Schroder Real Estate Inv... Share Discussion Threads

[kenmitch] 18/11/2020 18:02

SKYSHIP

Don’t know whether this helps or is sensible, but on the question of when to sell the Investment Trust REITS I hold, I’m holding on for a return to somewhere near where their share prices were earlier this year and pre covid.

So for SREI that would be nearer to 57 (40p today) AEWU £1(78p now) AIRE 76p (60p) SERE 117p 93p)EPIC 90p (64p).

If not needing the cash is there also a case for holding for the dividends with further dividend increases likely for some of these?

[sphere25] 18/11/2020 15:44

Added here. Price looks very strong with buyers mopping up what appeared to be a little dip today. However, the price was skewed with yesterday's closing auction uncrossing at 39.75 relative to the offer into the close of 38.1p.

Have buyers in size at 39p too so roll on that attack on 40p!

[skyship] 18/11/2020 12:11

Flyer - BREI - well EI often posts that in his view their portfolio is better than that of SREI. They appear to be broadly similar in sector allocation:

.......Office......Industrial......Retail.....Retail W'hse.....Spec/Alt
BREI:...30%...........43%...........11%..........16%
SREI:...40%...........29%...........12%..........12%.............7%

BREI @ 62p is on a 34.6% discount
SREI @ 39p is on a 32.8% discount

.........Debt Cost..........LTV
BREI:....3.10%..............24.2%
SREI.. ..2.25%..............25.9%

BUT - we have that Buyback Scheme in operation...

[spectoacc] 18/11/2020 11:58

Most - if not all the ones I'm watching/in - are still trading below their post-Covid highs. SREI got over 42p in June & surely going back through that before long.

(RGL bounced back to over 90p in April for eg; AEWU 85p in August; BREI over 70p in late March. Assuming we're nearer the end of Covid than the beginning, and accounting for some vaccine success, they're all likely going back through those levels. And it'd still leave them well down on pre-Covid).

Profits always tempting tho - assuming something else more tempting to buy.

[skinny] 18/11/2020 11:55

Skyship - you beat me to that chart - post 1089.

[chucko1] 18/11/2020 11:52

But it is tempting!!! If I can stop eating orange Club biscuits (by the packet), we should all be able to resist the temptation of taking profits. Apart from just a few.

Some, like RGL, AEWU, AIRE have been absurdly easy to trade. But then they can go up 20 points and I would not want to have been caught short! (not literally short, but just not sufficiently long).

Some of the infra REITs are just as tradable.

[clausentum] 18/11/2020 11:09

There are many UK smaller companies that look cheap, but I am only too aware that some will go bust in the next year, but with REITs I am reassured by the NAV of the properties. Everyone is assuming that with vaccines on the horizon the next year will be a smooth recovery, but it would only take one more adverse reaction in the Oxford trial to dent that optimism, and give us another buying opportunity. I will only reduce my overweight REITs when I see something that I think is better value.

[chucko1] 18/11/2020 10:43

Why sell? The long term fundamentals for many of these REITs are barely worse than they were in February, but they are still 30% lower than their 2020 highs. Long term rates are lower by an amount to offset any slight worsening of prospects (apart from retail, which is a whole different story).

Sell a few because they are pretty easy to trade (which I have used to improve my average entry level significantly), but trying to time this market wholesale is an appalling proposition, in my opinion.

And 30% lower means a 40% rise + 7% dividend yield, say. Recovery over 3 years implies an IRR of circa 20%. I don't want to miss any molecule of that.

I do not have all my eggs in the REIT basket, for sure, but I cannot think of anything with better prospects of enhancing a conservative portfolio. The history of REIT recovery in the US post market blow-up is compelling. Should be over in the UK as well. Check out the history of PHP LN.

[skyship] 18/11/2020 10:09

The November rise has been a fantastically profitable and predictable run in which most of us will have shared.

The question now is of course - when to cash-in?

I am one of those who always sells too early; however have resisted thus far; but when we hit 40p!!!

Even at that level they will still be on a 31% discount. If the buybacks continue to a 25% discount level that would deliver 43.5p.


free stock charts from uk.advfn.com

[flyer61] 18/11/2020 09:47

Thanks SKYSHIP....any thoughts on BREI.

[skyship] 18/11/2020 08:44

Interesting - 10% rise yesterday, but no buybacks declared.

Will they set themselves a limit do you think; and if so at what level - 40p perhaps?

[my retirement fund] 17/11/2020 16:55

Wow so pleased I hold these. 50p cannot be that far now surely?

[sphere25] 17/11/2020 14:26

Nibbling away here. Moving beautifully intraday and breaking significant levels on the chart.

Headed nicely into the 40's on the back of today's news folks?

[skyship] 17/11/2020 11:33

chucko - certainly sounds like that in the BT webcast.

Incidentally Nick, double thanks for reminding me of that.

[chucko1] 17/11/2020 11:18

They do pay a running fee to have the facility, and of course, a higher fee when they are drawing. But times like this show the benefit of liquidity and at a pretty low price.

They did say that they were targeting spending much of their cash in the next 6-9 months. this would produce around £4mn of additional rental income.

All going well, they will arrive at a fully restored dividend.

[flyer61] 17/11/2020 11:18

Just the way you want a facility. Nothing doing this side of Xmas/Brexit (the cynics might say the board is now on their Xmas holidays) we'll pull it down in the new year if we need it....

[nickrl] 17/11/2020 11:08

Sky one of them did make the point on the Q&A that the RCF is really flexible can be drawn and paid back as many times as they want without penalties.

[skyship] 17/11/2020 10:49

Re the RCF – see more in Note 9:
=========================
The Company also has in place a revolving credit facility ('RCF') with Royal Bank of Scotland. In January 2019 the RCF limit was increased from GBP32.5 million to GBP52.5 million. As at 30 September 2020 the facility was completely drawn (September 2019: GBPnil; March 2020: GBPnil)…..

….The RBS revolving credit facility can, by its nature, be drawn down and repaid at any time and on 17 November 2020 the full balance of GBP52.5 million will be repaid in full and without penalty. As such, as at 30 September 2020 the fair value of the Group's GBP52.5 million loan drawn was also deemed to be GBP52.5 million.
==========================

Personally I don’t see much to this other than, I suppose, an indication that any large splurge on more property beyond the £60m referred to by Nick above (thnx for that Nick) is definitely on hold for the time-being.

Still, a good spot Flyer. Glad someone reads the fine print:)

[spectoacc] 17/11/2020 10:45

Thanks both.

Looking forward to PCA one too!

[nickrl] 17/11/2020 10:37

Listened to the investor presentation on BrightTalk

hxxps://www.schroders.com/en/sysglobalassets/investment-trusts/sreit/documents/schroder-real-estate-investment-trust_interim-presentation_17.11.20.pdf

Confirming share buyback will restart as board see its still NAV accretive but indicating they want 60m for potential acquisitions to increase NRI by £4m pa but still leaves plenty for buybacks.

Said there in no rush to buy but did say on Q&A they were outbid on some assets. Also in Q&A wanted to emphasise share buybacks aren't there only ammunition to increase NAV.

If it wasn't for retail/leisure rental collection would be around 96% but still a solid 86%. Got out of them on Q&A they have another 0.5m pa due/qtr on monthly/deferrals and 0.5mpa is from "can pay but wont brigade" (there words!) and they are pushing them harder but aren't convinced moratorium will be lifted in December to use legal action. They also intimated they expect most will just pay up once they have no protection.

Settled with University of Law adding 0.415m pa and go on to show 1.4mpa added for next year already with 2.7m pa extra within two years on existing leases (dont mention what is at risk though!)

Expect to be able to further improve dividend over next few qtrs.

One of the better REITs ive listened to. Next up is PCA at 11 which will be a contrast im sure.

[chucko1] 17/11/2020 10:19

Listening to the results now - presenters significantly more adult than the equivalent SUPP tribe!

This REIT clearly has a lot further to run over the next year or so, assuming no significant vaccine hiccups.

Also, they are demonstrating the circumstances where share buybacks make sense. At a 30-40% discount, and a strong balance sheet, this is "unarguable" (although people do).

[colonel a] 17/11/2020 09:49

Good spot.
I guess they are telling us as much about why it is being repaid as to why it was drawn down.
I think this suggests the draw down was in anticipation of a potential nightmare scenario, and that they think the worst is over?

[flyer61] 17/11/2020 09:23

Well good news all round....cheers SKYSHIP

now would anybody like to make a comment on this

The Group has served notice to repay the full drawn balance of £52.5 million of the RBS RCF on 17 November 2020.

Page 37 note 15. The second to last point of the whole report.

[skyship] 17/11/2020 08:38

Specto - quite right; even my own buyback spreadsheet confirms it - DOH!

Damned frustrating morning. Tried to buy more in the 35s but couldn't get a quote for more than 2000 shares with both YouInvest and IDealing. Fortunately was able to add to my CFD purchase with Accendo.

Interesting now to look forward a few days:

At 37p the NAV discount = 36.2%

At 38p the NAV discount = 34.5%

At 39p the NAV discount = 32.8%

At 40p the NAV discount = 31.0%