U And I Share Discussion Threads

[kazoom] 27/4/2017 14:10

Thanks Scurbs,

I think I get you. So it's like as if they have a loan for 100, but the interest they are paying on it would service a loan of 105 at the current rates?

I can't quite get my head around whether it makes sense to take account of that in an adjusted NAV : on the one hand it reflects the "running costs" but on the other hand at the end of the term they'll only have to pay back 100 not 105.

I knew there was a reason I don't normally "do" property companies. - My head hurts!

[scburbs] 27/4/2017 13:24

Hi Kazoom,

They have fixed rate loans, especially relevant are c.£70m due 2025 but there are others too. As a result of reduction in lending rates those loans would be highly valuable to the lender, i.e. they are worth more than par.

This valuation difference also means that for the next 8 years (or at least until interest rates adjust) UAI would be paying above market interest on those loans. The fair value adjustment is basically NPV'ing this effect (i.e. they are worth more than par to the lender and effectively cost more to the borrower than current rates).

Overall impact is similar to a variable rate loan with a swap into a fixed rate and the swap becomes a liability on the balance sheet because rates have reduced.

[kazoom] 27/4/2017 13:03

Interesting.

So NAV over the course of the whole year was down 13p / share (from 291 to 278).

You can argue (as someone did above) that this fall is "because of the dividend."

I rather see as the fact that they paid a dividend, despite making a small loss.

However it's worth noting at that at the half year NAV was down to 272p / share, so a 6p (2%) improvement, okay I guess, but not startling.

As scurbs notes, these stated NAV figures don't include the EPRA adjustments.

To be honest though I'm slightly confused by these :

The EPRA adjusted net assets are stated as 288p/share (so 10p better) but then they make an adjustment for "fair value" of interest rate swaps and debt, which bring the figure ("EPRA adjusted triple net assets per share") which brings the figure back down to 277p/share.

Can anyone tell me why the "fair value" of their debt would be £14m higher than the value in the accounts?

Anyway they sound pretty bullish about their prospects, but I'm not sure I've met a property developer who is not always.

[skyship] 27/4/2017 09:41

Horndean Eagle states above:

"Note share price relative to where the price was a few years ago when the cheerleaders on this board were singing the companies praises and prospects."

The obvious response to his usual Jeremiah comments is:

Note share price relative to where the price was a few weeks years ago when the doom-mongers on this board were yet again slating prospects.

Sorry HE - but I'm more than happy that UAI is now 20% higher; that after 25% higher early yesterday when a few of us exited!

[scburbs] 27/4/2017 09:09

The EPRA NAV exercise was a bit underwhelming, but it reviewed c43% of the on balance sheet trading and development portfolio which the results show was 15-20% undervalued.

The reported NAV does not include this revaluation.

[rathkum] 26/4/2017 23:59

1 undervalued income stock to uncover

Bilaal Mohamed | Wednesday, 26th April, 2017 | More on: UAI
Public Domain.

U and I Group (LSE: UAI) isn’t a name that most investors will be familiar with, even those who regularly venture outside the perceived safety of the blue-chip FTSE 100 index. There are two reasons for this.

Firstly, the company was previously known as Development Securities, before management decided to change to a more funky-sounding name after its merger with Cathedral Group in 2014. Secondly, valued at just over £234m, U and I isn’t yet rubbing shoulders with the larger London-listed property firms residing in the FTSE 100 or even the mid-cap FTSE 250 index. But that isn’t necessarily a bad thing.
Untapped potential

The London-based small-cap firm is in essence a specialist regeneration and property developer. The group’s development portfolio is focused on sites with untapped potential in urban areas, with the aim of creating long-term socio-economic benefit for the local communities, and of course delivering sustainable returns for shareholders. The group has an expanding portfolio of mixed-use regeneration projects within London, the South-East, Manchester and Dublin.

It seems like the company certainly has good intentions, but after today’s full-year results are the shares still a buy for savvy investors? During the 12 months to the end of February 2017, U and I delivered development and trading profits of £35m, compared to £51.5m for fiscal 2016. Pre-tax profits also came in significantly lower at just £400,000 compared to £25.8m the previous year.
Supplemental dividend

The poor-looking figures were primarily due to a lower level of development and trading gains, a negative first half valuation performance of its investment portfolio, and lower rental income as a result of disposals of non-core assets from its investment portfolio. After paying out £17.4m in dividends, equivalent to 13.9p per share, the company’s net asset value (NAV) decreased to £347.6m (278p per share) from £363.3m (291p per share) in FY 2016.

Management recommended a final dividend payment of 3.5p per share payable on 17 August to all shareholders on the register on 21 July 2017, bringing the total dividend for the financial year to 5.9p per share. An additional supplemental dividend of 2.8p per share will be paid on 16 June 2017 to all shareholders on the register on 12 May 2017. This will be the third supplemental dividend in the past three years and underlines the group’s confidence in continuing to generate strong cash flows from its development and trading activities.
Public Private Partnership

The group won four new large-scale Public Private Partnership (PPP) projects over the period, adding £90m to its pipeline of gains, and £1.5bn of gross development value to its portfolio. In addition, £65m – £70m of development and trading gains are set to be delivered in FY 2018, with visibility on more than £150m of development and trading gains in the next three years from existing projects alone.

I believe U and I Group still represents an attractive investment, with the shares currently trading at a 48% discount their net asset value (NAV) of 278p per share, and supported by a prospective dividend yield of 9.6% for FY 2018.

[my retirement fund] 26/4/2017 21:06

I had a final chunk left to dump but sadly missed the daft opening. Fortunately IC seemed to have sung its praises which gave it a lift and i was out.I agree this is a real dogs dinner. I guess I would be tempted at 150 or 160 at a push.

[horndean eagle] 26/4/2017 20:33

Another year another set of rubbish NAV figures. These figures include up to revaluations which I know some of you thought might add a decent chunk to NAV. Whilst next years gains are higher the year after have been slashed by 10m on broker forecasts. As repeated previously its fine to trade in and out of but make no bones this is a dog of a business with woeful return on equity. Note share price relative to where the price was a few years ago when the cheerleaders on this board were singing the companies praises and prospects.

[scburbs] 26/4/2017 13:00

All looks good on paper. H1/2 forecast weighting of the £65-70m (10-12 & 55-58) does dampen the H1 outlook and increases the risk of not hitting the FY £65-70m.

[hugepants] 26/4/2017 11:56

Results look as expected? At this price the yield is 4.6% and the discount to NAV is over 30%.

But next year they are forecasting to almost double development and trading gains, and cutting overheads by £2M, so you'd expect the dividend to rise significantly.
I don't see the point in selling at this price.

-
Outlook - visibility on strong pipeline of gains from regeneration activity

· £65m - £70m of development and trading gains set to be delivered in FY2018 and visibility on more than £150m of development and trading gains in the next three years from existing projects alone

· Investment portfolio total return of 10% targeted for FY2018 through non-core asset disposals (FY2018 target: £50m), reinvestment (FY2018 target: £50m) and asset management (FY2018 target: £5m). Since year end terms agreed on £10m acquisition and £8m of further disposals

· Targeting a £2m reduction in net recurring overheads in FY2018 through cost savings and management fees from specialist platforms

· Business on track to deliver a 12% post tax total return per annum in the next three years

[stupidboypike] 26/4/2017 09:54

Go on SKY - you know you want to!!!

Best regards SBP

[spob] 26/4/2017 09:26

nothing wrong with trading in and out

prefer to invest and keep buying the dips myself

[skyship] 26/4/2017 09:15

Personally I was going to be a seller at the open down to 185p - so was totally surprised and delighted when they opened up at 200p.

Tempted to buy back in already; but plenty of time to read, assess, dither etc...

[spectoacc] 26/4/2017 08:38

Some fall from open - 200p UT, keen buyer 202p when 202/204. Going to be buying back at this rate..

[mad foetus] 26/4/2017 08:26

Having sold out would add the discount to NAV remains very high, around 35%, which with the yield suggests limited downside.

[spob] 26/4/2017 08:25

nav drop mainly due to dividends paid out

nav doesn't show the full picture

[speedsgh] 26/4/2017 08:23

Figures don't look great which will no doubt impact share price short term. 12-24m outlook looks ok so on balance will probably hold & take the income in the meantime. Certainly disappointing to see drop in NAV.

[spectoacc] 26/4/2017 08:18

Got some away at 2.00 having missed 2.02 bid, but still in half here.

[skyship] 26/4/2017 08:09

Well, I'm now out for the time-being.....and at a PROFIT. So well pleased!

[spectoacc] 26/4/2017 07:35

Too much to wade through - headline seems positive.

[skyship] 24/4/2017 12:40

Apologies for my chart in Post No.786 above. The green arrows should have been arranged in a straight vertical line :)

[kazoom] 24/4/2017 10:16

As I noted over on the KWE board I don't think that the apparent premium from 1110 - 1175 actually exists (I expect KW Holdings to open down in the states).

But it is perhaps of some interest here to note that this deal will value KWE within around 10% of it's NAV. I've no idea though whether the portfolios are in anyway comparable.

[mad foetus] 24/4/2017 08:27

In the sector KWE announced a merger today at 20% above Fridays share price Value will out at some point. BTW you can still buy there at around 1100 when the merger values the company at around 1175 and you get a 12p a quarter dividend while you wait. It looks a pretty good low risk deal to me.

[masurenguy] 24/4/2017 08:24

Looks like a bit of interest this morning ahead of the results on Wednesday.