Spec Inves Prop Share Discussion Threads

[hedgehog 100] 03/3/2016 21:21

Since 23rd. January 2016 SIPP (formerly HCP) has risen from 14p (consolidation-adjusted) to 19.5p, a gain of 39.3%, on strong recent volume:




In bearish market conditions this shows SIPP's sound defensive properties, combined with decent growth prospects even in challenging economic times.

[hedgehog 100] 03/3/2016 17:20

Some extracts from the 15th. January RNS from HCP (now renamed SIPP).
Note Puma's track-record of top performance, strong fund-raising capability, and experience and contacts in the care sector:

15/01/2016 07:00 UK Regulatory (RNS & others) Hotel Corp (The) PLC Placing & Open Offer and Notice of EGM

"2.6 Property Investment Adviser

The Company announced today that it had entered into a property investment advisory agreement with Puma Investments. Puma Investments is a subsidiary of the Shore Capital group of companies. This agreement is summarised in the Circular.

The asset management division of Shore Capital, including Puma Investments, has a long and successful track record of investing in property and property-related schemes, dating back to the launch of Puma Property in 2002 which achieved an IRR of close to 40 per cent. per annum. Its track record in smaller companies is now nearly 20 years. It currently manages six Venture Capital Trusts ("VCTs") which specialise in property and construction related deals. Each VCT is a five year life vehicle and the first five Puma VCTs launched, the last of which liquidated in 2014, were each rated the top performer in their peer group by the independent research house Martin Churchill's Tax Efficient Review (September 2014). The VCTs have raised close to GBP200 million to date.

Puma Investments also manages a discretionary portfolio service invested in four specialised EIS companies (two focused on construction and two on pubs) and advises Heritage Square, a specialist property lender. An affiliate within the group is the property adviser to two investment property funds in Germany, Puma Brandenburg and Brandenburg Realty. In total the fund management group has around GBP800 million under management and has a large dedicated group of around 45 investment and property professionals.

Puma Investments has demonstrated that it has strong fund-raising capability. The latest VCT, VCT 11, listed in May 2015 having raised over GBP30 million, making it the largest limited life VCT raising in that tax year (2014/5). Brandenburg Realty also closed in 2015, raising EUR150 million in equity. The EIS companies have raised GBP28 million since inception in 2014.

2.7 Puma Investments' Track Record in the Care Sector

Puma Investments has substantial experience in the care sector having been involved in the construction and development of 12 homes for adults with learning difficulties, nine of which have been completed. It has been similarly involved in five care homes for the elderly, two of which have been completed and three of which are in construction.

2.8 Deal Flow

Puma Investments has strong deal flow in the relevant sectors, including supported living properties and care homes for the elderly. Puma Investments has the platform to assist the Company in executing the investment strategy, working with experienced developers who have a strong track record experience of developing quality assets in these robust sectors of the property market.

2.9 Financial Returns

The returns from the investment strategy are likely initially to be in the form of net income available for distribution. In due course, it is expected that there will also be the potential for capital growth as the specialised sectors become more acceptable for institutional investment and the portfolio which can be offered to third parties grows in size.

Initial assessments indicate a strong potential for income generation, most of which could be distributed in dividends after covering the Company's overheads. The Company will target an initial dividend yield of seven per cent. per annum."

[hedgehog 100] 02/3/2016 17:05

02/03/2016 07:00 UKREG Specialist Investment Properties PLC Completion of Capital Raising & First Acquisitions

" ... The Company is pleased to announce that it has now begun to implement this Investment Policy with the completion of the acquisition of its first two properties. Secta Properties Limited ("Secta"), a subsidiary of SIPP, has successfully completed the acquisition and leaseback of two existing children's homes in Heywood and Bury, Greater Manchester. Both homes are leased to Meadows Care Limited, a well-established children's home care operator, with over 10 years' experience, on a 25-year inflation linked FRI lease.

The consideration for the two properties was GBP507,000 with SIPP funding GBP188,000 and the balance coming from funds drawn under the Framework Facility Agreement. The properties were purchased from Jonathan Rigg and Niel Shelmerdine, principals of Meadows Care Limited.

In addition to the acquisitions, Secta is in discussions to purchase two more residential properties in Birmingham to be leased to Meadows Care Limited; this would enable Meadows Care Limited to fulfil part of its contract with Birmingham City Council to provide children's accommodation. A selection of further properties in the area are also being identified.

The Company is also in discussions with developers, property owners and care operators in relation to further acquisition opportunities, both in the children's homes sector and supported living sector. Given the number of acquisition opportunities currently in negotiation, the Board expects the net proceeds of the Capital Raising to be fully deployed within the timeframe of three to six months stated in the Circular (defined below).

The initial average gross rental yield from the most advanced acquisition opportunities currently identified and in discussion is expected to exceed 8% per annum. ... "




SIPP has edged up a quarter penny on the day, to 19.5p (19p - 20p).

[hedgehog 100] 01/3/2016 18:29

23/02/2016 07:00 UKREG Specialist Investment Properties PLC Result of Round 2 of the Open Offer
"... The Company has therefore raised gross proceeds of c.GBP2.14 million from the Placing and Open Offer. ...
Following Admission, the Company's issued share capital will consist of 13,204,095 Ordinary Shares, all with voting rights. The total number of current voting rights in the Company will therefore be 13,204,095. This figure (13,204,095) may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change in their interest in, the Company. ... "



The net proceeds of the placing and open offer (i.e. after costs) were approximately £2.04M.
Before the fundraising the company held approximately £300,000 in cash.
So this adds up to about £2.34M., i.e. about 17.7p per share.

SIPP's current mid price is 19.25p.

[hedgehog 100] 01/3/2016 17:50

A large buy yesterday of 80,000 shares (the exchange market size is 2,500 shares):

Last 5 trades REFRESH MORE
Time/Date Price Volume Trade value Type
10:10:26 18.62 642 119.57 O
16:18:49 29-Feb-16 19.50 80,000 15,600.00 OK
12:27:08 29-Feb-16 18.59 4,782 888.85 O
09:35:32 29-Feb-16 18.75 336 63.00 O
16:31:44 26-Feb-16 18.50 10,000 1,850.00 O

[someuwin] 29/2/2016 10:00

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[hedgehog 100] 28/2/2016 16:08

In terms of the new strategy, it looks to be bang on the money: a defensive niche, undervalued, with excellent growth potential.
And with a sensible level of gearing (70%) to increase returns.

My opinion is that shareholders have come up trumps here, and that an investment in SIPP could now be an absolute cracker: especially from the current depressed level of 19.25p.

It's likely that the available stock now that the fundraising is over will be very small indeed, which means that few shares will be available as news of the new "Specialist Investment Properties plc" gets out.


And the icing on the cake is the company's tax losses of £13M.:

26/03/2015 16:23 UK Regulatory (RNS & others) Hotel Corp (The) PLC Final Results and Notice of AGM

" ... As at 31 December 2014 ...

GBP'000 ...

Retained losses (13,022) ..."




As far as I'm aware these will be eligible for offsetting against future profits, as the sector is the same (i.e. property), and in any case there has not been a reverse takeover here.

[hedgehog 100] 28/2/2016 15:42

The mainstream care home sector has seen strong institutional investor interest recently, and SIPP's more specialised focus looks to be ahead of the curve.
With good scope to build a sizeable property portfolio in this area relatively cheaply, before institutions start bidding prices up.

Moreover, unlike the shares bought by an investment trust, SIPP's investments will not be buyable elsewhere.

And to buy similar investments directly would be financially onerous for most retail investors, and without the liquidity of owning shares in a listed company.

Shares are often temporarily weak near the time of a fundraising, as with SIPP at 19.25p, but that can often present a good buying opportunity, as in this case.

[hedgehog 100] 28/2/2016 15:22

It's also important to note that SIPP will be undertaking an element of actual property development (with its increased scope for value-creation), as opposed to just buying 'completed' facilities for its purposes:

"Initial Programme
... Two of the properties are already in operation as care facilities for children and available as sale-and-leaseback opportunities while the two other properties would be open market purchases of standard homes for conversion. The adaptation work required is modest with a subsequent local authority compliance check prior to receipt of a designated change of use."

I.e. SIPP will be more of an active business than an investment trust is.


And SIPP's investing policy focus has shades of how Duncan Bannatyne built a large part of his initial fortune:
"The initial and primary focus is to make investments in purpose-built homes for adults with learning difficulties requiring support from carers (for example adults with autism), purpose-built care homes for the elderly and infirm and converted dwellings accommodating young adults/late teens requiring extensive support from social services."

Duncan Bannatyne:
"Net worth £175 million"
"He eventually sold the business for £28,000, founding a nursing home business called Quality Care Homes which he then sold for £26 million[7] in 1997 and children's nursery chain Just Learning for £12 million.[9]"

[hedgehog 100] 27/2/2016 15:32

SIPP (currently 19.25p) looks to have attractive potential in both the short, medium and longer terms:

1. SHORT/MEDIUM TERM.

• Strong positive newsflow as the company executes its initial property investment programme during March - June 2016.

• Follow-up company development: larger fundraising(s), and further acquisitions.

• Dividend policy: "The Company is targeting a dividend yield of seven per cent. per annum, and your Board expects to pay the first dividend in Q1 2017."

2. MEDIUM/LONGER TERM.

• Growth in dividends.

• Capital growth: " ... these properties can offer attractive returns on equity and the prospect of medium term capital growth as the chosen specific property category grows and becomes better appreciated by mainstream property investors."

• Move to increased rating as the company grows, develops a track-record in its new sub-sector, and becomes more widely-appreciated by the market.

[hedgehog 100] 27/2/2016 15:07

Shore Capital has raised hundreds of millions of pounds, so they're well-place to deliver the desired future funds for SIPP.

Especially with the resources and tech sectors being avoided by many investors at present due to global market concerns, and people seeking safer, domestic plays.

The aim will doubtless be to 'get bigger fast', to reduce the percentage of fixed costs.

And in the meantime, Puma is waiving some of its fees for 2016 (see section 2.10 of the Circular), and there will be strong positive newsflow.

There's an an ideal size from which a company like this can become a multi-bagger: too small, and fixed costs become too burdensome; whereas too big, and there can be insufficient quality opportunities in a chosen niche.

£10 - £15M. is probably the ideal early-stage starting point, and with more fundraising SIPP looks well-placed to approach or even reach that very quickly.

[hedgehog 100] 27/2/2016 14:48

From HCP's 15th. January 2016 circular:

"2.3 Initial Programme

The Property Investment Adviser has initially identified four properties for the Company to look to acquire. The acquisitions would comprise a combined investment of around £1.3 million, of which it is expected that around 70 per cent. can be financed by debt. The Company would seek to raise the debt initially from Heritage Square a specialist property lender advised by Puma Investments as the Company believes this offers faster execution at competitive pricing. As the Company acquires more properties and builds up a portfolio of income producing properties, it will look to refinance this initial debt with a longer term facility. Two of the properties are already in operation as care facilities for children and available as sale-and-leaseback opportunities while the two other properties would be open market purchases of standard homes for conversion. The adaptation work required is modest with a subsequent local authority compliance check prior to receipt of a designated change of use.

The Company would endeavour to acquire each home with an existing lease in place and with an established care operator. In relation to the two open market purchases, leases would be entered into with the care operator on acquisition which would be subject only to approval of the change of use. The Company will target such leases to be for a minimum term of 20 years (25 years on properties initially identified) on full repair and insuring (FRI) basis, with annual rent increases linked to the consumer price index (CPI). The care operator for the four properties has recently secured a substantial, term care placement contract with Birmingham City Council and needs additional space. This contract will support the care provider’s ability to meet the lease payments. The care provider is a well-established operator with over 10 years’ experience, already operates a network of 19 residential care units, one specialist school and has 36 young people in its care. It is a substantial enterprise with 250 staff based within five local authorities and also undertakes ad hoc work nationwide.

The Property Investment Adviser has additionally identified a pipeline of similar transactions which it will introduce to the Company for the Company to seek to execute within two to three months of the close of the Capital Raising. The Property Investment Adviser would then aim to identify further acquisitions which would be part financed through raising further equity in a larger fundraising or raisings."




P.S. Thanks A.L.

[alynch] 26/2/2016 20:51

Nice job, Hedgehog! :-)

[hedgehog 100] 26/2/2016 20:13

From the Specialist Investment Properties PLC website ("new website coming soon"):

"SPECIALIST INVESTMENT PROPERTIES PLC Update 25 Feb 2016
(Formerly Hotel Corporation plc)

Business Description and Investing Strategy

Investing Policy

At an Extraordinary General Meeting held on 16th September 2015 the Company adopted a new investing Policy. The Investing Policy adopted is for the Company to become an investment property company, acquiring and holding freehold properties (and, in rare cases, long lease-hold properties) in specialised sectors of the property market. The initial and primary focus is to make investments in purpose-build homes for adults with learning difficulties requiring support from carers (for example adults with autism), purpose-built care homes for the elderly and infirm and converted dwellings accommodating young adults/late teens requiring extensive support from social services. The Investing Policy for the Company will also allow it to invest in other specialist areas such as wedding and conference centres, other leisure facilities and, if sufficiently non-mainstream, residential or commercial property.

Specialised Investment Property Sectors

The areas listed above are outside of the classic investment property mainstream of commercial buildings let to businesses of good covenant on full repairing and insuring leases with five yearly upward only rent reviews. However, in many cases they can offer strong long-term security of income streams and, because they are more complex and specialised, offer higher initial yields. In many cases they also offer inflation indexed rents.

The specialist children’s homes sector, which will be the initial investment focus of the Company, is underpinned by the Children and Families Act, which places legal responsibility on local authorities to look after those young people. Local authorities are generally unable to place those with emotional or behavioural difficulties or complex care needs into foster homes and consequently they are placed in care facilities. These facilities are often run by outsourced specialist care providers who require leased residential accommodation. To execute this initial investment focus, the Company has entered into a Joint Venture with a children’s care specialist who will work with the Company to identify assets to purchase, develop relationships with operators and provide expert industry knowledge.

The Board believes that it can acquire and provide as landlord leased properties to these care providers. If acquired on prudent debt/equity gearing ratios, these properties can offer attractive returns on equity and the prospect of medium term capital growth as the chosen specific property category grows and becomes better appreciated by mainstream property investors. The Company intends to limit its leverage to approximately 70 per cent of the total asset value in normal circumstances.

RECENT EVENTS

On 15th January a Circular was sent to all shareholders proposing a Capital Restructuring together with a Placing and Open offer of 12,454,765 New Ordinary Shares at 20 pence per share and the issue of up to 4,151,485 Warrants. At the same time the Company would change its name to Specialist Investment Properties plc to more properly reflect its business.

At an Extraordinary General Meeting held on 8th February 2016, resolutions were passed to:

a. consolidate and sub-divide the Companies issued share capital,
b. to sub-divide the Company’s remaining unissued share capital.

A special resolution was also passed to change the Company’s name.

On 23rd February 2016 the Company announced the conclusion of rounds 1 and 2 of the Open Offer. Valid acceptances for 713,142 Open Offer Shares had been received. A further 10,000,000 New Shares would be issued under the Placing. Warrants totalling 3,571,035 will also be issued to Open Offer and Placing Shares.

Following admission for trading on the AIM on 25th February 2015, the Company’s issued share capital will consist of 13,204,095ordinary shares, all with voting rights."

[hedgehog 100] 26/2/2016 19:58

Company website:


London Stock Exchange website page:


Friday 26.2.16 closing data:
Change % Chg Cur Bid Offer High Low Open Volume
0.00 0.0% 19.25 18.50 20.00 19.25 19.25 19.25 27,737
Sector Turnover (m) Profit (m) EPS - Basic PE ratio Mkt Cap (m)
TRAVEL & LEISURE 0.0 -0.1 -0.29 0.0 2.5

SIPP looks to have attractive potential in both the short, medium and longer terms:

1. SHORT/MEDIUM TERM.

• Strong positive newsflow as the company executes its initial property investment programme during March - June 2016.

• Follow-up company development: larger fundraising(s), and further acquisitions.

• Dividend policy: "The Company is targeting a dividend yield of seven per cent. per annum, and your Board expects to pay the first dividend in Q1 2017."

2. MEDIUM/LONGER TERM.

• Growth in dividends.

• Capital growth: " ... these properties can offer attractive returns on equity and the prospect of medium term capital growth as the chosen specific property category grows and becomes better appreciated by mainstream property investors."

• Move to increased rating as the company grows, develops a track-record in its new sub-sector, and becomes more widely-appreciated by the market.

[someuwin] 03/2/2016 10:15

Can't log in!

Technical difficulties update – Log in connection and Phone systems

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We apologise for any inconvenience this may cause.

[james smith] 22/4/2015 11:06

Do not use TD under any circumstances. Absolutely useless.

[peterbill] 29/3/2015 05:49

I don't think CGT applies to SIPPs, I guess at any crystalisation, the ammount over the LTA limit is taxed at 55%

[karateboy] 02/3/2015 20:01

When you start taking pension from your SIPP, say at 55, is any increase in your SIPP value not subject to CGT ? Is SIPP privileges still valid while you start taking your pension?

[jayfella72] 19/2/2015 12:23

Ps. Once transfered its nothing to do with the pension company the responabilty is all yours.Hope that helps.

[jayfella72] 19/2/2015 12:21

HiI transfered my old work pension into my SIPP and went all in in Castleton Technology share and yes you can take it at 55.

[smurfy2001] 19/2/2015 10:48

Hi,

If l transfer an old work pension into a SIPP, can l have access to said money when l turn 55 as the pension l have indicates age 60?

[66ten] 26/11/2014 09:47

An alternative SIPP strategy or insanity ?

With all the political and economic uncertainty at the moment and many warning of a market crash at some time here is a hypothetical scenario that may be a solution, feel free to comment/ridicule/ support such a theory.

Traditional) A pension SIPP fully invested in various Trusts/Bonds/Equities etc. that has a value of £150,000 - assuming an average return of 10% pa then after 6 months this would be worth £157,500, the market then crashes 50% wiping out half and leaving £78,750 in the pot.

Alternative) The same SIPP holds £100,000 in cash and £50,000 is invested in a high return Trust such as BIOG which is averaging over 50% pa. After 6 months the trust could have gained another £15,000 and after the same market crash would be worth £32,500.
The overall value of the SIPP would be £132,500 a potential saving of £53,750 against the fully invested version and additionally would leave a large amount of cash to invest in any recovery.
If no crash were to happen within a year or two the Trust amount could easily double in value and would far outweigh any negative results of holding a large amount in cash.

[karateboy] 27/9/2014 10:55

I must say I was not aware of this multiplier i.e 25. Pension multipliers that I am aware are related to defined benefit...final salary schemes...these are my understanding for defined benefit schemes:
1. If your pension goes up in real term say by £1000 pa in a financial year, this is multiplied by 16 , and subtracted from your yearly limit, £40000...you can in this example make further pension contribution of £24000.
2. Your total defined benefit pension pa is multiplied by 20 to compare against lifetime limit. For example, at the time of taking your defined benefit pension, if your pension pa is £20000, this is multiplied by 20, Giving a value of £400,000 . This is subtracted from life time limit £1,250,0000 giving further fund of £850,0000 available for further pension investment.

I am not sure about your 25 multiplier...do you have any references for that...

If I understand what you Sutherland, saying , if you have two money purchase pension schemes, Say A and B. You are taking pension from A but not from B. Pension taken from A pa is multiplied
by 25 and it is subtracted from annual limit and is applied to B. I have assumed that you have only two pensions A and B.

My understanding is different for money purchase schemes such as SIPP. For Pension A: at the time of taking your pension A , pension A is valued. This is divided by annual limit multiplied by 100, giving a percentage of life time you have used. The remaining applies to pension B.

Example: Money purchase pension A has a value of £500,000. This is 40% of current lifetime.
This means you have used 40% of the lifetime limit. 60 % left to apply to pension B. I am not aware of any income from pension A is multiplied by 25 and subtracted again from pension B lifetime limit . Lifetime limit of 60% is fixed and is independent of your income from A.
The other thing we should be aware of is that if you start taking flexible income from say
SIPP from April 2015, your yearly limit may reduce from £40,000 pa to £10,000 pa.
This is to stop a loop hole that is currently available to make £1500 pa by opening and closing Small pot SIPP(<£10000) three times a year. HMRC rightly does not like it...

Regards...