Standard Life Investment... Share Discussion Threads

[speedsgh] 24/3/2021 20:12

@HugePants - Intriguing. PCTN share price return has clearly outperformed SLI & SREI over 2, 5 & 10 yrs so would appear to be the quality play and may be why the market is willing to give it the higher rating? Even if you disregard the Covid crisis and measure the 5/10yrs to 1/1/20, PCTN still outperforms both handsomely, although it does look like the main outperformance has occurred in more recent years.

So, the six million dollar queston is what is going to narrow the gap between SLI & PCTN? Narrowing of the SLI discount to NAV compared to PCTN might go some of the way but in the long run it's the performance of the investment manager and the portfolio which will dictate the outcome. Think I am right in saying both SLI & PCTN have had the same managers for the past 10 years. I haven't held SLI for a long time (have a sizeable holding in PCTN) but have always held Jason Baggaley in high regard so was rather shocked to see the difference in performance compared to PCTN.

[hugepants] 24/3/2021 18:21

Notable how Picton(PCTN), with a similar portfolio breakdown (and lower yield), is now at only a 6% discount to NAV versus 25% here. Share price recovery here has stalled. It was 50% higher pre-pandemic.

[playful] 15/3/2021 09:46

Chap in the Sunday Times gave us a positive shout out.

[nickrl] 03/3/2021 11:53

speedsgh thanks for providing comprehensive notes and good to see insightful comments from the mgr.

Interesting comment on divi payout they can't get round REIT rules though other than by upping their fees of course and borrowing more?

View of FT is its a done deal to extend moratorium doubt CHEx will say anything shortly but expect an announcement from Kwarteng later in the week.

[spectoacc] 03/3/2021 11:33

Great, thanks @speedsgh.


"..Where he had offered 2yrs rent free in return for a landlord only break option in 5yrs; the tenant refused as they don't want to miss out on making so much money from the location over the remainder of the full lease term.."


Really looking forward to certain culprits being hauled over the coals - even if he (you know who I mean..) tries to CVA, he wouldn't avoid the landlord break being put in. That suggests some decent rent recovery ahead.


"Not all industrial is good" - tend to disagree, never seen the market so hot. Only thing I envisage knocking it is supply, as per every comm prop boom, and not enough of that in the pipeline yet.


Offices comment seems spot on - market inevitably going to shrink, but no chance it'll disappear. Unlike some parts of retail, which might.

[panshanger1] 03/3/2021 11:00

Thanks for posting speeds

[speedsgh] 03/3/2021 10:48

Interesting presentation by SLIPIT fund manager, Jason Baggaley, this morning as part of a 3-day Kepler Trust Intelligence event.



A few take-outs...

Dividend - With the benefit of hindsight the payout was probably cut too far at the start of the crisis last year. There is therefore likely to be a small making-up payment to satisfy REIT obligations for FY20. Someone also submitted a question re how quickly the dividend might return to pre-Covid levels. Whilst JB expected the dividend to rise strongly from the current level (0.714p per qtr), he questioned whether they should be even trying to return it to pre-Covid levels in such a low interst rate environment. Do not assume therefore that it will!

Rent collection - Q1 21 rent collection is lower (low 80s %-wise) than achieved in previous quarters due to impact of current lockdown. Approx 5% of FY20 rent likely to be written off in final accounts. This relates to smaller tenants (of which the trust has a small number, e.g. hairdressers) who will genuinely be unable to recover the lost revenue to repay it at a later date. JB is still supportive of such cases. There are also some larger profitable tenants that are openly taking advantage of the current moratorium and have a policy of not paying rent even though they can afford to. JB cited as evidence discussions with one tenant where he had offered 2yrs rent free in return for a landlord only break option in 5yrs; the tenant refused as they don't want to miss out on making so much money from the location over the remainder of the full lease term. JB stated that they would be at the front of the queue to be dealt with once the moratorium is finally lifted.

Sector comment - "Not all industrial is good". There is likely to be pressure on smaller multi-let estates with small local occupiers who will be impacted by recession. Longer term structural drivers means that most logistics will continue to be in high demand over the next 10yrs or so. Pricing is now v keen for logistics assets; SLI are looking at possibility of some speculative development as a means of getting more affordable exposure to this sub-sector.

"Not all retail is bad". JB's focus is on affordable retail.

JB does not subscribe to the death og the office. However he does think that there will be an inevitable shrinkage in tenant requirements as many workers work both from home and the office in future. Key to this sector will be having assets in the right place (he believes city centres will continue to be preferred to out-of-town locations due to better transport links into city centres and better general environment for workers outside of the office itself) that are cost-efficient (ESG) and offer amenities attractive to workforces. Also offering pre-furbished solutions (not fit-out required by incoming tenant) with short form leases which can be completed in much shorter timescales than traditional leases.

Share buybacks - Opportunities for this are relatively limited due to closed periods etc. However JB views it as a sound investment buying back shares at a significant discount to NAV.

DISCLAIMER: There was plenty more discussed besides the above. The above are just my own hastily-written notes from the presentation so apologies for any errors.

Hopefully the video/audio presentation and slides might be made available by Kepler as playback in due course.

[spectoacc] 03/3/2021 10:10

Good luck. Fallen off my radar a bit since turning more stable (along with SREI, BREI etc).

Offices still a bit of an unknown.

Back trading at NAV - one day? Happy to sit on it in meantime.

[nimbo1] 03/3/2021 09:19

been buying these last couple of days - hoping for 20% over the next few months.

[2wild] 23/2/2021 12:23

Got back in here with a small purchase at 60.75p. Also added to AEWU this morning at 81.86p, yielding 9.7% and with cost of debt below 1.5%, another outstanding REIT primary invested in Industrial property.

[hugepants] 22/2/2021 19:33

Portfolio at end Dec 2020 (from recent update)

Industrial 48%
Offices 32.5% (5% central London)
Retail Warehouse 10%
Leisure 5%
Data Centre 2%
Retail High Street 1.5%

"The LTV of 23.0% provides sufficient headroom against banking covenants (Bank LTV covenant is 55% and interest rate cover required is 175% v 595% achieved)."


Looking at the chart on this one there could be 50% upside here if it reverts to trading at a premium to NAV again!
I make current yield 5% and discount to NAV of 25% but you'd expect the dividend to increase from here with rent collection at approx 90%.

Still think this has one of the best portfolios.
LTV only 23% and massive covenant cover.

[spectoacc] 08/2/2021 11:43

High-ish price too - onwards & upwards for SLI.

[nickrl] 08/2/2021 10:47

Chunky own share purchase reported from 5/2

1,143,588 Ordinary Shares at a price of 60.62 pence per share

3,692,585 Ordinary shares now held in treasury

[skyship] 03/2/2021 11:53

* We continue to expect outperformance from logistics and supermarkets, with
fashion retail continuing to lag. Offices remain an area of significant
change, where there will undoubtedly be winners and losers.

Indeed - Central city losers; regional winners...

[spectoacc] 03/2/2021 11:25

Sounds like it - predicting a big shake-up with winners & losers.

[spectoacc] 03/2/2021 10:07

Some interesting comments re offices too.

[nickrl] 03/2/2021 09:53

Yeah interesting that they recognise obligations on 90% distribution others seem to be sitting on the fence and just noting the obligation but not declaring there hand.

I also like the statement

" extension of Government restrictions on rental collection continues to impact, with several tenants withholding payment but accepting they will have to pay at some point"

is another useful read across and if moratorium is lifted as planned hopefully that infers most companies will just pay up and not wait to be embarrassed by winding up orders.

[playful] 03/2/2021 07:47

Let's hope so!

[dr biotech] 03/2/2021 07:22

I was expecting a drop in NAV. May be the start of better times ahead.

[playful] 03/2/2021 07:15

Rent collection for the year above 90% too.

[spectoacc] 03/2/2021 07:12

Impressive NAV uplift, sensible divi hold (but with a 0.25p Special expected for this year), & only 23% LTV. Main uncertainty seems to be finding good purchases, a nice problem to have.

[cwa1] 13/1/2021 11:14

Cheers, thanks for that speeds

[speedsgh] 13/1/2021 11:02

From Winterflood trust tips for 2021...



In commercial property the analysts made two changes. Among mainstream, heavily discounted UK real estate investment trusts, they now prefer Standard Life Investments Property Income* (SLI) over BMO Commercial Property Trust (BCPT) for its higher industrial weighting, lower retail exposure and better dividend prospects.

Among specialist UK Reits, the broker plumped for Civitas Social Housing (CSH) over rival Residential Secure Income (RESI) because the dividend behind its prospective 5.1% yield is fully covered. ‘Civitas offers an interesting opportunity for investors looking for secure income from a UK real estate portfolio and we believe that the portfolio’s long-term, inflation-linked leases are appealing,’ Elliott argued.

Tritax Eurobox (EBOX) and TR Property (TRY) had also been retained, he said.

[spectoacc] 09/1/2021 14:56

A small Citywire mention:

"Elsewhere in the property sector, trusts such as Standard Life Investments Property Income (SLI) and BMO Commercial Property (BCPT) have bounced from their lows but remain well-below the levels that they were trading at last year. My feeling is that most of these are oversold.

For example, well over half of SLI’s portfolio is in industrial property, which is set fair. "

[dr biotech] 08/1/2021 09:59

Or NAV will drop to below the share price .. I have quite a lot of these, I think they are well managed and the current discount represents a decent buy assuming things will return to "normal".

The nagging doubt in my mind is that the new normal will be a lot more working from home. I'm partially doing it (though as I often see labs I normally need to visit) and my wife is now full time from home. She thinks post covid she'll be home 3-4 days a week. Her company had two floors of a multi storey and they are in the process of giving up one of them.

I have been impressed with the management here over the years so will hold on.