Interesting development with AGR and the involvement of the USS. As one of the 2 big lenders to RESI I wonder if there will be similar corporate action here particularly since RESI is a willing seller. |
Pretty sure they said that both lenders were open to considering change of control but that repayment could also be an option - think mentioned a possible break gain of circa 6 million as things stand... |
Alas you don't usually get break gains on privately placed notes - theyve got spens break costs but no break gains if its in your favour On publicly traded bonds you often have no change of control or a change of control that only bites if the credit is subsequently impaired - eg a ratings downgrade - but on a privately placed note it's more likely there is a change of control Without a change of control and the debt can be passed to a seller so you will be able to extract value from them for the benefit The recessionary yield isn't worth a lot, you get some capital gains from staircasing when that happens which isn't that often |
Presumably also some potential upside from the reversionary yield and low cost debt either as part of a sale or break gain. Plus healthy dividend whilst we wait |
Still a reasonable picking post the fee party - it's just not the 32% discount to book and the assets, other than a bit of reputational risk with SO are pretty solid and recession resistant |
This is just picking over the bones of a dying corpse and hoping that there is something left for scavengers after the various professional advisers and have had their first bite.
Lean pickings here over an extended timeframe. Far more attractive opportunities elsewhere for better use of capital and more attractive returns.
all imo. dyor.
qp |
Or the orange man does something mad of course |
Unless there's something really wrong it ought to be 12 months as they just need to do two sales - there's two neat portfolios that have more value together than sold of asset by asset So yep so long as the gilt market doesn't blow up you should get high teen returns |
"With gilts blowing out (especially real yields for the shared ownership) I reckon the discount (post realisation costs) is probably more like 10-15"
Interesting. That's quite the haircut but this would still give a range of returns - from decent to very good if you include dividends and depending on whether its 10% or 15% and whether it takes 12 months or 24 months. You'd hope the next NAV update will make things clearer.
Also the major shareholders may not agree to a wind-up at any cost. It may make more sense just to keep going as is and wait for more favourable market conditions. |
Plus the political risk around shared ownership might put of annuity/pension funds (they are very sensitive about these things) If they won't buy it then it's going to have to go at a much higher yield to tempt someone more opportunistic - especially if the debt can't be ported - hence why that's so important |
With gilts blowing out (especially real yields for the shared ownership) I reckon the discount (post realisation costs) is probably more like 10-15 It's in theory an easy wind up Would love to know if the debt can be sold with the assets (my guess not) as that would add another 5-6p - the debts hugely valuable but not if there's a change of control clause as the lenders will insist on being repaid at par |
Although we've just had the results there is also usually an update and a divi announcement at end January.
The IC write-up (you may need a subscription to read it)
Simon Thompson: Shares are priced 32 per cent below NAV even though shareholders have sanctioned an orderly realisation of its assets
A Reit wind-down worth buying into
Published on January 22, 2025
by Simon Thompson |
You are spot on up4it |
Tipped by Simon Thompson in the IC |
Seems a solid play.
NAVs will drop when updated again in mid-February as latest reported NAVs don't reflect explosion in GILT yields. |
 I watched the presentation, from which it was clear that the wind-down is not in the long-term interests of the shareholders, given that (a) this is not a good macro environment in which to be disposing of the portfolio and (b) this is a well-managed business that produces a good income for investors for the foreseeable future. On the other hand, the wind down may well be in the interests of Gresham House, who wish to exit as soon as possible and hope to make a short-term gain.
I’m sure that these facts are well known to the the RESI team, who spent most of the presentation demonstrating convincingly that RESI is an efficient, socially responsible and financially viable business, yet were vague on the question of the costs of the wind-down (which of course will be borne by shareholders) and were unable to explain how they will be able to “maximise value” at a time of rising long term yields, relatively poor macro conditions and against the backdrop of a self-imposed deadline of 12-24 months.
Shareholders should be able to see some short term benefit from the disposal of the assets, given the currently prevailing wide discount on NAV, but only at the cost of giving up a secure revenue stream and the prospects of better long term capital appreciation. |
i currentlyhave 5 companies in wind down at various stages and i have to say based on todays RESI call they are by far the best managed, most in control, and open. I wish i had enough money to buy the company :-) I will be buying some more this month seems to me like well managed almost 9% div while ongoing, and a large hopeful realisation result getting much closer to NAV than the current share price, over teh 12-24 months wiond down i am hoping for >40% overall return! |
Conference call on now.
Wind-down to take 12-24 months |
For me, they've done the right thing in repaying the floating debt. Now they have a nice model that works and provides stable income. Gresham are no longer interested in managing it because they can't grow it so they want to wind up at the worst possible time for shareholders. Surely someone can come up with a management proposal that sits tight for (say) ten years and captures the benefit of that revisionary surplus. Nobody expects a 10 bagger but there's a steady 6/7/8% per anum TR to be had here |
The results look quite good.
Note there are 2 NAVs;
EPRA NTA 74.6p
IFRS NAV 81.6p
"IFRS NAV benefited from the valuation of the USS debt adding £12.8 million / 6.9 p to IFRS total return (not included in EPRA NTA)"
and
"£89 million reversionary surplus of vacant possession value compared to fair value"
1.03p dividend. |
Asset values must have fallen with gilts rising - especially the shares ownership which is a close index linked bond proxy Thus id rather get in at around 50p now |
Big block gone on the order book at 54p. Wonder if it is likely to be filled? Will be interesting to see.
Hope results aren't disappointing tomorrow :-/ |
..... I see you are today posting on The Phoenix thread but talking about Aberdeen.
- Using your logic I guess one could also say.....
" I'm not sure the Phoenix thread is the place to discuss other insurance companies"
so why can you talk about other insurance companies on the Phoenix thread but you comment on someone doing a similar thing here?
Each to his own, CWA, each to his own. |
There are other resi property investors at varying levels of discount-but I'm not sure if the RESI thread is the place to discuss them. However, each to their own QP |
it is relevant because it is interesting to see another residential property investor which is trading at 70% discount |
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