Social Housing Reit Share Discussion Threads

[williamcooper104] 30/9/2024 11:36

If you're passing rents are higher than fhe market rent then that over-rented part of your rent gets valued at a higher yield So when you remove that over-rented income then you should lower your overall valuation yield as there's of fhe high yield income The degree of the discount depends on the length of the term certain leases and the covenant of the tenant - eg if you're overrated to a strong covenant on a long lease then the yield premium is there but it should be too penal But if it's over rented with short leases and/or to a weak covenant then you'd expect more of an adjustment

[xxx] 30/9/2024 11:31

Hi William can you explain what you mean by 'valuation yield includes a premium for being over rented'.

[williamcooper104] 30/9/2024 09:43

A fall in the income doesn't necessary lead to a one for one fall in GAV as the valuation yield includes a premium for being over rented so you'd expect to see the valuation yield come in a bit Also taking the hit on income with a good general kitchen sinking is likely to help narrow the share price discount to NAV In the current market this shouldn't trade at more than a 20% discount to a kitchen sinked NAV

[xxx] 30/9/2024 09:20

There are issues both at board and management level.
A key matter will is what aspects of performance the new managers are remunerated upon.

We have endured TP entering into contract with incompetent care providers and it is not clear how deep that runs. They say 2 are materially in arrears, but refuse to say how many are in arrears.
Re-contracting at 90% of previous rent should mean that the asset value of those properties falls 10% and the nav 14% [gearing] but TP have again refused to clarify.

The board have had more than 2 years to clear this up, but have been too slow. The chair has been in place since 2017 and has numerous other board positions [10+ according to wsj].

Replacing the manager is only beneficial to shareholders if it is cheaper, but for greater competence to the key issues.

Once that has been dealt with, the board should be replaced.

[mark5man] 30/9/2024 08:12

Do we know Atrato to be materially better? Although can hardly be worse - my hope is that they see a meaningful and mutually profitable long term engagement - my worry is pillage

[davebowler] 30/9/2024 07:43

James CARTHEW in Citywire-...Ibought some Triple Point Social Housing Reit (SOHO) at 57p back in July 2023, and have made some money on this given the high yield and a roughly 15% uplift in the share price since then. However, it still feels too cheap, and I may add to the position.The most recent interim results (covering the six months to 30 June) were published a couple of weeks ago. The net asset value was down slightly, as the valuation yield rose from about 5.6% to 6%, more than offsetting rising rents. Falling UK interest rates should bring the yield back down and the NAV back up in time. The dividend was covered, thanks to improved rent collection.There is an ongoing review of the trust's investment management arrangements. The board has pushed back the timing of the announcement of the conclusion of that, saying it wants to secure an appropriate, cost-effective agreement for the benefit of the company and its shareholders. I am not necessarily expecting anything dramatic to come out of it, but the implication is that good news is on the way. On that basis, a 49% discount and 8.4% yield looks pretty attractive.

[chucko1] 30/9/2024 07:23

I agree - one for the long run. Swapping Triple Point for Atrato is pretty well as much as one might have wished for.

[cwa1] 30/9/2024 07:21

Do you think there's any chance of a bit of "kitchen sinking" after Atrato get their feet under the table?

[williamcooper104] 30/9/2024 07:14

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

[return_of_the_apeman] 30/9/2024 07:09

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 :-)



 

[budd_foxx77] 17/9/2024 12:21

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

[williamcooper104] 17/9/2024 12:11

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

[budd_foxx77] 17/9/2024 11:57

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

[williamcooper104] 17/9/2024 11:45

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

[williamcooper104] 17/9/2024 11:43

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.

[budd_foxx77] 17/9/2024 11:34

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.

[williamcooper104] 17/9/2024 10:52

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

[budd_foxx77] 17/9/2024 10:18

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.

[xxx] 13/9/2024 08:34

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

[williamcooper104] 13/9/2024 08:02

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

[jonesy100] 13/9/2024 07:34

Very happy with progress. Not convinced about long term value of share buyback.

[return_of_the_apeman] 13/9/2024 07:08

Next Qtrly x-div on 19th Sept

[return_of_the_apeman] 13/9/2024 06:46

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

[williamcooper104] 12/9/2024 18:25

Hard to refute a criticism of Triple Point

[badtime] 12/9/2024 17:55

Div date announced