Schroder Real Estate Inv... Share Discussion Threads

[skyship] 14/5/2013 15:22

From one Nick to another...

If you had asked me the same question in Mar/Apr I would have recommended Picton (PCTN) or Development Securities (DSC) - see their threads or the CP+ thread.

Now, less easy, especially for those like me who prefer buying £1 for 60p.

On balance I would still say DSC, as even after the recent 15% rise they are still on an historic NAV discount of 32%, minimum of 35% prospective. So I still expect them to be North of 200p by the end of the year, ie another 20% to go.

Elsewhere, outside property but still asset plays, if you are prepared to accept a lower return of c14%/15%pa, then consider ACD & NRI - both companies in liquidation mode - the first a liquidating hedge fund with now less than 2yrs on the clock; the second a liquidating Private Equity play. All facts and figures on their threads; also the PE & SL threads.

[nickadv] 14/5/2013 12:05

Hi Skyship---I may move some money out of Chesnara yo a Prop Reit--I hold FCRE andv SREI---what would recommend as a third---thanks Nick

[skyship] 14/5/2013 11:51

Miranda - true - but just take a look at the lack of posts on the large REITs such as BLND, HMSO, SGRO etc.

Also as a further indicator - the almost negligible interest on TMF's property sector thread. I've given up posting there after suggesting DSC and receiving not a single reply for two months - though one fellow traveller did contact me directly - which TMF enables you to do.

[mirandaj] 14/5/2013 11:46

Not so small - some read a lot!

[skyship] 14/5/2013 10:28

Agreed - & we all love propcos - amazing what a small coterie we are however!

[elmfield] 14/5/2013 09:47

You are both right from your own angle!

[redsonning] 14/5/2013 09:37

Thanks Skyship - Yes I am well aware of what you say. I am not unaware of the upward movement in various other property stocks and I have also benefited considerably from those. However, measuring performance over such short time periods is not what everyone is looking for. This is especially the case as portfolios grow and therefore the requirement to offset risk by spreading across sectors becomes more relevant. In that situation one is looking for very sound companies because (as you have yourself have correctly pointed out in the past) preservation of capital becomes a factor of growing importance. So I am in no way suggesting that one should not be in other property companies (I have holdings in at least half a dozen) but what I am saying is that SREI is one of the core property holdings and, for me at least, there is no good reason to change my stance on this as the fundamentals for it's prospects and it's financial structure look good.

[skyship] 14/5/2013 08:16

Redsonning - you may well be right as the overall strength in the property sector is raising all participants. That said, with respect I think you miss the point. Those who exited back in March were selling in the 40p/42p range and a few of us were switching into better value plays like PCTN (up 14%) and DSC (up 10%). SREI has not surprisinly under-performed...

Its all a case of maximising portfolio performance through an activist approach.

[redsonning] 13/5/2013 23:34

As I indicated in my last post, this company is now extremely well placed. This has been entirely borne out by the market support to date since the dividend cut. The dividend adjustment has of course strengthened future prospects and the share price has shown no sign at all of dropping below the 39-40p level. In fact in the last day or two it is creeping back above 40.
Those who thought they would be buying back around the mid thirties will be disappointed.

[redsonning] 24/4/2013 23:53

There continues to be some misunderstanding about this company. Those who think that this SREI is not as strong as they thought it was are missing some of the point. The company has reorganised a great deal over the last year and, as a result, is now well positioned. It's new debt arrangement is amongst the best now in place at any property company. It's dividend has been set at a low level in order to allow it to strengthen its position further over the next year or two. Its high level of voids is now a significant opportunity compared with those which have lower voids. Additionally it has the potential from the eventual successful planning applications at Reynards Park and at Hinkley. Much of this is simply a matter of time to transpire, given good management, and it is clear that it now has that good management.
These factors continue to support the price at which the shares trade. A company which overpays dividends is inherently weaker than one which does not, and this weakness has now been corrected. Similarly the recovery in the share price of the combined IPT-IRP (now FCRE) following the merger and dividend reduction was essentially for that same reason.

[jodi17qad] 24/4/2013 22:08

Thanks for that Specuvestor.

[eeza] 24/4/2013 18:37

No thread for FCRE - as yet.

[specuvestor] 24/4/2013 17:13

Its F&C UK Real Estate Company. This was the result of a Merger between ISIS Property Trust Limited & IRP Property Trust. Both previously managed by F&C but separate entities. Shareholders agreed a merger earlier this month based on the NAV of both on 31st March. F&C UK Real Estate Company is therefore a new entity as far as ADVFN is concerned.

F&C Commercial Property Trust (FCPT) is quite a separate company. It is confusing as both are similarly named. No doubt they too will merge some time in the future.

[jodi17qad] 24/4/2013 16:42

Specuvestor: Did you mean FCRE or FCPT? I suspect the latter.

[elmfield] 24/4/2013 13:14

Good to seeit holding up, a dividend play for income, notbe buying unless drops back.

[coolen] 24/4/2013 13:10

With the new dividend rate unlikely to be cut again, this is likely now to appeal to income funds who have piles of dosh seeking a home over 5%.

[specuvestor] 24/4/2013 12:52

Forgot to mention fully covered dividend for FCRE !

[specuvestor] 24/4/2013 12:47

At todays SP, FCRE (formerly ISIS & IRP) seems a better choice than SREI. Lower LTV (33%) and higher yield(7.43%). Discount similar. Also better quality properties.

Would wait until mid 30's before diving back in to SREI.

[colonel a] 24/4/2013 11:31

Got that one wrong.
But thanks all for the discussions, had the chance to step out defensively but thought the company was stronger than it now appears.

[skyship] 24/4/2013 09:28

I think the investment dynamic has changed here somewhat. Whereas before it was heavily PI influenced, now it is far more institutionally controlled. The result may be a less rigorous valuation, ie a lower yield and a lower NAV discount may be acceptable - as per the examples of FCPT, IGRE & UKCM for instance.

Those companies usually appear over-valued by our (certainly my) PI metrics; but institutions are less picky and work to longer timeframes. They are also investing Other People's Money rather than their own!

Ergo, we may see SREI hold up better than those low/mid 30s suggested. 37p/38p would be my guess; but certainly no need to hurry back in...

Elsewhere - pleased to see PCTN making progress; and still waiting for DSC to gain traction ahead of next week's numbers.

[speedsgh] 24/4/2013 09:03

Ditto. Many thanks to Skyship + others for flagging this.

To be honest I wouldn't be surprised to see these fall as far as the low 30s over the next few months. Even at 32p, you are looking at 7.75% yield which, despite the insatiable demand for income out there, would be a fair reflection on SREI + its recent performance imho. I suppose the question is whether they can improve their performance going forward.

[asmodeus] 24/4/2013 08:25

Many thanks for your warning, Skyship. You were absolutely right about the div.

[cwa1] 24/4/2013 08:21

Hasn't fallen back as much as I had expected, yet. Possibly further to go? Will keep an eye on for a re entry level around the mid 30s. Hopefully it stabilises around the current level for existing holders.

[elmfield] 24/4/2013 08:18

Yes, I suppose down to mid 30s then.