Regional Reit Share Discussion Threads

[redhorse2020] 13/3/2024 10:55

Guessing just to maintain the REIT status but I think it has quite rightly been pointed out previously that a scrip alternative could have been used - that would certainly have been a better option in hindsight.

[redhorse2020] 13/3/2024 09:33

Do we have a viable alternative to voting it through? Situation obviously far from ideal but wouldn't we be shooting ourselves in the foot by trying to block it in the current climate?

[hindsight] 13/3/2024 09:17

@ipavlou, think biggest risk to bonds is shareholders dont vote rights motion through. It will be priced to sell thats for sure and expecting bond holders to have an option to buy any rights left from shareholder applications in an over application facility

[farrugia] 13/3/2024 07:36

i don't understand - why didn't they stop the dividend? Or is there something that restricts them from stopping dividends? Paying the dividend surely hasn't helped. Can a REIT stop dividends in case of a crisis? This needs the dividends to stop for a couple of years to get back on its feet.

[grahamg8] 12/3/2024 21:58

The bonds are RGL1 quoted at close of play 87.25/91. So £50m nominal would cost £43.62m to buy in, and of course the price would rise as soon as RGL started to hoover them up. Where's the money supposed to come from? If you hadn't noticed RGL are skint.

[jonathb] 12/3/2024 18:30

dandigirl: "Maybe the buyers started to try to reduce the price(s)?"
- LOL anyone who has ever sold an apartment has seen this happen on closure day:
- Buyer: There's a dirty pipe. I want a 10% reduction.
- Vendor: Wah? $$£$?? now? f%%ing now? WTF!?! I'll SUE!!
- Buyer: Oh yeh, sue away. First hearing slot is 4 years. But you'll be broke in 1 year. (pause) .... now, let's talk about that 10%.

[lpavlou] 12/3/2024 17:50

Surely safer to buy the retail bond at a discount now, knowing it will get paid out in full in a few months time. Why take the equity risk. Bond holders will want their cash back rather than invest in another bond at a higher rate or swap for equity even at 10p

[grahamg8] 12/3/2024 17:16

I would be interested to know if Edison still stick to their assertion that if there was an equity raise the share price would rise. Fat chance. This does smack of deliberately trashing the share price in order to allow a known investor to takeover on the cheap. A new 5 year bond at 15% coupon would be a lot simpler, but doesn't solve the debt/equity limit. So convertible shares/bond hybrid deal? The coupon should be lower and the equity base would be higher. Combine this with a decent level of asset sales and we might stay in business.

[williamcooper104] 12/3/2024 16:17

Indeed Better to refinance the retail bond even at an expensive rate with amortisation and then just realise value over 12-24 months.

[nickrl] 12/3/2024 15:46

Why would any institutional investor support this mega value destruction from a naff inv mgt team overseen by inept BoD.

[hpcg] 12/3/2024 14:35

Indeed CC. The reward here has to be 200-300% because, even though it shouldn't be by the numbers, the risk is possibly 100%.

[cc2014] 12/3/2024 14:13

I have been to look at the bios of the directors of RGL. They seem reasonably heavyweight by comparison with some I look at for companies this size. Certainly some of them ought to understand the balance sheet so I'm wondering why what is happening is happening. I think maybe based on the RI info coming from Edison they are not being consulted on everything in a timely way. Maybe.

My gut says investors are going to get stitched up here. I see no other explanation for the very strange actions of the Board.

[fozzyb] 12/3/2024 12:57

Took a bath on these at 18.5p and saw it tick up. Not regretting now. Only wish I had been stricter with stop loss. Sorry to those still holding. I'm not sure this will exist going forward was reason for sale. Thankfully modest position

[hpcg] 12/3/2024 12:09

Farrugle - I'm not sure there is value at 10p in a rights issue; rights will be available to buy for very little IMO, and the share price might trade below the imputed completed value anyway. I would rather buy at 14p on the way up after a clear out of the entirety of the people that put the company in this position, and only then if I trusted the dominant controlling party.

The problem the company will have is that the type of institution / fund that chases high dividends, equity income garbage, is on the wrong end of redemptions, probably permanently. They are busy taking money out of the market, not putting it back in. So it will likely have to be special situations and hedge funds. That negotiation will be a lot harder than with the muppet that is desperate to avoid having to announce to unit holders that the high dividend yielder trumpeted for the previous few years is now a doughnut. It looks like Old Mutual, GLG, Unicorn, M&G, Blackrock and Chelverton are on the line, but they come in at just over 15%.

The more I look the more intractable the problem. The only solution is perhaps to pay the bond in shares. That would have to be an extremely attractive rate because voting against, and thus for admin might otherwise be a better solution for bond holders, who would almost certainly get out whole in nominal terms. In which case buy in at the rate bondholders get as there will be ample available for purchase at that price.

[williamcooper104] 12/3/2024 11:45

Usually after a distressed rights issue a REITs share price pops But there's still some doubt that they'll get it away (you'd think they would given management must have guided Edison; but then that's the same management that got them into this mess) Post any share price pop on a rights issue being completed in not so sure it's going to be a great investment; with the much higher share count and capex needs they'll struggle to pay much of a divi for quite some time and that'll likely limit any major recovery See HMSO post rights issue

[solarno lopez] 12/3/2024 11:35

A very good question, fortunately we have posters who excel in their analysis and hopefully will respond to your question as I too am interested but simply don’t know

[farrugia] 12/3/2024 11:33

is this value at current levels? that's the big question! I don't want to throw good money after bad.

[williamcooper104] 12/3/2024 10:21

Indeed they won't get a going concern statement unless they have the retail bonds repaid or refinanced Hence why you never ever let a material recourse debt have less than 12 months outstanding

[cc2014] 12/3/2024 10:03

I'm not sure there is a plan SpectoAcc.

And I think the City has known this for years. If we go back 3 years or so this thread was filled with posts from Sky regarding the excessive discount to NAV and the high dividend yield. That was one of the warning signs.

I cannot for the life of me figure out what the Board are thinking. Surely they are staring down the barrel of issues with the "going concern" statement given the lack of refinancing of the retail bond. My gut says that's why the RI is being raised now to try and get it down in the next month so the going concern statement won't have to be considered.

[dandigirl] 12/3/2024 10:00

T'was I that posted that the I thought the bond would be repaid on time, in full.
My calculation was that there was enough free cash plus the proceeds of sales to fund the repayment. My thought is that the sales haven't progressed as planned. Maybe the buyers started to try to reduce the price(s)? Who wouldn't?

Bit like Brown flagging he was about to sell the Nation's gold.

Have to agree with much of the criticism above. Should have been addressed a long while ago - divi cut - RI sooner - etc.

It need not have come to this. Really bad management.

Shades of the Wasps bond here. That could and should have been addressed much earlier.

For Richardson we have Inglis.

Too much hubris on display. Shame on them both.

The announcement really hasn't helped - it flags that there really is a problem and they still don't have a solution.

Am eating humble pie.

[hpcg] 12/3/2024 09:47

£75m @ 10p is 750m shares. There are currently 515mn share outstanding. Any underwriter is likely to end up with a controlling interest, perhaps even an outright majority if current holders don't wish to double down. One could sack the board and manager, cram down the junior bonds under threat of a drawn out administration wind down, and then wind down anyway. It's a lot of works, but perhaps one could get 20p out of the 10p, plus of course an extremely fat immediate partial pay back on the fee.

[spectoacc] 12/3/2024 09:36

You'd hope they had things pretty much sewn up before they allowed the (paid for) Edison note to come out. But it's RGL, so possibly not.

I still say the Singaporean owners of LSPIM may be doing a CAL on RGL. That's the only explanation I can see.


"Last year ARA Asset Management bought Regional REIT’s asset manager London & Scottish Property Investment Management. The Singaporean giant has been supporting the business and its access to capital."


If no underwriter, RGL are toast. Even with an underwriter, the LTV post-RI, if taken up in full, is c.45%, ie too high in a structurally challenged sector.

£60m of disposals and it's still 40%.

CAL redux. And I'd almost feel sorry for RGL shareholders if this is the game.

[cc2014] 12/3/2024 09:25

I'm a little confused here guys that there is a thought process that thinks anyone is prepared to underwrite this.

The current pitch is: "Please give us £75m so we can pay a dividend of £6m to the existing shareholders and pay off the retail bond of £50m. We are going to use the remaining cash to continue paying dividends at the existing rate of £24m a year"

I mean wtf but who is going to put anything into a rights issue on that basis (apart from some posters on ADVFN who no doubt have been adding all the way down from 80p)


I remain of the view that the Board do not know how to manage the balance sheet and I would imagine the Board will be forced to cancel the dividend very shortly.

I also remain of the view that the retail bond is not going to get repaid at par (or if it does it takes so long that the opportunity cost of investing the money elsewhere is such that it's still a really bad deal for holders). RGL will walk all over that retail bond because it's highly likely there is no dominant large institutional holder to stop it.