Schroder Real Estate Inv... Share Discussion Threads

[sleepy] 28/6/2012 13:35

It looks to me as if Yieldsearch is right - that the c4.4% is fixed. 3 month sterling is c0.90% at present so with a margin of 2.1%, floating rate money would only cost them c3.0%

[skyship] 28/6/2012 13:21

Yes - I suspect that we will soon have seen the last of the Lloyds holding; but as they were below 3%, perhaps no RNS. Bye, bye & good riddance Lloyds!

Tilts - RE PCTN - yes, that was how I read it - margin fixed and rate floating. Of course the swaps of the past have been disastrous, but you couldn't criticise Michael Morris if he were able to do a swaps deal to fix the current low rates.

Reckon today's news and trades signal the bottom - double bottom - now in at SREI.

[envirovision] 28/6/2012 11:25

Its also show a negotiated trade of 5.74 Million shares time stamped 9.18, some large chunks of shares certainly been swapped in last few days, might get a holding rns later.....one day

[tiltonboy] 28/6/2012 10:53

Looks like the stock that was easy to buy over the past few days has been covered with that sale of 1.5m. I picked up an easy 100k off the board straight after, getting hit instantaneously at 32.25p.

[tiltonboy] 28/6/2012 09:59

I believe the margin is fixed, not the overall rate!

I understand an interest rate swap will be entered into once the rate has been determined.

[envirovision] 28/6/2012 09:29

A lot of these swaps may eventually have to be compensated by the banks. More than half of all commercial loans were only offered on condition of them. The way its going we could end up with a situation where the banks have to compensate customers who were offered commercial loans only on terms with obligations attached of complicated derivative swaps attached (the source of many a bankers bonus during the gordon brown/blair years).

[alanji] 28/6/2012 09:17

If it is fixed at 4.4% or thereabouts it is a very good deal.

The bad news:
"In order to facilitate an early repayment of its existing facilities, the Company will incur swap break costs in July 2012, which had a liability of GBP5.1 million as at 31 March 2012, along with additional arrangement and restructuring costs. Further details of these costs will be provided following Completion."

[yieldsearch] 28/6/2012 09:10

no interest rate risk, the financing is fixed rate:

"The funding has been secured at a blended margin of approximately 2.1%
which, based on benchmark gilts, currently reflects a fixed cost of
approximately 4.4%."
Loan margin is 2.1% and fixed rate market based on gilt is 2.3% so all in cost is 4.4%.
So it is actually very good, as one would expect interest rate to increave over 10 15 years. Best time now to lock a long term fixed rate

[lord gnome] 28/6/2012 08:29

The PCTN deal looks good and shows that SREI might also refinance without too much difficulty. The variable interest rate shouldn't hold too many fears. If interest rates rise, that's a sign that the economy is improving and so property prices - and rents - should also respond.
In the meantime, like others on here, I am amazed that the SREI share price is so low.

[skyship] 28/6/2012 07:51

As a rise is surely inevitable, I would prefer to pay more and fix. Perhaps secure the deal by providing an equity kicker upside for the lender, via a placing of ords or warrants.

If PCTN can do it then surely with Schroders in charge SREI can do likewise...or better.

[tiltonboy] 28/6/2012 07:40

Lets just hope that rates dont rise then!

[skyship] 28/6/2012 07:36

Picton shows us the way with exactly the sort of refinancing package I alluded to above. Up to 20yr year refinancing with AVIVA & CANADIAN LIFE. Set @ 2.1% margin, so starts @ 4.4% but will rise with interest rates:

[stupidboypike] 27/6/2012 19:45

SkyShip, it scares me a bit, does the market know something I don't? Is the debt going to prove tricky to re-finance? I wouldn't have thought so but then I didn't think they would be at 32p either!

Best regards

SBP

[skyship] 27/6/2012 18:35

Good to see a couple of good-sized buys this afternoon - will help hasten the final departure of Lloyds.

32.25p - strewth, who would have thought it!#~/? Buy at that level and the yield = 10.9%. Get them through the book and you pay 32p for an 11% yield. Bizarre...

[skyship] 26/6/2012 17:32

Tilts - RE re-financing - this was from my Post No.72 back in April.

Imaginative solution @ 4.9% outside the banks:

=====================================================
Big Yellow Group PLC

New GBP100 million 15 year loan with Aviva Commercial Finance Limited

Big Yellow Group PLC ("the Group" or "Big Yellow") announces that it has entered into a new GBP100 million 15 year loan with Aviva Commercial Finance Limited, secured over a portfolio of 15 freehold self storage centres valued at GBP242.1 million at 29 February 2012. The annual fixed interest rate on the loan is 4.90%.

The new 15 year term loan has been deployed to repay and cancel GBP100 million of the Group's core bank debt facility, reducing it to GBP225 million of which GBP190 million is drawn. This facility expires in September 2013 and is secured on the remainder of the Group's self storage centres. The repayment and cancellation has been disproportionately applied against HSH Nordbank's commitment which has been reduced from GBP150 million to GBP65 million.

The Group has cancelled GBP100 million of interest rate derivatives at a cost of GBP9.2 million. In addition to the Aviva fixed rate loan, there is a residual GBP90 million interest rate swap in the core bank debt facility at 2.99% plus margin to September 2015, with the remaining GBP100 million of the core bank debt paying at floating rates plus margin. As a result of this transaction, we have repaid GBP100 million of bank debt which was costing 4.8% per annum, with a 15 year loan fixed at 4.9% per annum. The Group's proforma average cost of debt remains at 3.7%.

The loan amortises to GBP60 million over the course of the 15 years, consistent with the Group's medium term debt reduction strategy. The debt service is payable monthly based on fixed annual amounts. The loan outstanding on the fifth anniversary will be GBP89.8 million; GBP76.7 million on the tenth anniversary, with GBP60 million at expiry in April 2027.

John Trotman, Chief Financial Officer of Big Yellow commented, "We are delighted to have arranged this new loan with Aviva which provides a stable core of long term financing for the Group from a new debt provider to the business. We will now enter into discussions with our banking group, who continue to be supportive, with a view to refinancing the core bank debt facility in the current year."
============================================

[gary1966] 26/6/2012 16:48

Enviro,

Maybe that is what they are doing on the QT, liquidating the portfolio in an attempt to close the discount to NAV. Can't say that I would mind as long as disposals are at or above NAV.

Would they need special resolutions to do this or could it almost occur accidentally?

[pip_uk] 26/6/2012 16:15

Hi Envirovision just wondered if you still had an interest in Gagfah.
Read an article today by an investor of some repute evidently, saying where he would put his money and he said into German Property.
He seems to think that is where the money flow will go given the present debacle.
Pip.

[envirovision] 26/6/2012 15:55

That puts some perspective on things. Cedar House was sitting on the books undervalued by 25%.

25%! FFS !!!!

I would sooner see the whole portfolio disposed of I think.

OK solent road was only undervalue by a few percent, but plantation place was sitting a nil value and now this.

Why an earth is the share price so cratered, what the hell am I missing ?

[skyship] 26/6/2012 13:37

I recall deals taking place @ c5.0%

[gary1966] 26/6/2012 12:51

I will own shares in a cash shell if we carry on at this rate. LOL

[tiltonboy] 26/6/2012 12:33

All depends on what they could refinance at.

[skyship] 26/6/2012 12:04

Hi specuvestor

Obviously you've seen all as below – but posted nevertheless. I don't know why they made the majority of the swaps to a date past maturity – just made the position worse. But the hit is all in the figures and the damage is the difference between the conventional NAV & the EPRA NAV.

As I posted the other day I would prefer then to refinance now and pay off the swaps liability. Could be that they too are thinking that way – it would help explain the mounting warchest.

================================
Finance:

Details of the Company's debt and two swaps are set out in the table below as at 31 March 2012:

(For the stats use this link & scroll to the bottom:)



Securitised debt facility has a Liquidity Facility of GBP11.2 million provided by Lloyds Banking Group ('Lloyds'). Liquidity Facility Agreement requires the provider to have a minimum Standard & Poor's ('S&P') credit rating of A-1+, which Lloyds breached in March 2009 when they were downgraded by S&P to A-1. The breach required the Liquidity Facility to be drawn down in full and placed in a blocked deposit account or alternatively a new provider put in place. Accordingly, on the 23 September 2009 the Liquidity Facility was drawn down.

The Company has a single on-balance sheet loan facility that matures in July 2014, with no other on-balance sheet financing maturing prior to this date. Following the debt repayment on 15(th) April referred above, the Company's loan balance has reduced from GBP173.4 million to GBP163.5 million. Because the Company broke the cheaper swap maturing in 2014, the blended total interest cost increased slightly from 5.69% to 5.72%.
========================================

[tiltonboy] 26/6/2012 11:54

A shed load of stock on offer at 32.333p. I've had a couple of nibbles!

[skyship] 26/6/2012 11:52

Another disposal - OK, only £1m; but above valuation:

[sleepy] 23/6/2012 18:58

I thought the interim results showed that only a dividend of c. 1.1p for the half year (2.2p for the year) would be covered but perhaps I don't fully appreciate Mr. Owen's magic!

Anyone heard anything on how the Picton refinancing is going?