Regional Reit Share Discussion Threads

[hindsight] 02/2/2024 19:19

8% sounds more realistic

At present there is no chance, quality infra funds on 8%. 12% sounds more realistic to me or some kind of debt for equity offer

[grahamg8] 02/2/2024 18:45

RGL seems to be trying to defy gravity.

From the Q3 update "In the near term, the Board remains focused upon a controlled disposal programme, to reduce the LTV back to the Company's long-term target of 40%, whilst maintaining the quarterly dividend.". The 40% target is repeated for the YE RNS today.

Take the figures as gospel:Portfolio £700.7m, LTV 55.1% , so borrowing is £386.09m. To achieve a 40% target by asset sales would mean
(700.7-X)x0.40=386.09-X or X = £176.35m disposals ie 25% of the assets. This assumes everything is sold at book, there are no costs incurred and all the proceeds are allocated to debt reduction.

The latest dividend of 1.20p would cost £24.76mpa with 515.74m shares in issue. So to maintain the dividend over 2024 would mean 'finding' £6.18m. This assumes operating and admin costs fall in direct proportion to the value of each disposal, highly unlikely.

The only way to at least partly square the circle is for only the vacant properties to be sold, so no income would be lost. But there just aren't enough of these, and the chances of vacant properties being sold at book seems pretty remote to me.

There is one more sleight of hand that can be thrust on shareholders, and that is if 'maintaining the quarterly dividend' actually means maintaining a quarterly dividend no matter how miserly. Technically correct a dividend of 4 x 0.001pps is maintaining a quarterly dividend. This would save the requisite amount from the lower rental income surplus available to distribute.

I'm also pretty edgy about the debt itself remaining duration of 3.5y interest rate of 3.5%. Have the board actually noticed that interest rates have gone up and they are only dropping very slowly? Our ultra low interest environment is over; refinancing is going to cost a lot more and 3.5 years is scarily close, starting in August 2024 in just 6 months time. The coupon on RGL1 is 4.5% and that is nowhere high enough to tempt new investors, or encourage a roll-over by existing bond holders. 8% sounds more realistic, and if all coming in the form of a bond would cost an extra £1.75mpa in interest, all to be taken out of the pool of funds available for RGL shareholder dividends.

The fall in the share price today says the market doesn't believe the narrative, and neither do I.

[fred177] 02/2/2024 10:28

A plus here is Inglis has skin in the game that and the end of WFH with the improving EPC will help them recover in
Medium term

[chatchat] 02/2/2024 10:07

RNS does state next divi dec is 22 Feb

[nickrl] 02/2/2024 09:36

@CDV "nothing bad" id say that the vacancy level dropping by from 83.4 to 80% is pretty bad thats a whole load more dead costs on the o/h's and lost income. Yes rental collection not bad but marked deterioration in Q4 could be a warning. That said the current NRI whilst down a tad from last trading update is sufficient to cover the current divi but what happens with the bond is going to decide the fate of that i would suggest.

Separately its seems pretty remarkable that they've shifted the EPCs so much as they've not been spending much that suddenly EPC B goes up by 18% and D & E down by same amount - ummmm.

[williamcooper104] 02/2/2024 09:10

Problem with refinancing the retail bond is that the loan covenants are close to being breached (from memory one of them is 55% and rest are 60%) Breaching those covenants will cut the dividends needed to service any holding company bond Some banks are insisting that covenant breaches get cured by mezz debt which is expensive and would also see dividends cut too

[cruelladeville] 02/2/2024 09:04

Nothing bad in today's RNS?News about upcoming bond repayment plans soon, I expect?

[feddie] 02/2/2024 08:57

Last year the dividend was declared on 29 February. The previous year was on 24 February. This year the valuation and Q4 update was early.

[skyship] 02/2/2024 08:47

Anyone done the numbers on the putative NAV?

The 10% fall in the portfolio and the 55% LTV must mean an NAV down from 66.5p to...perhaps.... something around 50p-52p.

[rcturner2] 02/2/2024 08:44

RGL is my worst performing share, but I never have more than 10% in one share and in fact RGL is well below 5% (probably about 2.5%).

I don't see any point in selling, at this point I don't think it is going to zero so happy to take the long term view and see where it goes.

[cc2014] 02/2/2024 08:29

With the LTV at 55% I'm not even sure why they are delaying the decision. Unless there's some massive sale coming in the next month

[mesb48] 02/2/2024 08:12

So last year, the divi announcement came in the same RNS as this type of update. Says something to me.

[cc2014] 02/2/2024 08:11

LTV now at 55.1%

Serious.

[lord gnome] 02/2/2024 07:44

Yes, spec, that same thought had occurred to me. A sale now could kill several birds with one stone and be transformational. I'm sure we're not the only people to have thought this. Keep on watching.

[spectoacc] 02/2/2024 07:39

I've long said they're ultimately going to zero, or something not dissimilar to zero (eg rescue rights). But I don't hold that view strongly enough to be short.

I just recall what happened to all the retail/High St/shopping centre ITs, and see it reflected here - a fast-declining asset class, which certainly won't disappear but will see falling rents & rising vacancy, combined with already excessive debt.

What would make the difference is if they block-sold the 1/5th of the portfolio that's empty - even for a poxy amount - which would remove all the empty rates, insurance, and other costs, as well as the future CapEx & management time.

May not be possible due to the debt those assets are backing.

[lord gnome] 02/2/2024 07:30

It stays on the watch list though. At some point they will have worked through the headline issues and if they can hold that yield while they do it then it will be a stonking buy. RGL lost me a fair amount of capital. I would like a chance to make it back.

[spectoacc] 02/2/2024 07:05

Only skimmed, are some positives, but got to laugh at the spin. Look at the rent collection! Look at the earnings yield! Look at the "100% fixed" debt!

Yet if you follow RGL, you know to look at:

- Occupancy (80%)
- Retail bond - make of this what you will: "The Company is actively exploring a range of refinancing options for the retail bond given its near-term maturity date"
- LTV
- NAV drop.


I'll give them credit for working hard on the EPC's tho.

[cruelladeville] 19/1/2024 10:24

I was hoping we wouldn't see

[uapatel] 18/1/2024 09:39

Topped up. Looks to be a base around here. 🤞

[uapatel] 16/1/2024 16:23

Back to 30p. Tempted to add more. Will see what happens over next couple of days.

[feuille] 12/1/2024 14:44

ex-div in 6 weeks.

[cruelladeville] 12/1/2024 12:40

Bought more with today's dividend.

[feuille] 01/1/2024 16:11

Despite all the rubbishing by the usual suspects, RGL is at a good risk/reward level.

[skyship] 01/1/2024 13:24

feuille - Well done you, a very good trade. 25% in under 2months!

Personally decided to go with the other Office specialist CLI rather than RGL. Not as good an immediate return; but moving up nicely and making a good chart breakout it would seem.