Regional Reit Share Discussion Threads

[williamcooper104] 25/9/2023 22:25

Delaps never cover you for the costs of refurbishing to current cat A standards; it helps but it's not a magic wand

[fred177] 25/9/2023 17:57

WC so in the event of lease surrenders they claim dilapidations which is effectively a return of capital deployed so opex v capex ?

[m_kerr] 25/9/2023 17:23

a couple of things WC - 'the dividend hasn't been cut, it's been reduced'. i know what he's getting at but still. :D

inglis pointed out that to pay off the £50m bond requires £100m of disposals, the sold assets having secured financing. i completely forgot that. so while LTV will be positively affected, they'd in effect be paying off cheap debt with half of the proceeds, not ideal.

i agree, i don't see why you'd lend to them on the same terms as the bond for 9%. FPO reckon they can get 11-12% on secured priority debt at up to 60% LTV which is close enough to what RGL are at.

[williamcooper104] 25/9/2023 17:16

In the video Englis tried to claim that 50 leverage wasn't very high - lol Maybe for a food store with a 15 year lease but for a regional portfolio of offices in largely the wrong regions with a 2.8 WALT it's x rated Haven't calculated it's net debt to ebitda but it'll be way > 10x (and that's before correctly accounting for capex as at least part an opex cost)

[williamcooper104] 25/9/2023 17:13

Yep As I've long said a lot of what's reported as capex in offices is really, or should be, an income cost So if they are paying for tenants fit out that ought to be netted against the rent That's not the red book way; just as once wasn't for shopping centres until all of a sudden it was

[m_kerr] 25/9/2023 16:48

' It isn't a choice between assets earning or assets empty, it's a choice between earning or costing'

spot on, but to add to that, even when an asset is 'earning', is it? i've been alarmed at how common rent free periods are nowadays. with such a high churn of tenants, due to a very short WAULT of just 2.8 years, my guess is that cash flow will deteriorate very rapidly in the next couple of years. i don't doubt that in most cases they'll find tenants, but those tenants will get rent frees and free fit outs which you can't pay dividends from. if there is some defaults, then cash flow could get ugly very quickly as they could be without cash coming in for an asset for a long time.

[spectoacc] 25/9/2023 15:57

:)))

RGL's.

[sleepy] 25/9/2023 15:45

Spec - sounds like you might be more suited to wakes!

[spectoacc] 25/9/2023 15:01

@121SPA - RGL has been "obvious" for absolutely ages, in the same way Retail was obvious. A slow structural change, that when it finally hits a tipping point, will be sudden.

And the last to see it are those at the coal face. Doubt there's a poster on here who thinks RGL shouldn't have cut their divi a long time ago.

They're facing the maturity of the £50m retail bond, a glut of empty space from the acqn, and possible recession.

Personally I think RGL's heading to pennies, the only uncertainly being timescale.

No recession, or substantial asset sales, might change my mind - but rather than selling the decent stuff, I'd like to see them dump the entirety of their empty space, perhaps at auction, and save a packet in Empty Rates and maintenance/refurb. They'd probably be lucky to get half of what it's in the books at, butwould put the co on a sounder footing. Similar to what RLE are doing.

REITs are doomsday machines when the going gets bad enough (as it always does in property, about once every 20 years). It isn't a choice between assets earning or assets empty, it's a choice between earning or costing, and what happens when the costing outweighs the earning.

RGL is the first but doubt it'll be the last, assuming the economy gets as bad as I fear it might, early 90's-style.

I'm available for parties, weddings, and bar mitzvahs.

[williamcooper104] 25/9/2023 14:31

Agree that they probably won't go bust But a deeply discounted distressed placing if they can't get sales away is possibleGiven that we are not in a recession and likely will head into one, it doesn't look good

[williamcooper104] 25/9/2023 14:28

That bond is unsecured, structurally subordinated It won't be 9-10 - think more like 12-14, especially if there's isn't a lot of amortisation

[121spa] 25/9/2023 14:22

I agree with a lot of the cynicism that's been aired here. I don't think it's a high quality stock with high quality management. I think that's a given.But my angle is different. Is there value here? Are the shares oversold? That's all I'm looking at. And here's what I'm noting.Their NAV seems reasonably accurate. Ie they are managing to sell assets at around NAV. So the shares are probably genuinely trading at half NAV ie there's a big margin of safety.Will they go bust? Very probably no because whilst they need to reduce debt and whilst it may prove costly, they know it, they're aware of it & they're on it.Is the worst of the macro behind us? Who knows? Inglis seems to think so.Sentiment on RGL is negative. SHs are frustrated. But I can't help thinking there may be real value at these levels.

[tiltonboy] 25/9/2023 14:12

The bond is becoming a bigger issue than I anticipated. Having to sell £100m of kit to pay it back seems near on impossible, and a re-finance at 9-10% may not be as easy they think.

Perhaps an equity raise, but given the gearing who would want to provide equity!

Between a rock and a hard place unless there is a sea-change in sentiment or market conditions.

[fred177] 25/9/2023 13:46

If he believes the 4.8p dividend forecast by analysts is low balling makes the shares a steal at these levels

[fred177] 25/9/2023 13:44

Perhaps just more realistic

[cruelladeville] 25/9/2023 13:27

You're welcome. To be honest, it's a really disappointing interview. The weakest by Inglis to date. In my opinion.

[fred177] 25/9/2023 13:24

Thanks CDV

[cruelladeville] 25/9/2023 12:35

New Inglis interview - https://www.edisongroup.com/edison-tv/regional-reit-executive-interview-3/32710/?j=108477&sfmc_sub=12783975&l=715_HTML&u=3068163&mid=536001663&jb=1

[cruelladeville] 25/9/2023 12:25

I seem to recall Inglis and family are about 12% holders of RGL equity. They were significant buyers at more than double today's share price. It must be hurting.

[williamcooper104] 25/9/2023 11:02

Other than "risk of increased finance costs"I'd say "increased finance costs" as unless some huge black swan happens with gilts finance costs can only go up up and up Put starkly like that though you do wonder if maintaining the divi is about management getting out what cash they can while they can (on another stock NWH.UN on my potential distressed watch list the CEO owns 25 percent of the equity and I'm wondering if the same doesn't apply there) They ought to do what HMSO did for a few years and just issue scrip divis

[gowkirk] 25/9/2023 10:29

RGL from the half yearly accounts

rental income £44.415m

net rental income minus admin costs is approx. £21m over 6 months

they are spending £23.41m on costs and admin!

1.2p Divi is 6.2m, 12.4m over 6 months, which represents 25 percent of the gross rent roll.

finance 8m cost over 6 months

So at the moment barely covering the revised dividend.

Risks of increased finance costs in the next years and increased risk of vacant properties.

They need to itemise the costs and admin and go to a 3 monthly cash in the bank statement.

Please correct me if I am wrong

[cruelladeville] 22/9/2023 18:54

And goodbye to another sh*t week at Regional REIT.Until we hear something positive from the management this is going to continue into the bottomless pit, it seems.A 2x pence share price looks likely next week.

[m_kerr] 21/9/2023 13:56

CDV, i have monitored their acquisitions over the years, and generally when they're buying single or very small portfolios they are generally pretty good quality.

the square stone acquisition boosted LSPIM and toscafund management fee income by about £1.5m per annum IIRC. almost all drops to the bottom line with the largely fixed cost structure they would have. so they're motivated to be optimistic with their projections and would be keen to get such deals waived through by the board.

[cruelladeville] 21/9/2023 13:22

Ex dividend today. Explains some of the price weakness today.

[chucko1] 21/9/2023 10:45

Poor? - it was a total disaster.