Unite Share Discussion Threads

[maddox] 21/1/2008 09:52

High Park,

How could I resist such a polite request.

NEW THREAD CREATED WITH CHARTS AND LAST PAGE OF POSTS FOR CONTINUITY .....PLEASE POST ON THE NEW THREAD!!!!!!!!!!!!!!!!

Regards, Maddox

[maddox] 21/1/2008 09:42

Maddox - 5 Oct'07 - 06:58 - 481 of 499 edit

[high park] 21/1/2008 00:22

I've asked for charts in the past, think Morgoth has lost interest.

Perhaps Maddox could set up a new thread, he is a consistent and thoughtfull contributer.

[jockthescot] 18/1/2008 10:25

Morgoth,

Is there any chance we could get some charts in the Header?
A daily one and an annual / 3-5 yr chart would be great.

Jock

[maddox] 17/1/2008 23:15

Thought I'd have a look at my premise that Unite is being perceived as a commercial property company. Plotted the graphs of Unite versus British Land and Land securities - yep been moving in tandem. Fair enough, unless you know otherwise, why wouldn't you view these firms and their fortunes pretty much all the same? Hmmmm

....a consideration I wish to ponder over.

Regards, Maddox

[maddox] 17/1/2008 16:21

TDay,

Thanks and no I do not work for Unite although I have an interest as a shareholder in the business. I am a independent business analyst, I specialise in smaller companies with excellent strategies competing in growing market sectors and with good management teams.

Regards, Maddox

[tday] 17/1/2008 14:00

Maddox,

Thanks for the summary - very helpful.

Do you by any chance, work for UNITE?

[maddox] 17/1/2008 13:10

Hi TDay,

You are correct in part, but things have move on considerably.

Unite used to securitise some of its developments to recycle its capital back into development - it also used joint venture funding and co-investment vehicles with very large funds. However, in December 2006 it established its own fund, Unite Student Accommodation Fund (USAF), and raised £500m from investors and together with further funding and debt reached its £1 billion target.

It has been unwinding the other arrangements and selling its property into the USAF to release capital for further development. The Fund thus provides a more strategically secure means of funding the development side of the business. Unite also earns further revenue from managing the fund's portfolio and also from managing the student lettings.

As you say, Unite's share price seems heavily influenced by what is happening in the commercial property market. This is anomalous as Unite's unique, niche strategy is very different. For example, commercial property prices are dependent upon the business economy and demand for office space, Unite's market is driven by the still growing demand for student accommodation. The recent valuation of the Funds property portfolio was strong - still up on December 2006, despite a recent decline.

One factor that has been driving down property funds to very high discounts to NAV is the attempt by investors to withdraw their funds. This will require these property funds to sell property to raise cash, causing them to be forced sellers into an already falling property price market. However, Unite's Fund investors are locked in for another two years - so not an issue.

Unite's discount to NAV thus looks like a very real discount by comparison with the commercial property fund NAV discounts that reflect some real falls in value.

Just my opinion of course as always please come to your own view.

Regards, Maddox

[tday] 17/1/2008 11:00

As I understand it, the company securitises (some of) its developments. At the moment, because of the debacle over collateralised debt obligations, securitisation isn't exactly flavour of the month. In times like this, the good securitisations, probably suffer with the bad.

If - and it's only my perception - the securitisation timetable has slowed or the proceeds from it have diminished, than cash flow could very well be tight.

On the other hand, perhaps the share price drop, is more to do with the decline in property values, especially commercial.

Either way, the good news is that the share price has recently been recovering, temporarily or otherwise.

[maddox] 11/1/2008 16:56

TDay,

Why would the cash be tight?

Regards, Maddox

[tday] 11/1/2008 14:09

Unite are suffering from the credit crunch and securitisation issues.

Cash is probably very tight as a result - and the market knows it.

[maddox] 11/1/2008 11:13

Well, I was gratifyingly correct in my last post. The fund valuation, just announced, whilst falling back in the last quarter to it 30th June valuation....

'As a result, the Fund's underlying property portfolio is now valued broadly in line with its 30 June 2007 valuation.'

...is still up on December 2006.

However, the share price is 298p as I post. Based on the 30th June NAV valuation UTG (which should still be higher due to development activity) is at a discount of 35% based on an Adjusted Diluted basis or 29% on a Reported basis.

Of course this is not to say that it couldn't widen further. However,this IMHO reinforces my assertion that we are looking at a very real discount to current NAV.

Regards, Maddox

[tday] 10/1/2008 15:03

At the bottom of the last bear market, these shares reached 105p. Hope we don't get a repeat.

[tday] 10/1/2008 15:01

Sp down at one point today at 300p.

[maddox] 09/1/2008 13:03

Well the share price is 325p as I post. Based on the 30th June NAV valuation UTG is at a discount of 29.3% based on an Adjusted Diluted basis or 22% on a Reported basis.

Whilst compared to commercial property funds UTG are trading on similar or even higher discounts there is an important distinction to draw. The recent valuation of the recent property acquired by the Fund suggests that the underlying property values are holding up. Whereas, the Commercial Property Funds' discounts reflect the very real decline in commercial property values against their book values which are yet to be adjusted.


Regards, Maddox

[maddox] 20/12/2007 21:14

TDay,

That is a very difficult question to answer, however, as you say a 2 year low. The balance of probabilities is that over the short to medium term the share price will be higher. Unless that is there is not something fundamentally wrong with the Company or its business model.......

Any ideas?

Regards, Maddox

[tday] 17/12/2007 11:15

The share price has just hit a 2 year low. Wonder when the knife will stop falling?

[trendie] 17/10/2007 11:11

Good to see the share price on the rise again from the low.
Looks like the players are starting to discern between the real estate stocks and have realised that UTG has far more stable and predictable revenue than the other commerical real estate co's.

[maddox] 10/10/2007 21:14

eipgam,

Yep bad luck on your timing but I think we'll be back there and more. Its damn difficult to get the best price, I tend to buy in smaller batches when volatility is high, its more expensive on the fees but evens out the prices.

Regards, Maddox

[eipgam] 10/10/2007 16:10

I was in at 438 and have had a pretty rotten ride since then due to the hammering property shares have had recently. It seems like recovery is on the cards (and hopefully a profit) as more and more buyers cotton on to the comments detailed above. In fact it is so bleeding obvious, I should have bought more at the recent low of circa 340!!

[maddox] 05/10/2007 07:58

Analyst comment.....

'Shares of UK's largest student accommodation provider Unite Group PLC fell in morning deals but analysts said the fall reflects the market rather than company fundamentals or the sale of assets announced today. But Landsbanki analyst Mark Reed told Thomson Financial News that "today's fall in shares has nothing to do with Unite's fundamentals" adding that today's statement is a positive for the group." Unite Group this morning announced a sale of three assets for 81.8m to the UK Student Accommodation Fund it manages. The company said it earned 1.2m of profit on the sale. The student halls in Glasgow and Bristol where wholly owned by the company while the halls in Leeds were a joint-venture with Lehman Brothers Holdings. The company recorded 800,000 stg from the sale of the Leeds JV. The consideration for the disposal will be in cash, releasing equity capital after repayment of loans of approximately 18m which the company said it will reinvest in its development activities. Landsbanki's Reed said the importance of the deal is twofold: first of all the sale enables Unite Group to realise its investment and recycle the cash into its core activity, development. On the other hand the disposal reinforces confidence in the NAV. He added that Unite Group has a very strong business model and isn't as cyclical as other property companies because demand is driven by student applications. "A rise in interest rates will not defer students from going to university," Reed said, adding that demographics right now are also positive for Unite. Lansbanki has a 'buy' rating on the stock.'

Regards, Maddox

[scburbs] 28/9/2007 08:46

Trendie/Maddox,

I agree that Unite is starting to look very good value along with a number of property stocks. However, I want to avoid the mistake I made when shorting of getting in too early and out too soon.

Great strategy from the board of flipping their properties to a fund at the peak of the market! However, performance fees from the fund are likely to be very limited. I will take a more detailed look at UTG over the next couple of weeks.

[trendie] 27/9/2007 16:50

I agree - has been brought down by the herd not understanding their business model.
IMO this share should be at a premium to the NAV given their leadership
position in the market, certainty of supply and good development pipeline.

[maddox] 27/9/2007 14:23

Hi Trendi,

Yep, you can see my post 471 above - my views have not changed, I'm buying. I really love it when a really good share gets pulled down by an essentially irrelevant influence. I say essentially because you cannot avoid the fact that property is out of favour as an investment, however, the reasons for that IMHO do not affect Unite.

Regards, Maddox

[trendie] 27/9/2007 12:19

Doesn't make sense why the share price at such a discount to NAV. Think it has been caught up in the neg real estate herd.

Student accomodation is a sector in its own right, and does not follow the same business model or cycle as the traditional real estate investment sector.

UTG has good occupency levels and strong development pipeline. Student numbers are forecast to rise over the medium term (particularly from higher spending overseas students) and rents can afford to increase modestly as demand outstips supply. This contrasts to the commerical property sector where rents reviews will be under pressure if economic growth slows, as well as the residential sector where there has been over-supply and limited prospect for rental growth in the short/medium term.

IMO, UTG is exactly the type of real estate co investors should be looking to get into if they want a relative safe haven over the next eighteen months.

Does anyone else support these views?