The Local Shopping Reit Share Discussion Threads

[aleman] 31/5/2013 14:11

"The beaten-down commercial property sector presents an interesting opportunity for contrarian investors, with yields now way in excess of those offered by equities or investment grade corporate bonds."

So says the one page article in this week's Shares magazine highlighting British Land, Premier Pan European Property, First State Global and Picton Property. Their share prices have looked perky in recent months. To be fair, these are more about primary international properties but they do suggest more interest in a sector that seems to be turning.

[gfrae] 31/5/2013 11:41

I presume suspending the dividend is a safety measure which should give them better bargaining power in any negotiations they may be having.
I believe as a REIT they do have to pay out all their recurring income,but presume they can delay the payment pending the outcome of negotiations.
Unfortunately I do not think that they can make early repayments to the banks without incurring penalty payments.
All asset sales hace been in excess of "NAV".
They should have no difficulty in refinancing in 2016.
Recurring income in excess of 4pps.
NAV of 56pps.
NAV based on a yield of 9.39%.

[rohkap] 30/5/2013 20:46

Its ridiculous and scandalous that they can't put a timeframe on the strategic review completion. We've already waited 6+ months. Its almost like they thought buyers would bite their arms off and that didnt happen so now need to work out a plan b. I dont understand the rationale behind suspending the dividend unless it has something to do with using the cash to delever, lowering the LTV to put them in a better position to refi in 2016. However, if they stay as a REIT then dont they have to distribute most of their net income at year end anyway so maybe they are considering giving up REIT status?

I just dont get the idea of a 'strategic review' at this stage. A sale of the company at the bottom of the cycle makes no sense for shareholders. I agree with others that the best way forward would be to continue as they are and use proceeds of ex growth properties to delever. Even if the LTV was say 80% in 2016 (conservative assumption I think), would the banks really want to refuse the refi and take these properties on to their books. I think they would just allow the refi maybe with disposal targets and a higher interest rate.

[chrysalis99] 30/5/2013 19:39

I hope the directors take into account that they owe the shareholders the skipped dividends when negotiating with potential buyers. That's worth another ~5% (so far).

[beardmore] 30/5/2013 17:57

""One wonders what the directors have been saying.""
Nothing to us, Gfrae. You could almost say that they hold the shareholders in contempt - no reports or updates given and now the dividend stopped.

[gfrae] 30/5/2013 17:53

Further thought,with approximate figures.If the properties were valued at a yield of say c8.39% next year profits would increase by about £16million to about £19.5m or about 24pps. NAV ex financial instruments would be 73p.

[gfrae] 30/5/2013 17:28

Bemusing I would say. One wonders what the directors have been saying.

[beardmore] 30/5/2013 14:05

Amusing in a way. Whilst the board of directors seek a new future for the Trust, a buyer snaps up a sixth of the equity. Perhaps an outright sale to Solera is the answer.

[gfrae] 30/5/2013 11:25

I agree with you Aleman.NAV does appear to be calculated very conservatively as demonstrated by sales during the period.
Valuing the proprties on a 9.39% yield seems very pessimistic.
I wonder how many buy to let businesses would be in negative equity on this yield basis?

[aleman] 30/5/2013 10:59

How realistic is NAV if ex-growth properties were sold at 15.5% above book? Yields seem too high for valuation purposes in the accounts. Yield assets generally in the UK's low interest rate environment have been seeing higher valuations over the past couple of years as income seekers have chased asset valuations higher. LSR's asset valuations seem to be getting out of line with interest rates and other income producing assets. It makes me suspicious of the review and dropping/postponing the dividend. I suspect the bottom may have passed here and somebody will take advantage if share investors don't start taking it into account when setting the market price for the shares.

[gfrae] 30/5/2013 08:23

I was'nt suggesting selling the company at anything like current prices!
A discount of around 10-15% to NAV maybe,say 50p?

[spectoacc] 30/5/2013 08:13

Agreed @topvest, unless it was a high enough offer of course, which seems unlikely.. We'll hopefully be sitting pretty either way.

[topvest] 29/5/2013 21:00

I think shareholder value is best preserved here by keeping the company going with a slightly lower distribution policy (i.e. bottom end of the REIT range). Selling the assets now is crazy; they are good value from a fundamentals perspective.

[gfrae] 29/5/2013 14:47

NAV of 56p excluding financial derivatives (the financial derivatives expire in 2016).
Property prices rising slightly in the South,though still falling in the North.
Sensibly not paying a dividend in order to give greater flexibility.
Rental income steady and running at about 4plus pps p.a.
NAV based on a yield of 9.39%.
No financial pressure.
Still awaiting outcome of their review.
The company could make the perfect property portfolio for a large pension fund?
If noone wants to buy to buy the company,then we can wait until 2016 and liquidate with no financial penalties.
Who knows sub prime properties may have stopped falling?.....they may even go up!
Still look very very cheap at 50p in the 1£.

[skinny] 29/5/2013 07:57

Dan - from the above link :-

"Dividend
In our results statement to 30 September 2012 we noted the Board would be reviewing the Company's dividend distribution policy when the outcome of the then recently announced strategic review was known. With the strategic review process still on-going the Board has decided not to pay an interim dividend and will review its dividend policy once the strategic review is complete."

[dandanactionman] 29/5/2013 07:53

The following is IMHO dyorDo the interims mention anything re the divided? I can not see any confirmation of dividend confirmed or cancelled? Am I missing something.

[this_is_me] 29/5/2013 07:38

Nothing unexpected here, steady as she goes. It makes the low share price look silly.

[skinny] 29/5/2013 07:04

Financial highlights
§ Recurring profit for the period maintained at £1.7 million or 2.1 pence per share ("pps") (H1 2012: £1.7 million or 2.1 pps)
§ The IFRS reported loss before tax for the period was £1.5 million or 1.9 pps (H1 2012: loss of £3.3 million or 4.1 pps)
§ As at 31 March 2013, the portfolio of 641 properties was valued at £173.0 million with an annual rental income of £15.8 million, reflecting an equivalent yield of 9.39% (30 September 2012: £177.2 million, 644 properties with an annual rent roll of £15.9 million reflecting a 9.31% equivalent yield)
§ NAV £38.2 million or 46 pps based on 82.5 million shares in issue, excluding those held in Treasury (30 September 2012: £41.3 million, 50 pps)
§ Adjusted NAV, excluding liabilities arising from derivative financial instruments, is £46.3 million or 56 pps (30 September 2012: £50.4 million, 61 pps)
§ Like-for-like rental income declined 0.6% to £15.8 million, with Market Rent showing a smaller decline of 0.4% to £17.1 million, as wider market-driven falls over the period were largely compensated for by successful asset management initiatives
§ The Group's cash position remained strong at £5.3 million at the end of the period, including £0.6 million held in substitution accounts for property purchases
§ £0.92 million of rental deposits held, representing over 23% of the quarterly rent roll.

Operational highlights
§ In line with the Group's policy to sell ex-growth properties, three shops and six flats sold since 30 September 2012 for a total of £1.01 million, at an average of 15.5% above the 30 September 2012 valuation
§ A further shop and five flats are under offer for sale for a combined £0.84 million, a 12.6% premium to their 30 September 2012 valuation, while a property in Bolton is subject to a compulsory purchase order where terms have been provisionally agreed for transfer to the acquiring body at £680,000 (including statutory compensation) versus a 30 September 2012 valuation of £500,000
§ 54 units let during the period securing annual rent of £455,950, with 18 units under offer as at 31 March 2013 for an additional £211,430 of annual rent
§ Average rent free period on lettings completed during the period remains low at just 70 days
§ Rent reviews completed on 104 units with an increase to annual rental income of £103,452, representing an average uplift of 7.4% (9.0% above Market Rent)
§ Planning consents achieved for residential conversions in Braintree, Clacton and Saffron Walden, with a further 13 flats under construction in Cardiff, Sudbury and Caversham
§ Void rate remains stable at 11%, (30 September 2012: 10.9%), of which 2.4% is deliberate.

[kirbydon2] 21/5/2013 11:56

Thanks all for the info

[aleman] 21/5/2013 09:27

(SMacks forehead) I read 29th and mistakenly took that as 27th. THanks, SKinny.

[skinny] 21/5/2013 06:52

The interims are scheduled for next Wednesday - Interim announcement 29/05/2013 (E),

but is still to be confirmed -

[aleman] 21/5/2013 01:30

Website says Monday, although I think that may be provisional.

[kirbydon2] 20/5/2013 19:44

Any one know what date the results will be ? thanks

[gfrae] 17/5/2013 17:07

Looks like they are the only buyer in town.