Regional Reit Share Discussion Threads

[williamcooper104] 24/4/2024 21:14

He certainly is Can he be worse than Tripple Point is the question

[nickrl] 24/4/2024 21:03

@WC Inglis is certainly competing for that accolade

[williamcooper104] 24/4/2024 20:34

The retail bond probably won't default But given that it's maturity is only three months away it's not a remote risk It wouldn't be the first REIT to default on a recourse debt and it wouldn't be the first management of an investment trust to do something really stupid

[grahamg8] 24/4/2024 19:56

I'm not convinced new equity is needed in the short term. However senior debt needs to be dealt with in 2.5 years time, that could be a different story. But August this year is where the focus needs to be. If the current disposals come through at reasonably near book value, and as RCT says roughly half goes to reduce debt and half to cash. Debt/Equity and LTV stay under control. Use what surplus there is to reduce the outstanding bonds and refinance the rest at a higher coupon. The premium will depend on how well the disposal program is going. So it is in RGL's hands.

In comparison ENQ went through a similar trauma. 5.5% bonds 15/2/22 were first extended to 15/10/23 at 7.0% and then rolled into new bonds at 9% ending on 27/10/27. Their huge debt pile has been substantially reduced and it looks as if there should be no problem redeeming the current bonds on time and in full.

It can be done.

[rcturner2] 24/4/2024 19:18

There is a lot of rubbish on this thread.

Firstly, the retail bond will not default it's just a question of how they work the balance of repayment, roll over and new equity. If the retail bond defaults the company is wound up and that isn't happening.

Generally speaking if they sell properties the true available cash is about the half sale price, so £30m of sales will mean £15m available to pay off the bond. This is a function of the LTV etc.

The bond is at 94p and that price is simply a function of supply and demand and the return that anyone would expect for holding the bond. If the price got anywhere near par holders would be selling simply to reinvest elsewhere.

[spectoacc] 24/4/2024 15:11

@Wc104 #4265 - or not gloomy enough ;)

[dandigirl] 24/4/2024 12:27

agree with low teen type returns - have seen a bridge at 12% recently, plus fees/costs - but it should be temporary pending sales receipts.

there are providers of such funding

looks like all should be revealed on 22 May 2024 with the Trading Update and Outlook Announcement.

[williamcooper104] 24/4/2024 12:17

Plus what they will really want to do is to lend a junior loan that prepays some of the secured debt such that the LTV on the new junior loan is lower They of course will still be looking for low teen type returns

[williamcooper104] 24/4/2024 12:15

The problem with refinancing is that any new lender is going to want to be comfortable that senior lenders can't shut of the cashflows coming out of their secured pools - so you're right they will need either cash or additional junior debt capacity to be able to cure covenants

[williamcooper104] 24/4/2024 12:13

The unrestricted cash should be capable of being used, proceeds from sales bit more complicated will depend on the loan docs and LTVs, but most likely that a large amount of it, if not all, goes to repay secured I've not looked closely at the balance sheet/accounts recently so could well be being a little over gloomy

[arbus5000] 24/4/2024 12:04

i suppose if the thing goes into administration, it wouldn't be all bad. There's no shortage of 'expert' opinion here, perhaps some of the contributors could take it over!

[cc2014] 24/4/2024 11:30

Nope. If they took the £20m unrestricted cash and spent it repaying the retail bond it screws up the LTV/debt covenants on the secured debt putting them into or close to default (you will have to run the numbers to get a view on exactly how marginal this is)


(and that's if the £20m actually exists for more than a few days at reporting periods and/or some working capital is required for uprating and maintaining the estate)

[dandigirl] 24/4/2024 11:17

Aren't we being a bit doomy and gloomy here.

Unrestricted cash at year end about £20m.
£13m of sales since year end and aiming to sell 58 assets totalling £130m [giving who knows what after debt repayments].

Surely at least 50% of the bond could be repaid with the rest rolled over into a new bond or bridged with a provider made comfortable with imminent sales prospects.

[hpcg] 24/4/2024 10:06

WC - r.e. forcing admin. Sure there are complexities with respect to what is the company when it comes to properties especially. Creditors can only take action against the company they have sold or lent to. Those that have had fun sorting out parent company guarantees with respect to small overseas entities will be familiar too.

RGL can walk away from any single property if it really is stand alone looking out and looking in, but the retail bond, which is first up, is at the holding company level. It has no choice but to pay up or wind up / be wound up. The question for shareholders is what does the ultimate recovery look like?

A different topic, but back to interest rates. The BoE does not have complete freedom to cut rates because the UK has a large external funding requirement. The ECB has it much easier because its debt loads are domestic, and if not within the EU.

[williamcooper104] 24/4/2024 09:38

Yep it's a right issue - and of course we are getting closer to summer and the August maturity so every week that doesn't happen means its less likely to happen They might be able to refinance the retail bonds (v expensive albeit) - but again we are not long to August so needs to happen soon The retail bonds of this doesn't happen will then have to wait for the secured lenders to be repaid before getting their money out How long could that take? My best guess 18-24 monthsQuite right about the divi - totally nuts

[cc2014] 24/4/2024 09:26

I can't see anything other than the retail bondholders taking some pain one way or another.

The only way they escape is by way of a rights issue but who is going to want to subscribe to that just to pay off unsecured bond holders.

But what continues to puzzle me is why RGL have placed themselves in this position in the first place by paying out dividends.

[williamcooper104] 23/4/2024 23:31

No direct collateral damage but can expect secured lenders to go hard on any covenants to try to stop cashflows going to the retail bonds The really painful thing is that the unsecured lenders can't actually sell the mortgaged assets, just the equity interests in the SPVs that own those assets and which all have secured debt But here's something else - those SPVs may not be capable of being sold without the secured lender consent - change of control provisions being pretty standard In practise, the retail bond holders plus the secureds would need to work something out

[williamcooper104] 23/4/2024 23:28

The secured creditors can't take the company down - they can only enforce of their mortgaged assets The retail bond holders can put it into admin

[hpcg] 23/4/2024 22:08

Creditors can go to court / put the company into administration. It only takes one unpaid bond to be able to do so. Any unpaid creditor can go to the courts at any time.

[nickrl] 23/4/2024 20:47

@WC whats the likely collateral damage if they default on the retail bond?

[williamcooper104] 23/4/2024 19:43

It is indeed, I would buy some but last time I wasn't able to get a fill You'd be unlucky to take a credit loss but worst case could be waiting for quite some time to get repaid

[nickrl] 23/4/2024 19:13

104 days till redemption or not

[williamcooper104] 23/4/2024 19:00

You'd think that if you were going to do a rights issue you'd do it now when the share price isn't totally creatored

[williamcooper104] 23/4/2024 19:00

Oh if they're not taken up the underwriting bank will sell them to anyone I think the bond pricing reflects the risk that they don't get paid of in August Clearly longer that there's not a rights issue or refinancing then the more likely that the bonds will not be paid of at maturity (don't think that would cross default the secured debts - but could be wrong about that)

[dandigirl] 23/4/2024 18:58

Hi Wc104

It just seemed so preposterous a figure that my first thought was, surely not.

I should have done a quick calculation first.

Of course, you are right! An amazing number, isn't it?!

Thanks, but we are not buying any more!