Schroder Real Estate Inv... Share Discussion Threads

[topvest] 15/3/2013 19:32

The debt cost will be nearly 15% lower going forwards - 5% versus 5.7% - this will help build more dividend cover. I think today's announcement is good news. They can start again from a sound financial position and long term funding in place. There may be a small reduction in the dividend, but prospects here now look pretty good in my view.

[redsonning] 15/3/2013 11:46

Yes, I was effectively saying that one can expect a dividend adjustment downwards. That will improve the company's position still further. The market will react positively to that, since this stock is not really rated by it's dividend percentage, but by a combination of factors which is presently improving (and will be improved still further by a dividend reduction). Whilst I don't disagree that the NAV discount has firmed up considerably, that is simply a reflection of the overall mix of improving parameters. The share price may not have much upside in the near future, but neither does it have much downside potential, and a dividend reduction will not change that analysis.

[elmfield] 15/3/2013 11:41

Agree with that but you have to hand it to the team running this just how good they are, what else will yet surprise us?

[lord gnome] 15/3/2013 11:02

I am not so sure about that redsonning. The dividend here is uncovered at present and I wouldn't be surprised to see a reduction at some stage. The discount to NAV is now also rather tight compared to many other quality property stocks.

[redsonning] 15/3/2013 10:44

The new financing is excellent news for the company, which is why the shares are starting to rise. It is not logical to suggest that the share price is over valued following this significant improvement in the company's loan arrangement. The share price is most certainly not driven by the dividend (which is indeed somewhat high). We have seen this in the recent examples of Picton (when the share price rose following a reduction in the dividend, and in the IRP/IPT situation where the same thing is in the process of happening. In property stocks the decision about the level of dividend is simply a balance between taking cash now and leaving enough for the company to develop it's property portfolio further. Hence when the balance is wrong (for example when the dividend is too high) the company finds it's share price being negatively affected since the market fears future NAV decline. Putting that situation right allows the share price to return to its underlying value level.

[skyship] 15/3/2013 10:40

ND - looks as though you got very good prices, courtesy of Investec it would seem...

[skyship] 15/3/2013 10:39

red army - follow many of us looking for the best value plays over on the CP+ thread. CIC was a great recent winner, with further to go IMO. DSC well worth researching - it was one of those mentioned in the excellent IC article this time last week...

[riskblue] 15/3/2013 10:25

I'm out. Suspect the divi will have to be cut. Will look again then.

[red army] 15/3/2013 08:58

Nil Desperandum

What better value property funds are there as this one looks to be ready for growth and divi.

[elmfield] 15/3/2013 08:43

Can't do better than that!
Well done on the trade, I will hold on for a whole yet!

[nil desperandum] 15/3/2013 08:40

I agree SKYSHIP, I was hoping to see these swap costs diminish and add to NAV ... of course they will have a better interest rate and so will help support the dividend. But not enough play here for me so I'm out. Thankfully someone likes them becasue I've sold over 200k from various accounts without problem at between 41.39 and 41.45p.

It was good, but now I think we have better plays in this space.

[skyship] 15/3/2013 08:15

I admit SREI has the better portfolio, but there seems to be a value disconnect here. Still, the Market says I'm wrong...today at least!

[lord gnome] 15/3/2013 08:10

I have already discounted a drop in the dividend to 3p per annum, Skyship, same as PCTN. I reckon PCTN is the pick of the two, but WDIK? Who has the best portfolio?

[skyship] 15/3/2013 07:47

Hmm - crystallises the swap loss, so at 40.5p the NAV discount is down to a mere 13%. Looks seriously over-priced, especially as no encouraging statement re the dividend - so a cut now looks a certainty. Can't figure yesterday's rise...

[skinny] 15/3/2013 07:45

More level for some than others!

I notice Investec increased their holding as well.

[lord gnome] 15/3/2013 07:34

Funny how the news comes a day after the market pushed the share price back above 40p. Level playing field anyone?

[skinny] 15/3/2013 07:04

Terms of the New Canada Life loan

The Company has entered into a Credit Agreement with Canada Life and expects to draw down the loan on 15 April 2013, the next available repayment date of the existing securitised loan. This is subject to satisfaction of standard conditions precedent which are required to be satisfied prior to loan drawdown. The key loan terms are as follows:

· Loan to value ratio ('LTV') of up to 50% calculated with reference to an independent valuation to be provided no later than 15 March 2013
· 80% of the loan maturing in 15 years and 20% in 10 years
· Fixed rate loan referenced to the 15 year Gilt rate. The Gilt rate will be set no later than 10 business days prior to drawdown
· Assuming the current 15 year Gilt rate and dependent on the LTV at drawdown, the Company expects a final fixed interest cost of approximately 5%. This could potentially change depending on movement in the Gilt rate prior to drawdown
· No amortisation
· Flexibility to sell existing properties and acquire new properties
· Flexibility to asset manage the portfolio including the ability to utilise cash from disposals to fund capital expenditure
· LTV covenant ratio of 65% and an ICR covenant ratio of 185%

[lord gnome] 14/3/2013 17:19

Back above 40p and looking a bit brighter all of a sudden. I wonder what has prompted such a display of exuberance. I was hoping it would stick around below 40p for a bit longer. I have some prefs to sell when the next tax year starts and was looking to reinvest here.

[elmfield] 14/3/2013 13:59

Hello hello hello.

[elmfield] 10/2/2013 14:34

Hope the team can deliver, if so great.

[elmfield] 08/2/2013 17:26

Thx for that, no surprise for me and a few others here!

[skyship] 08/2/2013 09:55

Tipped in the IC by Stephen Wilmot

[garycook] 06/2/2013 06:55

Purchased 15000 @ 38 for the Divi,may be cut?,also UKCM

[lord gnome] 01/2/2013 14:29

Skyship - as I said in an earlier post, the one fear that I have is the uncovered dividend.
The way I read the situation is that they are going to do a deal similar to PCTN. To this end they are clearing the decks, selling off the under performing property, and selling off the low yield property. They will get the gearing down, then refinance and cut finance costs. Should also help with Dividend cover, but I accept that a rebase is a concern.
I share the view of some holders that we have limited capital downside from here. Property is bumping along the bottom and as the economy picks up, so will the property sector. Rents will stabilise and then start to rise, so will capital values and then discount to NAV will narrow and dividends will rise again. It may take some time, but I intend to keep a good proportion of my funds invested in this sector. The three stocks I hold are MCKS, PCTN and SREI. If anyone can suggest any improvements on these I will be all ears.