Secure Income Reit Share Discussion Threads

[adae] 19/5/2020 10:14

"Landlord threatens to sue Travelodge" [Thought it would be SIR]

"Travelodge has been warned that it could face court action if it pushes ahead with a restructuring to cut rents.
CPGG, the landlord the brought a legal challenge against DEB last year, has accused the hotel chain of penalising landlords while beefiting from govnt support...
...TL, owned by hedge funds GoldenTree AM, Avenue Capital, and Goldman Sachs, has furloughed staff and been granted business rates relief.
In a letter...TL has warned...unless waive up to £146m in rent...CVA...to slash rents and leave sites. Landlords have been blocked from taking legal action by the govnt, which has issued a temp ban on statutory demands.
CPGG says TL should not pursue a CVA and that a key ruling from the Debenhams case - which found that tenants could not protect their best properties from being taken back by landlords in a CVA - could be a stumbling block".

(Any mistakes mine).

So not a slam dunk, but interesting to see CPCG, SIR etc are on the same page. No one's going to let TL's locust owners get away lightly.

As said above, I'd be right behind SIR if they took a short-term hit to avoid being screwed over by TL. Would be a precedent followed in the future by others.

[bondholder] 19/5/2020 09:59

Interesting.What was the basis for the article suggesting a CVA might fail?

[adae] 17/5/2020 16:21

Interesting article on front of Sunday Times Business section, saying Travelodge CVA may not work/may get challenged.

Also pointing out they've furloughed staff/taken advantage of the govnt schemes, but leaving landlords high & dry.

[adae] 15/5/2020 13:15

250p wasn't the best averaging price, only 3 days ago, and since it's effectively all the management, not sure what that says about the Travelodge uncertainty.

[redponza] 15/5/2020 12:20

Insiders buying, maybe they think SIR can get back the sites pretty quickly and lend to another operator?

[adae] 14/5/2020 19:33

I hope Travelodge will be their EMI - PE has had it far too easy for far too long. Buy, gear, gear up some more, strip out costs, re-float for a killing.

Let SIR take the sites back, rent them on to new occupiers.

Worst-case would be a CVA or pre-pack which sees the vultures still in control, but the arrears escaped from.

[bondholder] 14/5/2020 18:17

Travelodge says its shareholders are sharing the burden of a collapse in revenues that could top £350m, based on analysts' forecasts of a 50 per cent fall in sales for the industry. In reality, owners are not providing extra cash without strings. They are offering £60m in loans and writing down the value of assets. That's not quite Lombard's definition of burden-sharing. From FT.Who wants to fund a company with half a billion in secured debt and no assets to speak of other than the brand which is pledged to the bondholders/banks?

[adae] 13/5/2020 16:28

Lol valid point! (Didn't they sell much of the healthcare side?).

The assets aren't going anywhere, Covid isn't sticking around for ever, but - as of right now, they do look awful. Can you socially distance in a rollercoaster queue?

[belgraviaboy] 13/5/2020 16:11

They just need people to re-start taking typical British weekends. A trip to Alton Towers, staying in a Travelodge, catching a show at Manchester Arena and ending up in some kind of a healthcare facility... and everything will fall into place.

In seriousness I could be a buyer in the 180-200p range

[adae] 13/5/2020 15:44

Averaged just above 232p. Expect to do so again on any Travelodge news.

[adae] 13/5/2020 09:28

I'd love - love - the PE boys to lose their shirts on Travelodge. Am 100% behind SIR in standing up to them.

Yes, may cost us a few % of rent roll, but IMO that can be justified when - as you say - the alternative may be to set a precedent.

[2sporrans] 13/5/2020 09:25

That article reveals that Goldmans/GT/Avenue are threatening a bankruptcy card to effectively walk away from rents.
If the landlords stand united and firm,, this can be blocked.

SIR and the group rep. for other 81 landlords are now willing to forfeit the March rent and take a haircut of 20% on April until Dec. 2020.
Those rent cuts would be deferrals until some later date [2021] when if Travelodge complies with contractual obligations the deferral would become write offs.
But this looks to me like a negotiating position rather than a realistic expectation of what Travelodge is going to pony up.

A further dilemna may be whatever 'precedent' any settlement may foment wrt future negotiations with the other stricken tenants - about 65% of SIR rents come from those, Travelodge [28%] included.

Oh well, at least there is movement in negotiations and seems to be solidarity amongst landlords who are preparing for a £500k lawsuit should negotiations fail.
+ "....landlords had received a number of unsolicited approaches from other budget hotel operators that were interested in taking on the leases."

[belgraviaboy] 13/5/2020 07:53

Article in the FT about Travelodge looking at a(nother) CVA

[adae] 05/5/2020 09:20

Bought in. The one concern - does the govnt banning repossession proceedings affect the Travelodge negotiations? GoldenTree, Avenue, & Goldman got a real cheek, would love to see them lose the asset. Am sure there's plenty of Newco budget hotels would love them, post-coronavirus. I'd happily take say a year without the income in SIR.

Paid £2.62, would have preferred the £1.80 low, but better than the c.£3.50 they bounced to :-)

[2sporrans] 03/5/2020 12:03

Good question about alternative uses for [Travelodge] assets bb.

It begs an extended version of your penultimate question:
What might the assets be worth in a Post CV19 world?
I mean, there won't be a return to 2019 circumstances; the whole game will move on
somewhat, including the macroeconomic environment.

Anyway, seems like emergency CV19 legislation in UK may block SIR from taking over the assets or render such an endeavour prohibitively expensive:



[Travelodge are shouting for 80% rent reduction until end of 2020, 50% off for 2021.]

Still, Politicos frequently change their tunes.
And like you say, the potential for a capital injection from Travelodge's 3 main shareholders should not be overlooked:

GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs

Avenue Capital seems to be a private equity fund with a vulture fund bias.
Not sure what GoldenTree is apart from being an asset management co. set up 20 years ago, HQ New York + London, Singapore offices.
The trio at least look unlikely to face insolvency issues, on the face of it.

So basically all 3 are American which I guess while it makes the situation that bit less tractable, might help wrt UK political 'adjustment'; not that I'm holding my breath.

It does look to me, fwliw, that while considerable rent deferral/rescheduling is in order, the case for any cancellation is shaky.

[belgraviaboy] 01/5/2020 12:20

All a bit grim for SIR at the moment.

That said I think Merlin are trying to get a $500m bond issue away - but that does not mean they will use it for rents. However, the owners have plenty invested here and I can't see them wanting to see it go up in smoke.

Travelodge needs an equity injection - SIR have rightly said they are not just going to waive 80% of the rent until the end of '21. GS and co need to anti up to get any rent consessions.

The other question is what are these assets worth in a CV19 world? If SIR are forced to take control of the assets who else could put them to use?

[2sporrans] 01/5/2020 11:01

SIR's rent comes in the great main from just 3 Tenants; about 87% comes from:

Merlin Entertainments Limited ~31%
Ramsay Health Care Limited ~30%
Travelodge Hotels Limited ~26%

Clearly Merlin is under the cosh as is Travelodge and some of the lesser tenants.


This statement from Merlin, though 4 weeks ago, is well worth a read:




Ramsey should bear up ok; enough to keep up the rents, though it too is on reduced fee earning business and forward guidence on hold:




Travelodge still operating a skeleton service
Guess a lot will depend upon extent/continuity of Gov't support:





So all in all pretty grim on the rental prospects going forward.
For how long is the main issue and great unknown.

SIR has over £200mn of 'headroom' thanks to cash reserve and has credit lines it
can tap for more but guess the divi could well take a haircut in Q2, Q3....maybe Q4 into 2021....

280p share price equates to 6% yield if the 4.2p/qtr divi holds.

[andyj] 23/4/2020 08:17

Well that statement worked wonders. Perhaps silence was better after all.

[belgraviaboy] 21/4/2020 18:56

Do you think rent on Manchester Arena rent will be paid next time? To name one....

[scallywagkid] 21/4/2020 15:20

Share price will now just drift down in news vacuum. Come on SIR, get a grip.

[scallywagkid] 21/4/2020 15:18

And still we PI's wait! Clear statement of intent on 06 April not fulfilled. A brief line to clarify divi status / intent in light of Travelodge is hardly beyond the wit of the Board. Poor PR.

[2sporrans] 20/4/2020 11:22

So, where's the confirmation of 4.2p divi. RNS?

Instead there's an update on Travelodge and the 6.4% oF SIR rental income from it withheld and no communication received as to a work around proposal.

Hmmm.

[rambutan2] 06/4/2020 14:33

Noted:

6 April 2020

Secure Income REIT Plc

(the "Company")

Covid-19 Update

The evolving impact of Covid-19 and the responses to it, including the UK wide 'lockdown', undoubtedly present challenges to a great many businesses across the globe. At this time of uncertainty, our priorities are to keep our team safe, maintain close relationships with our tenants and to ensure that the Company's financial position remains strong.

The Company confirms that of the rents due to date, representing over 94% of the total quarterly rent roll, 76% has been paid on time. The balance of the quarter's rent (either not yet due or due but remaining outstanding) is subject to active discussions to agree an appropriate level of temporary deferment in support of businesses that have had to suffer forced closure.

The Company's management team has had very long relationships with all of the Company's major tenants and, consistent with its aim to work in long term partnership with them, it wishes to be supportive of those affected businesses whilst protecting its own position and its responsibility to its shareholders. The Company's tenant roster is made up of well-known, long established businesses with excellent management teams and substantial owners, occupying key operating assets with high barriers to entry. While current conditions, including forced temporary closures of tenant premises, will require collaboration between all stakeholders to deal with the cash flow challenges resulting from the pandemic, those discussions are already underway where necessary.

Secure Income REIT Plc is in a strong financial position, with a net loan to value ratio at 31 December 2019 of 32% across its non-recourse debt structures and GBP234 million of uncommitted cash. Significant covenant headroom is maintained in all of the Group's debt facilities, as presented in detail on page 20 of the Company's preliminary results announcement of 12 March 2020, which is available on the Company's website.

The Company intends to announce its next quarterly dividend on 20th April and confirms its previous guidance that this will remain at 4.2 pence per share, consistent with the previous quarter's dividend. The Board will continue to keep its dividend policy under review as responses to the pandemic develop.

[andyj] 04/4/2020 05:14

I have lost faith in the management here. Awarding themselves millions of free shares as a bonus as the share price falls 60%? Feels like the captains are stuffing their pockets full of treasures as the ship sinks. Yet another fund run by opportunistic cowboys.

[2sporrans] 18/3/2020 16:41

Yep, same as around the Brexit Ref.

Irony is that the if the OE funds weren't into their own version of lockdown.....
there'd be a rash of forced property sales to meet investor withdrawal obligations