Schroder Real Estate Inv... Share Discussion Threads

[frazboy] 03/12/2020 17:36

58. Half the initial tranche of the buy backs were completed after the end of the last reporting period but this has been offset by the dividend payment.

[chucko1] 03/12/2020 17:31

But what's the current NAV? 56p or so?

[skyship] 03/12/2020 17:10

So, they've resumed the buybacks - one can imagine the discussions about when and at what level. Sadly they missed the cheap stock...

03/12 - 465k @ 37.25p (highest price 37.90p)

[kenmitch] 02/12/2020 16:05

SKYSHIP.

I agree that it’s pointless spending long arguing for or against buybacks, as (a bit like with Brexit) minds are made up, and are almost impossible to sway.

But I can’t resist replying to your “just the one case” comment. There are so many similar examples. Look at what happened to Investment Trust share prices and discounts at the time of the March market crash. The many Trusts who had bought back often saw their share prices hammered. The buybacks provided no support with those buying back seeing similar or worse falls than Trusts that hadn’t. And it was the same with shares. US Companies had bought back on a scale like never before ahead of the crash, and yet the US market saw one of the biggest and fastest crashes ever.

[skyship] 02/12/2020 14:43

Ken - I won't take up more time debating the relevance of buybacks. I would say that your 1 & 2 above are one and the same; and exemplified by just the one case.

Then; of course the shares rise when supported and drift when not - but the current buybacks are only 20% into the permitted programme - so need to wait awhile.

Personally I'm surprised that we haven't seen a resumption since the Interims - especially seeing the volume late on Monday...looks like a missed opportunity.

[hindsight] 02/12/2020 14:35

Brought a few at 37.05, Im not exactly sure why did though

[kenmitch] 30/11/2020 17:28

SKYSHIP.

I take your point and the same point made by others that there are few bargains available for Trusts like SREI at present.

But whenever I post on buybacks there are almost no direct replies or counter points to the evidence I provide to back up my negative view of them.

e.g SERE far far better share price performance despite not buying back than SREI who have bought back.

e.g that shares and Trusts buying back often underperform shares and Trusts in the same sector who didn’t buy back. SERE vSREI is yet another such example.

e.g Trusts buying back often see the discount narrow and the share price rise a bit while they are buying back, only as has happened with SREI, for the share price to drop back when they stop.

[skyship] 30/11/2020 17:00

Ken - no problem disagreeing over buybacks; but just glad the Board agree with me over that one. Exceptional times, exceptional discount - so acted accordingly under the annually approved 15% Buyback Scheme.

Sphere - a good spot. If we picked up those then that one trade would cost £3.57m and add £2.1m to the Net Assets (0.42p/share!). Obviously no property acquisition is going to produce that instant return.

[flyer61] 30/11/2020 16:49

Well lets hope that is why they were waiting to buy back. A buyback of that amount at 36.4P would be good news! Cannot imagine the MM's would want to hold that many shares for long. Waiting for the RNS....

[sphere25] 30/11/2020 16:38

MSCI dump confirmed in auction with an exchange of 9.8m @36.4p

[kenmitch] 30/11/2020 16:29

SREI share price is up today despite no current support from buybacks. Isn’t it possible for Investment Trust REIT share price discounts to NAV to reduce without buybacks? e.g if investors decide a REIT looks good value as SREI certainly does. SREI has significantly underperformed others I hold like SERE who have not afaiaa bought back recently. What’s more SERE increased their dividend.

Much as I respect Skyship for his excellent posts and correct calls I just can’t fathom his absolute certainty about SREI buybacks being a no brainer. As with so many contrary views the points for and against are finely balanced yet people post with absolute certainty. Brexit was a classic example of this. Views were far too polarised on both sides of the argument.

[skyship] 30/11/2020 14:24

Specto - quite right - we see share prices down 20%/30%/40%; but we certainly don't see property valuations down anywhere near that - as recent acquisitions attest. 5%/10% at most. So really buybacks a bit of a no-brainer, especially for propcos with cash on their B/S.

Happily SREI see the logic in that.

[hindsight] 30/11/2020 10:56

Buybacks at these discounts look best investment to me, cant see much good commercial at -30%. And small REITs should be merging to reduce overheads going forward, but that turkeys voting for xmas.

[brwo349] 30/11/2020 10:55

Quite right kenmitch. The company should not be buying back shares just so short term traders can make a profit.

[flyer61] 30/11/2020 10:50

Yep the number one worry here is they are not going to find any bargains and just buy come what may. Keeps the fees up. Buybacks please.

[chucko1] 30/11/2020 10:46

The maths alone is persuasive - a 35% discount to NAV is worth 4.4% per annum over 10 years. If you can buy property in this market at a 4.4% yield "addition", then fine - but there is no evidence that you can. Not reasonable stuff, at any rate.

If we were talking about 1.00% per annum rather than 4.4%, then that is a different matter. But we are not.

[spectoacc] 30/11/2020 10:34

@kenmitch - agreed, but how many bargains have there been? Thought we'd get some with the UTs forced to sell, but not really seen any. There's a few REITs been buyers, but at yields generally similar to pre-Covid. And those who've sold have got good prices - few at any meaningful discount to NAV, some at a premium.

So I'm for buybacks - on the logic SREI's NAV isn't far out, and the discount they're buying the shares at is well beyond the discount on any property they could buy.

[kenmitch] 30/11/2020 10:26

I would much rather SREI invest spare cash on bargain priced acquisitions than spend it on buybacks. For traders buybacks might appeal, but for longer term investors what matters is not the share price and NAV next week or month, but longer term. Shrewd buys now from distressed sellers could work wonders for the SREI share price in time, along with possible dividend increases.And that way SREI could outperform too.

[spectoacc] 30/11/2020 09:12

Interesting - so SLI saying where they think the floor is. Could SREI have spotted an acquisition instead of buy-back I wonder? Or waiting on EU deal/no deal?

[skyship] 30/11/2020 08:52

SLI bought-in 1.85m shares on Friday. Regrettably our boys seem to have gone to sleep. In fairness, they did well holding off; but that tactical victory will be lost if they fail to time the resumption.

[sphere25] 30/11/2020 08:18

The underperformance here could be explained by forced tracker selling as this gets ejected from the MSCI Small Cap Index as of the close of play today. Clearly not much drama out there, beyond the odd pockets of selling in technically overbought shares, so perhaps that might explain the additional selling pressure here.

[skyship] 28/11/2020 09:05

An interesting extract from TRY’s Interim statement yesterday. SREI has a 40% allocation to offices:
======================

Offices:

This sector has suffered from universal negative sentiment as much of Europe’s office-based workforce switched to working from home (“WFH”). This all occurred in late March and into April, just as we entered our new financial year.

As spring turned to summer we saw a steady increase in returning to working in the office. This was far more pronounced in Continental cities, particularly smaller ones than in London (which holds the unfortunate accolade of the longest average commute of 77 minutes). Evidence from Scandinavian cities (including the largest, Stockholm) indicate office utilisation rates (the levels of occupancy compared with pre-COVID levels) reaching +80%. The major German cities have also reported much higher levels than London and again reflects the size of the city, commute times and the amount of decentralised office space (fewer floors than the CBD towers).

The low level of utilisation in London has clearly impacted existing and potential tenants’ behaviour. The silver lining on the proverbial cloud has been the lack of new supply (as commented upon in the Annual Report) which remains well below the long term average. However, as expected, demand has reduced whilst supply, particularly of second hand space, has risen every month since March and is now at 18.1m sq ft (long term average 14m sq ft) a level last seen in 2010.

Vacancy overall has now crept up to 6% across Central London but is much more pronounced in the City and Docklands than in the West End.

None of this market behaviour comes as a surprise and has been fully reflected (in our view) in share prices. The surprise has been the robustness of the property investment market and this has been echoed across Europe’s dominant cities. Long term capital has looked beyond the current crisis and clearly doesn’t buy into the ‘end of the office’ theory (nor do we). The last quarter of the year has already seen a number of significant transactions with competitive bidding and the major agencies are predicting prime yields to remain stable (initial yields at 3.75% for the West End, 4% for the City) as we progress into 2021. It is important to note that such demand is focused on prime, fit for purpose, buildings.

Paris has seen a similar investment picture with the headline grabbing sale by Unibail-Rodamco-Westfield of SHiFT, a 47,000 sq m brand new office for €620m. However, Paris is experiencing increasing new supply particularly in La Defense and other decentralised markets. Only the core central areas have maintained record low vacancy levels and we remain nervous about the prospects outside of this central sub-market.

As we move into the autumn we are experiencing a second wave of the virus in Europe and the nascent return to office movement appears at risk of being snuffed out. A pattern of tenants extending existing leasing arrangements whilst they assess their future requirements is emerging. WFH will therefore remain a key element of working patterns now and in the future, however the longer it continues to be the default option the greater the realisation that it is no panacea.

[skyship] 28/11/2020 07:30

Ahh - thnx, had forgotten the XD aspect.