long history of directing its net annual cashflow to buybacks of the ordinary.

In any event, there are two other protections for preference holders. First, any proposal to redeem requires a vote by 75% of those voting to vote in favour. Note that Quilter owns 31.6% of the pref's so can and would block a vote that was not favourable to its interests. Second, the Articles also provide that in the event of a takeover of the company, the stock exchange quotation for RAVP will be maintained.