 The LFL portfolio decreased by 8.2% from 1 January 2024 to 31 December 2024 & a decrease of 3.1% in the period 1 July 2024 to 31 December 2024 -so regional office valuations still falling, but not as quickly
Net loan-to-value ratio 41.8% . i estiguessed 44%. the comment about being focussed on the LTV indicates still ongoing pressure to make sure this doesn't slip
EPRA Occupancy (by ERV) at 77.5% (2023: 80.0%), still falling, not positive if they are disposing of their weaker assets.
Group cost of debt (incl. hedging) decreased to 3.4% pa (2023: 3.5% pa) -100% fixed and hedged ensuring the maximum cost of debt in 2025 will not exceed 3.4%
Weighted average debt duration 2.9 years (2023: 3.5 years)- none of this debt sounds alarming
i had a look at the "highlight" Capitol Park, Leeds - £1.2m deal led refurbishment of Truman House (10,297 sq. ft). delivering an annual rent of £0.3m (£23.09 /sq.ft.), an expected valuation uplift of c.£1.8m and raising the rental tone benefiting other assets in the Company's portfolio at this location.so they have more properties in this park. this is close to a busy part of the m62 and as good as any if staff want to travel to Leeds but not into the centre of town. it is advertised on the knight frank website. the property is under offer, which is positive. although the website says the property is in need of refurbishment. so not sure where the £1.2m went
still can't say i would want to buy RGL. if the occupancy continues to fall i can't see how the wider portfolio's valuations will rise, because for commercial property so much of the valuation depends on the expected rental income & return. seems destined to keep selling off assets in the short to medium term. however nothing jumping out as alarming in the finances.
do your own calcs to see if you think the income you get can be maintained. |
NRI down 10% over the year and in this qtr its retreated back another 1.4m so despite all the headlines about rents being agreed above ERV its not arresting the income decline. Disposals were a key part of the strategy here going yet they've shifted only 30m and now they say "this does mean we are holding some vacant and part vacant assets for longer, which does have a short term impact on occupancy and net income. It is expected that the value improvement upside will be substantial on those assets". Vacancy rate up another 2.5% is getting into existential territory here at 77.5% that said the divi remains just covered by my calcs but they need to get disposals going as debt refi are looming on the horizon in 2026. |
Trouble is Inglis has no credibility now . |
A "positive" update eh.
Vacancy rate buried a little way down.
But hey - look at the C-or-higher EPCs. |
This is supposed to be for Q1 25 dividend onwards. So not the next one, but the one after. |
Hi,
dunno what is the end game but i do expect at some point this year the div to go up to 3.3p a quarter, the reaction to that i hope is the share going up to +150p |
The end game here is that Bridgemere take RGL private as a cash cow family investment company? |
Probably best to have someone there on a day to day basis that knows the running of the company as long as Bridgemere are making the stratigic decisions and controlling him. |
@renewed yup can't go against given his investment but surprised Inglis hasn't been moved on as hes still following the same playbook. |
Steve Morgan and Bridgemere Investments would not have bought into RGL without a healthy understanding of how to turn this around. I wouldnt trust Edison predictions seen to many go awry but am putting my trust in the Bridgmere management and giving them time to enact the required changes. |
Agree with all that, particularly re Edison which I personally ignore.
RGL need to dump the vacant space, but then that's been the case for a long while, & have to assume the loans against it make it impractical to sell off cheaply. |
Edison notes are useful in terms of aggregated tables of data to review and easier reading than reports & accounts but are basically a mash up of the Co's own announcements embellished a bit to make it look as though its independent research. There always too bullish about the future and RGL is no exception whereby they always forecast that the reversion will be gained when it never is. Fundamentally here RGL are carrying excessive vacancies now which will worsen further given the expires/breaks over next 12-18mths and they aren't disposing of the vacant properties. Only 1 sold in Q3 and i take the absence of RNS's that anymore have gone in Q4 although they did report an additional 7.1m debt reduction above what was forecast in an RNS in Dec from the disposal programme but they did have a hefty cash on the books at Q3 so would have been sensible to use that. RGL have always been very transparent on the lettings side but when it comes to less bullish or negative news they remain silent and your left to deduce what's going on the results announcements.
Am on a watching brief here but will wait to results to recalibrate. |
A clickable link to Edison's latest note, adapted from feuille's post 4783, is |
Sigmund your updated ltv looks right in case of a slightly larger than anticipated drop in asset values. |
am always interested in companies at a time of despair. but right now think i need a bit more certainty. i would be gambling on the valuations. better things to gamble on!
20th feb might be an interesting day for those that follow |
The return to office working is on-going, at least in the private sector. |
13p is just about coverable on current NRI but has been falling qtr on qtr and im not sure there is any good reason to see that decline being arrested in the short term with numerous expiries/breaks on the portfolio over next 12-18mths. That said a divi of 10-11 would still give a good yield but until there is clearly a base on office needs established the share price will continue to drift down here. |
For new income investors, you only need the share price not to drop.
If the 13p is achieved, a fair share price is 130p , for 10% yield. |
If that's right it might perk the dead dog share price up a couple of pence. |
hxxps://www.edisongroup.com/research/a-clear-strategy-to-realise-value/34004/
hxxps://www.edisongroup.com/research/preparing-the-ground/34139/
Total div for 2025 should be 13p - 3.25p per quarter , from recent 2.2p per quarter. |
entirely back of envelope estimates of mine
ignore the day to day renting and income from this, day to day costs etc. let's say that has been generally stable throughout this period. once the LTV gets above 50%, debt financing will become much more of an issue than day to day operations.
31/12/23
property valuation 700.7m
borrowing 370m plus 50m bond= total 420m
cash 34m
total LTV= (420-34)/700.7= 55.1% as quoted
30/6/24
valuation 647.9m
borrowing 353m plus 50m bond = total 403
cash 25m
LTV= 403-25m/647.9= 58.3% as quoted
12/12/24
110m capital raise
50m paid off bond
26m paid off borrowing
28m spent repurposing properties
some of the remainder must have gone on fees, total is 104m.
7m property sold which paid off borrowing
borrowing is stated to be 319, with no bond. that must be 353-26-7=320
valuation - i am basing on the 6/24 valuation. so they sold 7, and if we say the re-purposing adds the same value as the investment, then value becomes 647-7+28= 668m
my estimate of the LTV=319/668= 47.7% but see below
if the market is expecting the ltv to be 41% as per the november release, i can only assume that either i have calculated something wrong, or that the new valuation will be significantly higher than the investment in re-purposing. this is entirely possible if it is for something people now want to rent eg student accomm / flexible hubs etc. it doesn't have to be rented out yet to get a higher valuation, the valuation would be based on the expected rental income for the new property / new purchases. this has to be balanced against whether you believe there has been no further reduction in the underlying property portfolio which was over 90% offices. and how long it takes to re-purpose the properties. there may be a significant rent reduction during the repurposing.
it all rests on the new valuation. i think that following a big capital raise, if they are well off hitting their stated target of an LTV of 41%, the market reaction will be brutal.
edit- i forgot the cash and i couldn't see it mentioned, so must be some cash still. so if there is still 25m, the borrowings are 319-25=294
LTV would then be 294/668= 44%
they might escape it LTV comes in at that level |
Why not wait for the 20th Feb to find out ? |
So, RGL languishing at about 11.5p in old money. Is there any hope at all for this stock? Or will the next round of re-financing finally kill it off for share holders? |
thanks feuille
one has to hope the valuation has not fallen by a similar %
the valuations fell 7.5% from 700m to 647m end 2023 to mid 2024.
do you know what the borrowings were before? the cash raise makes it confusing to work out |
The aggregate Company borrowings have now reduced to £319.9m (as at 11 December 2024).
20 February 2025
Q4 2024 Dividend Declaration and Portfolio Valuation |
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