Regional Reit Share Discussion Threads

[dartboard1] 23/2/2024 18:00

Key question. Is inglis doing DRP or taking cash

[master rsi] 23/2/2024 15:56

24.50p +1.05 - Looking for 25p,
Will it be today?
Plenty of volume in the ticker, best for some time on looking at the chart

[master rsi] 23/2/2024 14:23

23.95p + 0.55p

Moving in the right direction.

The oversold position is the right way to get stock for recovery, mainly as Interest rates are on the way down.

[rcturner2] 23/2/2024 11:51

hpcg, I don't disagree with you. I hold both the equity and the bond and could lose all my money on both. I don't think that will happen but it could. I have less than 5% of my investments in those 2 instruments.

The discount to NAV clearly indicates a company in distress. You're getting a bargain here or you are losing your money.

[feuille] 23/2/2024 11:07

236,014 sq ft in Bristol , Dr Doom no 2.

[williamcooper104] 23/2/2024 10:38

Saw an out of town office ripe for conversation to resi Was priced at just over £200k per acre - which worked for resi in that area But - that broke back into about £20 psf for the existing office Of course; it's all location/asset specific just making the point that alternative use usually isn't a panacea (other than where you can get a big planning gain and/or you are in a very high resi value area - I'm sure you can find an office in Cheshire that's worth more as a resi land site) - but rather a stop loss - and sometimes one with lots of pain before it gets hit

[williamcooper104] 23/2/2024 10:34

Yep; it's less likely to be an administration and more likely a total divi cut and a wind down; happening at a brisker pace than might be sensible due to lender pressure I would say a distressed rights issue - but don't think that'll fly

[williamcooper104] 23/2/2024 10:32

Indeed; Bristol, Oxford, Cambridge - all great But those aren't the places RGL is focused on

[arbus5000] 23/2/2024 10:19

agreed with RCT and thank you for turning the conversation around. There are plenty of nay-sayers on here, and even broken clocks can be right twice a day!

To me, issue with RGL was short term illiquidity versus insolvency, and they have made very good progress towards that w.r.t funding the retail bond maturity.

The geographical diversification makes generalisations difficult. Economic growth and trends are less likely to be uniform across the country.

Although less employees work at offices, this concept is not dead yet, with most offering hybrid working patterms, and this varies by sector.

As I understand it, most of RGL's offices are out of town, which is not necessarily a bad thing.

For the vacant lots, there is potentional for conversion into industrial, student housing or flats and 'last mile' warehouses.

As stated, the decision to retain the dividend suggests that the bond maturity is almost covered. RGL is not averse to cutting the dividend either.

RGL is cutting it fine, and it is a very difficult market, however, their strategy here does make sense. If overall cost of debt is 3.5%, and initial yields are at 9%, why have a fire sale of properties at the bottom of the market to reduce LTV to 0%? Bringing LTV down to 40-45% over the next 18 months would be ideal.

[hpcg] 23/2/2024 10:07

Why are some investors blind to the concept that a company can go out of business? This isn't fear, it is literally what happens every day of the week. There are plenty of bad outcomes for equity that don't involve going out of business, even from this share price.

[adae] 23/2/2024 09:32

There's no over-supply of Grade A almost anywhere, which is the root of RGL's problem. The unchanging vacancy rate, likely to rise with disposals of let assets, shows that.

[rcturner2] 23/2/2024 09:29

Offices depend very much where they are. Some parts of the UK have ridiculously tight supply. Our office is in Bristol and there is no oversupply of offices in Bristol that's for sure.

[m_kerr] 23/2/2024 09:15

A further £13m in the bank soon, and an equal reduction in debt. There's no doubt now IMV the bond will be paid off.

Havent run the numbers recently on the discount RGL runs at but i believe it's about 30% based on LTV of around 50-55%, and P/B of about 0.3. the issue for me has always been the cash flow crunch from rent frees and capex, not helped by what is after valuation declines, uncomfortable gearing. paying off the bond should help though.

It would be interesting to do research into what percentage of their offices are located in city centres or residential areas (and so probably have a future in some form), or have clear redevelopment potential. i am familiar with some of their assets and it's very much a mixed bag of modern and older offices, business parks etc.

[mrwaterloo] 23/2/2024 08:57

Is the real question when does the how big is the structural gap between supply and demand end in regional offices end?

If it ends soon then LTV and income will recover and this is a floor price. If we have economic headwinds (e.g continued inflation and stagnant economy) then LTV and income will continue to decline.

It feels like there is still oversupply/low demand for office space. companies operate more effectively with an office space (community, training, collaboration, efficiency etc) but feels like we could see another 6-12 months of malaise in this sector while companies continue to optimise costs and adjust to 5% interest rates.

[rcturner2] 23/2/2024 08:15

Specto, RGL owns a lot of offices and has debts that are secured on them. The debts were built up when the cost of credit was a lot lower. They are juggling the assets and the debts, we all know that. They may go under that is quite possible. I personally don't think that will happen. Each to their own.

[feuille] 23/2/2024 07:33

Weak minded folk was a very good phrase.
Pontificating Dr Doom is another.

[spectoacc] 23/2/2024 06:56

@RCT2 - with respect, I've been saying where RGL is heading since 2022. Can't say it's there yet, but starting to look close.

@Wc104 - my thoughts exactly, tho note there's now a token scrip, introduced well after the iceberg hoved into view.

@grahamg8 - exactly. Worse, is it the best assets they're selling? The route out of this would have been to dump the c.20% unlet, which has an active and ongoing cost to RGL in empty rates, insurance, maintenance. Dump that, and there's no loss of rental income.

But presumably it "earns" for them in the sense of making up far more of the NAV/LTV than it could ever realise back.

The retail bond maturity is unlikely to be the end of RGL. Yet.

[dandigirl] 22/2/2024 19:47

RCT, I agree with your comment..

"""Most likely they will pay down as much as they can and add the remainder on to an existing arrangement""".

They will be able to do this from cash/facilities available and from the proceeds of sales in the pipeline, bridged if necessary.

88 to buy this afternoon.

[rcturner2] 22/2/2024 18:04

Christ there are some weak minded folk on here.

[williamcooper104] 22/2/2024 17:54

Wondering if keeping the divi is now about management getting out what they can

[williamcooper104] 22/2/2024 17:53

90% taxable income which is a lot lower than accounting earnings Plus they can pay stock dividends - as HMSO did for a number of years

[grahamg8] 22/2/2024 17:49

To find £50m for the bonds means selling a lot more than £50m assets. The LTV needs to be held, and the Board says they are going to reduce it. This is not just a desire but a necessity in order to stay within covenants on the loans. The more you sell the less rental income is left to pay for the remaining debt interest, admin, and as elbrus points out the dividends. I think Wellington had a similar problem at Waterloo. 'A close run thing' or in modern parlance squeaky bum time. Reporting some sales is a start, much more to be done.

[elbrus55] 22/2/2024 13:16

Some suggestions that they should be cutting their dividends.I thought REITs have to declare 90% of their net income as dividends in order to maintain their tax exemption?

[master rsi] 22/2/2024 10:19

Everything is Hunky-Dory on the charting front after the RNS
with 1.20p divi for the Q4, update on office occupancy and asset disposals

[glavey] 22/2/2024 10:06

Well, it's declared but not yet paid...