Sdic Power Discussion Threads

[lagosboy] 15/4/2010 17:16

envirovision

Good luck to you, as well as SDIC, you might want to ask him about BILL, MR Mellon recently went on record saying market value could rise to $2 t $3 billion.....yes billion!!!!!

Unfortunately it has fallen 25% in last few weeks, giving a market cap of $75 million, Mr Mellon owns 30%. Check it out, ticker is BILL. Its a significant investment for him.

Regent Pacific might be worth a look too, ....go armed and dangerous.

Hopefully he wil have the answers. Cheers

[envirovision] 15/4/2010 17:07

kipes, i just hope we can corner him, it must be pretty embarassing for him, certainly if everyone knew his rating would take as big a bash as this share has.

My observation from an outsider point of view is the lack of news and time to correct the finance problem may indicate serouse lack of institutional shareholder support, I wonder if there have already been a couple of collapsed placing attempts allready.

[lagosboy] 15/4/2010 15:31

schrubs

12.75 on the bid, getting seriously ugly...what's going on?


Placing in the works.....lack of news/updates a concern also ???

Tempted to buy, but have learnt my lesson.

[lagosboy] 15/4/2010 09:16

kibes

totally agree....good luck

[kibes] 15/4/2010 08:59

lagosboy - exactly, if a fundraising is needed it is the large investors who will probably be offered a placing at some ridiculously low price. Small investors are screwed twice by fund managers/institutional investors in my opinion, once when these people buy their shares at a discount and second when they try to offload them all in a hurry and find they can't sell and so drag the price down for months.

I am going to the master investors conference as well and will ask Jim Mellon why he recommended SDIC as a hot tip in Moneyweek magazine not long ago when he must have had a clear idea where it was heading (down). The business model obviously isn't working.

[lagosboy] 14/4/2010 15:55

The reason, they often don't involved is that they are happy to protect their position at the expense of other shareholders and this often best served by ignoring the views of small shareholders and siding with management.

Having said that action was taken at Speymill McCau to remove the incumbent Board.

Insitutional Placings at deep discounts are a perfect example of this.

envirovision....good luck with Mr Mellon, although I am beginning to wonder if he really does know what is going on. I think he is pretty genuine and did not foresee the train wreck SDIC has become.

[envirovision] 14/4/2010 13:39

I'm going to master investors so will ask Jim Mellon what his take is on it.

[davidosh] 14/4/2010 13:15

envirovision......I suspect you are spot on there. I find that at most small caps I am involved in. They never get involved in helping to change things either. Too passive and very little ownership mentality.

[envirovision] 14/4/2010 13:02

I rather suspect the problem for a prospective shareholder is that we (that is to say the fantastic posters on here who've put in a lot of effort), know more than the insitutions infact do. Moreover probably care more than they do.

[lagosboy] 14/4/2010 12:57

I suspect they must have bought some very poor quality properties, structural problems are very expensive to rectify. I think general repairs are masquarading as refurbs.

On a more philosophical approach I see the arrangements between SYG and GOAL as incentive schemes. Everyone benefits if the Estate Valuation rises.

You see them as conflicts of interest. Where I agree with you is , (as with the banking crisis) is that the incentive schemes are too relaxed.

So I guess you have convinced me that incentivisation has indeed created a conflict of interset because there is no clawback or penalty for poor performance, simply reward for performing. The accounts can state all it likes about how well GOAL is doing but the only real indicator of any merit is the Estate Valuation.

Well done schrubs, I took you to task and on further reflection and having read thru the accounts again (which are full of self serving nonsense as you have pointed out) I think your analysis is better than mine.

I hope the insitutions look to take the necessary steps along with a capital raise and new management which I think is still needed for long term recovery.

If assets are to be sold to clear loans in breach, I hope management is up to te task.

[scburbs] 14/4/2010 10:41

Morning Lagosboy,

Apologies if I was appearing tempermental, perhaps a side effect of logging on after a night on the sauce! I will leave er indoors to sort you out!

The underlying point is that no one thing will sort this out. You have a tendency to take one of my points in isolation and then explain that this will not solve things which I completely agree with.

They need to sell properties, manage conflicts of interests, cut running costs and reduce vacancies. These four would collectively sort a lot of the problems out. The underlying question is whether the conflicts issue is stopping them addressing the other three. If having done these things they need further equity then that is the time to come to the market, i.e. on the front foot having proven their business model.

Here is another classic quote from the results in justification of the refurb

"Vacancies decreased marginally during the period from 14.9% as at 30 June 2009 to 14.3% as at 31 December 2009, demonstrating that the structural refurbishment programme will provide long term economic benefits."

They also say the refurb is 93% complete at 31 December. Therefore, it is unclear why they are expecting gradual medium term reductions in vacancies. They should be cutting vacancies quickly. This together with disposals (i.e. exactly what TAG have done so the evidence is there that it can be done) would go along way to sorting things out.

[lagosboy] 14/4/2010 10:08

schrubs

Now, now schrubs, don't get all tempremental on me.....er indoors and the girls have that well covered.

I agree on GOAL.....who really knows how they are doing and how good they are at their job, so far from this train wreck there is no evidence to support GOAL's performance other than a few self serving comments in a bright and shiny set of accounts which I take with a pinch of salt.

I do disagree that GOAL's remit has been increased simply to generate fees for SYG, but perhaps I am just less cynical than you on this one.


We don't know for sure if the breach is caused by too many properties being refurbed. The particular silo in breach could be secured by a fully refurbed property(s) just suffering a high vacancy rate. I doubt if the company even had clue this was coming so poor are the internal controls. I think you said that there is not even a Finance Director....that's pretty shabby and I am surprised it is permitted.

From an investment point, I see the bid at 13 cents today, I am sticking to sub 10 cents as a recovery/takeout play only......I have no confinece that the incumbent management can return this to 35 cents plus. The other banks must be getting a little fidgety.

[lopsidedgit1] 14/4/2010 09:43

not many people know the net asset value here is 0.86 euros but it only costs 0.15 euros to buy now. Yes thats right.

[scburbs] 13/4/2010 23:35

LOL! Not surprising that you should think I am missing the point! Some things never change. I really am quite dim given the number of times you have tried to enlighten me!

What is the interest cover potential breach caused by?

Too many properties in the refurbishment programme?

Lets not pretend that this is different from the conflict issue given Goal are paid for managing the refurbishment programme. The higher the vacant properties being refurbished the greater their fees!

Personally I was stunned when they extended the programme! People want to see the benefits of the refurbishment in terms of rentals, valuations and core vacancy reductions. There will not be many people agreeing with the boards detailed take on the programme!

"We are pleased with the progress of the programme thus far."



Personally I would love to be convinced. Evidence is what is needed. If the refurbishment programme had been minimised and rentals maximised would they be at risk of breaching the covenant?

[lagosboy] 13/4/2010 19:08

scburbs

Thank you for the information, it is, and your time appreciated.

Look, by conflict of interest we are referring to Mr Mellon's involvement in SDIC and SYG.

I think you are still missing the point.

Whilst I agree that SYG's fee is calculatedon the Estate Valuation at SDIC, Mr Mellon's shareholding is valued on the share price at SDIC. That share price valuation is best served by the Estate Valuation increasing.

The current banking covenant has actually ocurred despite Mr Mellon's holdings, it is the last thing he would have wanted as a 12 % shareholder. May I remind you that he has recently been buying shares at 30 cents plus.

My advice is that if you are going to take this further to focus on the real problems, which you have highlighted very well, rather than get drawn into a personal attcak on Mr Mellon which will only prove to be counter productive in my view.

If other insitutional shareholders and PI's wish to try to change the group structue and an agreement with SYG shareholders cab achieved, that's fine but I would view that as a bonus.

[scburbs] 13/4/2010 18:14

Lagosboy,

If I remember rightly you were of the view that there was no conflict of interest! Our main differences seem to stem from the fact that you hold just one opinion and anything else is wide of the mark, missing the point or way off base etc.

My view is that there are clear conflicts of interest that need to be managed. This view doesn't preclude there being other problems as well!

The conflict of interest is in my view responsible for the current banking covenant issues. If they had made the hard decisions and reduced the size of the portfolio then these issues would not have arisen and the share price would be much higher.

However, this does not explain the underperformance of their portfolio on other measures. I have now looked at a lot of German residential properties and across the board (with one obvious exception!) they seem to have had a very strong second half of 2009! This includes those who seem to have started the year from a very weak position like TAG Immobilien. SDIC talk about gradually reducing vacancies over the medium term whereas TAG have reduced residential vacancies by nearly 50% in 6 months! As you can imagine none of the others seem to have an FFO number quite like SDIC's which is a clear illustration of the overpayment for SYG/Goal services.

I will post a summary comparison at some point as this should show the performance variations more clearly.

[lagosboy] 13/4/2010 17:34

scburbs

I thought you subscribed to the view that the conflict of interest was the cause of the problems at SDIC.

Seems we agree afterall.

[scburbs] 12/4/2010 22:42

A illustration of a turnaround at a German residential property company (TAG Immobilien). The turnaround in vacancy and cost cuts has done wonders for the profitability and valuations for this company. They even managed to make some sensible disposals (c.10% of the portfolio) whilst making these improvements! Share price is nearly 4 times higher than trough valuation (current discount to NAV is just over 25% up from the trough discount of 84%).

Similar vacancy reductions should eliminate any covenant breach risks for SDIC.

"The two halves of the year 2009 were as different as can be for TAG. After the CEO changeover at the end of the first half, the management decided for reasons of transparency to simultaneously adjust the value of the properties by EUR -15.3 million and of the discontinued lines of business by EUR -9 million. These items resulted in a pre-tax loss (EBT) of EUR 28.4 million at the end of the first half of 2009. In contrast to this, the second half of 2009 was dominated by vacancy reductions and cost cuts. TAG saw initial successes from these measures during Q3/2009, and was able to build on them in Q4 by maintaining the required focus. The uptrend is evident in the quarterly results. For example, in Q3/2009 TAG had EUR 3.0 million in pre-tax earnings (EBT), followed by EUR 0.7 million in Q4. Due to the non-cash expenses from the first half, earnings before taxes (EBT) for the full year came to EUR -24.7 million.

The aggressive vacancy reduction was a direct contributor to the positive second-half performance. Vacancy was cut by 40% across the Group. In residential property alone, vacancy was reduced by nearly half, bringing the vacancy rate down from 16.4% to 10.1%. In Berlin, rental activities brought vacancy down to currently 14% (2008: 25.6%). This successful vacancy reduction is reflected in the rental profit, which at EUR 35 million at year-end 2009 is on par with that of the previous year - even given a high (property) sales volume of EUR 73 million in 2009. On an annualised basis, the vacancy reduction added EUR 2.4 million to the net income, which would be equivalent to a rise in NAV of 1 EUR per share."

[lagosboy] 12/4/2010 17:26

schrubs

Just further confirmation of how poorly SDIC has performed.

Did you invest for exposure to German Real Estate or exposure to Mr Mellon ?

I think many choose the latter and that is part of the problem.

When are the institutions going to get involved, after all Mr Mellon owns only 12%. It seems his influence runs much deeper but must be getting closer to a McCau situation

[scburbs] 12/4/2010 17:08

I wonder how they are pricing the float relative to NAV! Company seems to have been performing fairly well.

"GSW Immobilien AG ("GSW"), a leading privately-owned residential real estate company in Berlin is preparing for an IPO. The Company plans to list its shares on the Regulated Market (Prime Standard segment) of the Frankfurt Stock Exchange and on the Berlin Stock Exchange in the second quarter of 2010.

...

From 2006 to 2009, GSW increased residential rents on average by 3.2% per year on a like-for-like basis, while reducing the residential vacancy rate by an aggregate of 32%."

[lagosboy] 11/4/2010 14:23

Davidosh

Look, I am aware of all the personal connections and frankly would not rest my cap on anything that is published by any of them.

I have also made it clear that I would prefer more transparent and commerial manager and fee arrangements than those currently in force.

Where we differ is that (1) the 'conflicts of interst' are not the root
cause of SDIC pathetic performance.The causes run much deeper. (2) the conflict of interest argument is over blown. It is rich to complain now when it was disclosed in the pospectus and was available to all investors
prepared to do a little homework.

I would focus more on GOAL and try to establish if widening its operations and services to SDIC is producing the commercial advanatges outined by management in the last set of accounts.

[davidosh] 11/4/2010 13:43

lagosboy....You have just posted an extract from a writer who is very closely linked to one of the directors at SDIC namely JM. The mere fact that he states 'greater clarity is required as to management control and conflicts of interest' should be damning enough but certainly confirms that scburbs and I are on the right lines.

JM is the chairman of the company that controls t1ps and EK is one of their most infamous writers. You will have to accept at some stage that even JM is well aware of the conflicts and the need for changes.

[lagosboy] 11/4/2010 13:28

Are you guys going, might be interesting.


Finally, I am sitting at the back of a meeting to be held on 22nd April at Speymill Deutsche (SDIC). This balance sheet is not good and, further, greater clarity is required as to management control and conflicts of interest. Given that the sainted chairman of, ultimately, t1ps.com is also the boss of SDIC I shall have to pretend to be deferential. Only pretend, mind.