Sdic Power Discussion Threads

[pcuser] 05/5/2010 23:20

Boys ( & Girls ) watch the Euro plummet against GBP.
Have you looked after your hedges ?

[envirovision] 05/5/2010 22:37

daviddosh thats what i used to think myself for a while, but check out his recent postings on the pspi board, follow the thread post 216 onwards and you'll see he was just wasting peoples time for his own fun, simply sending them up. Scburbs im sure can confirm.

[lagosboy] 05/5/2010 20:23

davidosh

I guess he was a little aggresive, but that's life.

I guess never found out if JM comments to you were indeed accurate?

[davidosh] 05/5/2010 19:45

envirovision...I am not so sure he is a troll. ydderf is quite a serious investor and also has a property folio in Germany so I do think his views should be considered even if you or we do not agree with them !

[lagosboy] 05/5/2010 19:19

envirovision

Thanks for the heads up.

[envirovision] 05/5/2010 18:52

lagosboy, hes filtered this end however ydderf is a troll, please dont feed him.

[ydderf] 05/5/2010 18:42

it ain't gonna happen lagosboy - that's another reason it's called Germany!

they would restore the Mark before letting inflation in via a collapsed euro - that's another reason it's called Germany

can you imagine the spaniards and greeks resorting to their previous currencies?

now do you get it?

[lagosboy] 05/5/2010 17:31

ydderf

A combined PIIGs bailout would require absolutely massive amounts of bond purchases and liquidity creation, leading to debauchment of the currency and renewed asset price inflation, including in Germany (where we like property).

perhaps you had better read JM lips !

[ydderf] 05/5/2010 16:26

for all you UK centrics, who can't understand how freakish the UK and US credit culture is, read my lips - there ain't no inflation and credit driven inflation in housing prices in Germany, that's why ît's called GERMANY!

btw why doesn't anyone look at the german propcos?

Gagfah is a very good benchmark, why would anyone buy SDICS rather than Gagfah this afternoon for example?

[lagosboy] 05/5/2010 15:57

investor

I guess my concern would be that even if rents could be increased, those increases would lag behind the increase in debt servicing costs.

Presumably most tenants would have an annual contract and I would suggest that increasing rents is not that easy in practice, particularly within lower quality blocks. Tenant turnover will only increase vacancy rates.

The immediate outlook for inflation may not be too bad, but money printing on this scale and intervening in the bond markets , bailing out bankrupt countries all comes at a cost.

[investor_tp] 05/5/2010 13:52

For some recent inflation numbers (month to same month of previous year), check out:



Who says Germans "don't do" inflation? (FWIW, inflation has been historically low only since the Euro, average inflation was considerably higher during Deutschmark times). Add to that that the ECB is much less likely now to raise rates in the near future, with the whole sovereign debt crisis going on and all, and might even be forced to intervene in the bonds market directly, the outlook for inflation picking up is not too bad IMHO. (German governments also don't mind a bit of (wage) inflation in times like this, since it increases their tax intake by stealth, keyword 'cold progression').

I don't believe the current government is likely to cap rents in any way. It's just not in their DNA, and it's not as easy as it sounds. There's even legislation on the way that will make it considerably easier to increase rents that are below the local average (it will then be sufficient to refer to a non-official more simple rent comparison table (Mietspiegel) rather than an official one to justify a rent increase).

[scburbs] 05/5/2010 13:32

I suspect they may have been a bit too ambitious on their pricing.

"GSW Immobilien AG decides to postpone planned IPO

Berlin, May 5, 2010 - GSW Immobilien AG ("GSW") has decided to postpone its planned initial public offering. Since announcing its intention to float there has been significantly increased volatility and uncertainty in global equity markets. Recent macroeconomic developments unrelated to GSW have resulted in a siginificant deterioration of the capital market environment."

[lagosboy] 05/5/2010 13:22

davidosh


I am not sure that inflation is a nailed on benefit, but I value your view based on your much greater experience.

My guess would be that Govt intervention to control rent increases would put a cap on property price appreciation whilst debt servicing costs increased by a greater percentages. With the comlex covenat structure in place at SDIC this might create more of a problem.

Nice to get some positive news Okison, echo schrubs

[scburbs] 05/5/2010 13:13

Thanks Okisen,

The residential climate is very very strong, up to 138.3 from 131.9.

Astonishing that SDIC is struggling so much when it is apparent that the residential market is in robust shape with increasing rents, reducing vacancies and slowly rising valuations.

[okisen] 05/5/2010 12:50

the King sturge greman real estate climate index for April is out today:


"Sentiment in the Real Estate Industry
Clearly Improved
The sentiment within in the German real estate industry
has substantially perked up since April. Compared
to the March survey, the sentiment rose by 9.1%,
from 90 to 98.3 points. This month's drivers are both
the income factors (rent development and user demand)
and the investment factors (purchase prices
and investment demand). The largest single contribution
to the upward push was provided by the Rental
Income. The polled market players see their development
options expand in regard to demand and, in
sync with it, to rent rates, even if most of the respondents
overall remain sceptical in this respect (as the
Climate rating has yet to clear the 100 point threshold).
Estimates by the real estate experts have also
improved in regard to investment demand and purchase
price performance. With the trend pointing upward,
those players who take a positive view of the situation
outnumber those with a negative take"

[davidosh] 05/5/2010 12:35

An inflationary environment in Germany would almost certainly push the property values up significantly too. The property values going up are exactly what SDIC need and with the gearing it would make a massive difference.

[scburbs] 05/5/2010 12:32

Afternoon Lagosboy,

I have no FX exposure to SDIC so not particularly concerned. In fact, for me, it is a positive in relation to my SDIC position.

A falling Euro would do wonders for the German economy (in the same way as the UK manufacturing PMI index is currently at boom time levels and Germany is much more geared to manufacturing), although it may be slightly inflationary. In addition, Germany is likely to need higher interest rates at a time when Ireland, Spain, Greece, Portugal will still desparately need low interest rates and this may lead to a slightly inflationary interest rate policy (although I suspect they will be fairly robust on this).

A strong German economy with a bit of inflation would be great for SDIC's value in Euros.

[lagosboy] 05/5/2010 10:01

shrubs

Interesting newsletter, JM expects inflation, even in good old Germany and if he is correct about the Euro SDIC will loose upwards of 30% in value against the £.

[lagosboy] 04/5/2010 17:06

kibes

Many thanks for that link. I have read JM book which is very interesting, he made some very accurate calls before the event.

Nice to see he feels BILL (my largest holding) is still 300% undervalued at today's price.

[kibes] 04/5/2010 15:44

For those who wonder what Jim Mellon is thinking, he publishes a very interesting quarterly newsletter. Can sign up to receive it free at www.wakeupnewsletter.com

[bisiboy] 30/4/2010 22:15

a placing is out of the question because of the discount to nav and would be
unfair to shareholders who could not participate.
an open offer however perhaps underwritten by one or more of the majpr shareholders like pspi did should however be possible, i still think that this is unecessary though and a pref issue combined with becoming self managed/syg takeover is the best way foward

[scburbs] 30/4/2010 17:01

Afternoon Lagosboy, LOL! Yes the language does suggest that, albeit it is words not evidence. I also remember reading language sounding very confident on banking covenants! The language on the success of the refurbishment programme has also been constantly positive!

If the advice has been so bad that SDIC is forced to raise equity at the worst possible moment without even having made those hard decisions (or having a portfolio that is too weak for them to be able to utilise those options) then the evidence will be deafening standing shoulder to shoulder (or perhaps it should be ear to ear) with a bit of vacuous positive spin.

[lagosboy] 30/4/2010 16:50

Afternoon Scburbs

The language in the accounts suggests GOAL is doing agreat job which makes the situation even more worrying in some ways.

[scburbs] 30/4/2010 16:24

SYG is the fund investment manager and Goal is the property asset manager for a number of the properties.

The fund investment manager would be responsible for strategic advice such as acquisitions and disposals, financing, refurbishment projects and the asset manager would be responsible for on the ground advice such as managing the refurbishment and managing the tenants.

My main concern is the performance of SYG in light of its 0.85% GAV fee. Way way too high for me and should not be based on GAV as it encourages over gearing. SYG is the one who appears to have been failing to provide the right advice to the board when the need to make disposals has been glaringly obvious and the strategic decision to extend the refurbishment programme that potentially put ICR under pressure was just bizarre.

There is less evidence as to whether or not Goal is performing.