Schroder Real Estate Inv... Share Discussion Threads

[spectoacc] 25/9/2022 19:52

@m_kerr - and $ earners. Trouble is, anything with "..Stable, recession proof earnings" isn't exactly cheap, on the logic that anyone running a fund needs to be invested, hence bidding up the "safe" stocks.

There'll be a time to buy junk in this downturn too - but it isn't yet IMO.

Sitting in the safety of the REITs hasn't proved all that safe, but I'd still take the yields, relatively secure cashflows, physical assets offsetting inflation & low debt/gearing/interest rate.

[m_kerr] 25/9/2022 16:32

i'd be wary of private equity. don't know too much about HVPE but i wouldnt invest in karna or shein at any price, and in addition they are spread so thinly that it's impossible to really understand what you're investing in.

some people like PE because during downturns they don't tend to mark down their portfolios as sharply as the public markets, giving the false perception of stable values. PE have also greatly benefitted from free / cheap debt, take that away and their model doesnt work at current valuations. buying / selling of companies has come to a shuddering halt since the UKR invasion for this reason.

(as always) the ones to be buying into at the moment are companies with low gearing and / or stable, recession proof earnings.

[fred177] 24/9/2022 22:56

Or opportunity knocks

Hughie Green shows those were the days

[spectoacc] 24/9/2022 19:45

Credit to you in sticking to your guns & selling out @Skyship. SREI seem great value to me, at least on a medium term view, but short term who knows.

Opportunity cost.

[skyship] 23/9/2022 20:22

Well, I sold the last of my SREI at c46.5p as believe that Head & Shoulders Top Formation may well play out - so target 40p.

As Specto & Riverman state above, perhaps find value in the PE trusts. HVPE look to be a great buy now that they've finally admitted that value enhancing buybacks have to be done.

At 2260p they are on a Jun'22 NAV discount of 45%; but that = 48% with today's exchange rate.

IMO the best value of the PE trusts; and UKCM the best value of the REITs - 45% discount and a lowly 13% LTV.

[m_kerr] 23/9/2022 19:52

rising interest rates will really hammer those with higher gearing. ones like this with conservative LTVs and long term low interest financing have a good chance of delivering good returns. as always, investing at fallen values with the known risks incorporated is a good time to buy, though clearly private investors are hardwired to sell during times like this.

[2wild] 22/9/2022 14:00

Intended for UKCM thread

[chucko1] 22/9/2022 13:59

MRF, my sentiments entirely. Property, so long as it is not overly leveraged, performs pretty well in rising interest environments where the rises are essentially inflation-driven.

However, there is a lag between initiation of rate rises and REIT prices stopping falling. But that is the period to add, add and add more.

Picking a bottom is a fool's errand. Buying cheapness is not.

[my retirement fund] 22/9/2022 11:53

I agree, can't really say where the bottom is, my best guess is we could see 40p though looking at the RSI downward channel forming and historic resistance/support from end 2020 into 2021. I am patiently adding on the way down to bring my holding up to a reasonable percentage of my portfolio as property is always a good hedge for longer term inflation, but indeed I don't want to over do it. The 2000-03 was a very depressing time to be in the market.


free stock charts from uk.advfn.com

[riverman77] 22/9/2022 11:33

Yes personally see even better value in the PE funds, such as APEO and ICGT which I think will actually be more resilient than commercial property and on even higher discounts (plus mainly non GBP exposure as an added benefit). Currently only have SREI and API on the property side but may look to add.

[spectoacc] 22/9/2022 11:24

Fair comments. A lot of the -90% stuff looks like it could have another 90% to fall - the likes of THG, JET, OCDO, TRST etc.

Guess my fear is the 2000-03 experience, which was a long grind.

PE ITs will be tempting eventually, & perhaps a good comparison to the REITs, being also assessed against NAV.

Suspect all on here are well loaded on REITs already, so the (next) average down needs careful timing. I thought the real assets the REITs hold would do better in an inflationary environment (they still might), but interest rates seem to rule all atm.

BoE in 35 minutes..

[riverman77] 22/9/2022 11:15

It's impossible to say exactly when the bottom will be. Could be 50% discount, but could be higher. I'd say if you think there's value on a medium term view then time to start gradually adding.

Opportunity cost implies there is somewhere else to invest that will provide higher returns in the time in takes for this to recover - not sure if there's anywhere obvious as pretty much everything down at the moment?

[spectoacc] 22/9/2022 11:05

Agreed, but. Opportunity Cost.

SREI, API, UKCM - are we going to see 50% discounts on (historic) NAV before the bottom's reached?

[riverman77] 22/9/2022 11:02

His comments about 15% fall in property market seem to be coming back to bite him (obviously not all this fall down to that, but probably not helping). However, I heard those comments several weeks ago in a Citywire interview, and the point was that the falls would not be equal - certain areas could see sharper falls (dated or poorly located offices, big box industrials, etc) but he thinks SREI is better placed with higher yielding properties in areas such as multi-let industrials where there has been less development. Looks insanely cheap at these levels.

[spectoacc] 22/9/2022 08:17

SGRO went to a crazy premium. Yes, been a lot of yield compression in Industrial, but there's also a lot of rent rises ahead. Lack of supply coming up against structural change. SGRO a quality operator but not sure I'd know when to buy - already at 2 year low.

Someone sold 75k SREI this morning & got all of 44.92p (45.1p bid). Still a weak market.

[m_kerr] 20/9/2022 22:22

don't like to toot my own horn but i looked at segro in february this year and it looked very overpriced to me. in particular i was shocked at how modest rental growth was - the valuation rises are almost entirely down to yield compression i.e. sentiment:

'3-3.5% yields nowadays in the sector. just 5 years ago you were looking at 6% yields. comparing the figures for rent per square foot, broadly speaking the like for like increases look to be up roughly 10-20% since then (much lower i imagined - it's not a like for like comparison due to changing geographies etc). so effectively, yield compression alone has an 84% increase in valuation, with rental growth on top providing the further gain. in order to get the same valuation increase again in 5 years time would require the yield to fall to ridiculously low levels - 1.8%. in other words, i get the feeling that the time to buy into this sector and make good returns has come and gone. a geared 2% starting yield including the increase today is very low indeed. '

[skyship] 20/9/2022 20:43

alter ego - thnx for posting the article.

[flyfisher] 20/9/2022 18:22

It was the august 3rd presentation.

[fred177] 20/9/2022 18:22

So nick do you see this as a buy ?

[nickrl] 20/9/2022 18:17

flyfisher thats my take when i read his article on citywire it sounded just like a recycled version of what he did on the results and investor meet. Nought wrong with that but what seemed an innocuous comment six weeks ago is now being latched onto to explain the falls.

[flyfisher] 20/9/2022 17:59

Nick Montgomery made that comment in a post results video presentation about 6 weeks ago. It seems to have been recycled.
It contributed to my exit.

[janeann] 20/9/2022 17:26

Well if Nick Montgomery, Schroders’ head of UK real estate investment thinks asset values are going to fall so dramatically why on eart has srei just instigated a share buy back programme. Just doesnt add up to me.

[spectoacc] 20/9/2022 16:30

Much as I dislike TA (show me the billionaire chartists), SREI & all the REITs undoubtedly look weak atm.

[skyship] 20/9/2022 14:26

Hmm - that rather nasty Head & Shoulders in my 1905 above seems to be playing out after the rally fizzled out at 49.4p