That's great news Much greater chance now that we don't get a cheap take out Like SUPR this is one I intend to hold forever |
Fantastic news
he Board of Triple Point Social Housing REIT plc (ticker: SOHO) announces that after careful consideration it has selected Atrato Partners Limited ("Atrato") to be appointed as the Company's new investment manager.
The appointment of Atrato is subject to agreeing a new investment management agreement (the "New IMA"). The key terms of the New IMA will be announced in due course, however the Board is satisfied that the New IMA will deliver significant cost savings whilst maintaining the existing high levels of service provision."
Perhaps the re-rate to a more fitting discount (49% currently) will gain pace now :-)
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ok thanks for the info. That's interesting, it makes a bid more likely for the REIT than if this disparity didn't exist. TBH I have no idea on the likelihood of PE or anyone else making a bid for SOHO, I'll defer to someone else on that point. thx |
Yep - ultimately on a going concern basis the NAV doesn't matter; unless you're going to sell assets or you've got debt covenant issues - as that's when NAV means cashflow US REITs just hold their properties at amortised cost; and the US reit market has outperformed Of course it very much matters if we get a bid for the REIT - as this is likely to be at a cheap level |
ok thanks so I think what you're saying is as long as TP are managing the REIT as a going concern the EPRA NDV doesn't really mean anything. It only would if there's a complete wind up of the REIT or sale to a third party where debt can't be transferred over. Guess will have to wait and see then. thx |
The important point is that if the debt can be ported and there's a takeover for the reit is that the IFRS NAV (with fhe PV of the debt) should be used to judge any offer and not EPRA NAV And even if the debt can't be ported we are still giving up that asset |
The only way to realise it would be to sell the whole REIT The calculation will be taking the forward implied rates over the current cost of debt and then discounting back at the current swap rates; it's pretty simple With bank loans and swaps you can monitise it by simply breaking the swap In theory you could go to your creditors and offer to repay at a bit of a discount - they wouldn't give you the full PV but you ought to be able to get some of it - so long as they believe you won't repay if there's no discount. |
ok but I assume there's no easy way for the co to realise the £62m or at least a part of it, if they could they would already be doing it as this is like 17 points accretion to the NAV. Can't be as straightforward as raising new cheaper debt to retire older expensive debt. But without seeing how TP have calculated it it's hard to say. |
It's not meaningless It's the present value of the difference between the current cost of debt and what cost would be paid should new equivalent debt be raised. Clearly it's an amortising asset such that at the expiry of the current debt it will all have been written off Now if there's no change of control in the loan documentation (or a change of control only applying if there's a change of control and a negative credit event) then it's an asset that can be sold |
I noticed on the AIC website the AIC had the SOHO NAV @ 129.45. I wrote to them about it, apparently Morningstar are picking up the EPRA Net Disposal Value (NDV) instead of the reported NAV. The difference is a £62m add-back for the difference for debt at fair value vs amortised cost. Which is huge given total debt is like £260m. I assume the fair value number is just a model number (so meaningless), but I wrote to triple point about it so will see if they eventually get back to me. Still, it's puzzling and haven't gotten to the bottom of it yet so thought I would throw it out there if anyone has any thoughts. |
A couple of questions that I hope some may assist me with:
1/ What were the financial consequences for the investment manager due to the non collection of rent ?
2/ Why is the company selling some properties ?
3/ Do people consider the fees of ~20% of passing rent to be reasonable ?
TIA |
You'll see the value in increased EPRA eps It's the delta between the EPRA yield they buy the stock at and the yield they sold the assets at |
Very happy with progress. Not convinced about long term value of share buyback. |
Next Qtrly x-div on 19th Sept |
 Results rns out today, very good imo
Nice to have figures to back up that the dividend is fully covered
"EPRA earnings increased by 31% to £11.4 million from £8.7 million" and more to come
Income will continue to rise in the second half
"In the first six months of 2024 annual rent increases were put through in respect of 66% of the Group's leases, with the rest to follow in the second half of the year"
Buyback to start in 2nd half too
"Following the announcement in June that the Company had agreed heads of terms in relation to a portfolio sale with an aggregate value in excess of £20m we had expected the sale to complete in September. Completion has now been moved out to November to allow for sufficient time for the acquiror's debt funder to finalise their process. The rationale behind the portfolio sale was to sell at a price that was supportive of the book value of the properties and unlock additional liquidity that would then be used to return capital to shareholders through a share buyback programme and this remains the Board's objective"
Upgrade of properties to EPC C via govt grants will help with valuations and NAV uplift
And more good news is on the way shortly |
Hard to refute a criticism of Triple Point |
Div date announced |
Oakbloke having a pop at TP - hxxps://theoakbloke.substack.com/p/is-soho-a-no-go
Not that positive, but his main worries seem to be TP and them being unable to resist mucking it up or dodgy dealings. I'm happy here for now especially under a government more supportive than previously |
Ditto It's possible there's a little to come of the NAV for transitioning tenants, but that's 2-5% type of a hit; max 10% Red Book valuations are more reliable than DCF/models plus houses are just easier to value And of course there's good market comps; and also now clear this isn't HOME But equally clear the stink won't clear until TP are gone - and you just simply can't trust them |
I am happy the nav is in the right ballpark
You can look up what the last properties were sold for then consider the low rate on debt and high and covered yield which should also be supportive |
How confident are investors in the reported NAV after the DG19 debacle? |
I'm all for patience But what's more likely it TP stay is it gets taken out cheaply by PE Sure nice capital gain But would far rather pick up my 9.5 yield on cost forever If your taken out at a say c7.5 yield then there's not that many places you can put it at that yield with this level of risk |
Getting a great yield while watching it slowly recover is fine by me but I can understand others frustration and desire for this to get back to nav quickly
Hopefully you will get your wishes after the review results in one week from now |
I second that WC104. I don't think TP have any hope of running a green grocer now. |
Check out DGI9 - also run by Tripple Point They've just had their NAV cut from 79p to 45p over a period when the marco has improved That looks very fraudy - on over inflated book values they of course get paid management fees I'm not arguing that SOHOs NAV is over valued (or certainly not by anything like the extent that DGIs was) But it's absolutely clear that this won't recover until Triple Point go Need a new manager urgently |
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