Urban Exposure Share Discussion Threads

[stemis] 06/4/2020 16:33

Stemis - it's development loans to housebuilders, isn't it?
Presumably based on assumption that interest and principal will be paid.

In general yes, but how much cash do they have, any debt, who have they lent to, what security etc...

At 31.12.19 the NAV was 82.7p.

At 18.2.20 the par value of their loan portfolio, inc KKR JV, was £116.5m, which is 73.5p. According to the circular, the buyer (HHL)

"...may terminate the agreement if between exchange and completion of the Lendco SPA there is or is likely to be a material adverse change in the financial condition of Lendco (defined for these purposes as a reduction in the net asset value of Lendco as at 18 February 2020 in excess of £10 million) which results from a breach or default by a borrower under any of the loans in Lendco’s loan portfolio, or if there is a material breach of the Lendco SPA.

UEX are presumably trying to claim that there hasn't !!

Not sure what else there is, although they committed to providing £7.1m (4.5p) of working capital to the MBO of the management arm.

Since the sale price of the two was £115.4m (72.8p) and they expected to distribute 73p, there must be enough cash apart from that to settle all the costs of sale/wind up etc.

[hindsight] 06/4/2020 16:24

Imagine at the % rates they charge, they are pretty low down in the charge pecking order. What discount is now applicable to previous building land values 30% ?

[jonwig] 06/4/2020 16:14

Stemis - it's development loans to housebuilders, isn't it?
Presumably based on assumption that interest and principal will be paid.

[stemis] 06/4/2020 15:28

I'd feel more comfortable if I knew what their net asset value was made up of...

[cjohn] 06/4/2020 14:04

I can't help thinking that UEX is looking like a bargain at these levels.

[cjohn] 06/4/2020 14:00

SteMiS
1 Apr '20
To be honest I've never really rated him. His stuff on Chinese stocks was bordering on the negligent. Tipping them when there was a lot of talk about whether they were really just frauds..


I totally agree, SteMis.

About 10 years ago, in a short period of time, perhaps a score of Chinese stocks came up on my new lows screen.

As they were attractive on simple valuation grounds and I'm a masochist, I looked into every single one. Several were obvious frauds; most of the rest were frauds which required a little analysis. "A little" being the operative word.

It would have been absurd to put money into the two or three where I couldn't find anything wrong.


Nearly all these shares have now disappeared. One or two limp on at fractions of their apparent asset value.

I don't rate ST as an analyst at all. But I do think you can make money, without great analytical ability, if you're investing approach is sound.

I have a couple of on-line investment friends, who follow a similar asset-value based approach to myself. By their own admission, they are no great shakes at reading a balance sheet. Yet both live off investing. And I have a great respect for their capacity to find bargains in unexpected places.

[stuffee] 03/4/2020 09:52

UEX has hinted of legal action against Honeycomb re welching in its purchase contract, but does anyone know whether there is any meat on the Honeycomb bone?

[stemis] 01/4/2020 14:56

To be honest I've never really rated him. His stuff on Chinese stocks was bordering on the negligent. Tipping them when there was a lot of talk about whether they were really just frauds...

[jonwig] 01/4/2020 11:27

Not Simon Thompson's finest hour. His tip was responsible for the spike up in September.

[stemis] 01/4/2020 10:51

Honeycombe have now attempted to cancel the share purchase agreement. I guess the question is whether they can...

[solarno lopez] 26/3/2020 08:50

Were the large sales of 100,000 in recent days from someone in the know ?

[jbarcroftr] 20/3/2020 15:08

Market seems to be saying deal won’t go through.anyone any views

[yieldsearch] 03/1/2020 22:07

Why on earth this company is paying £400k to cover legacy costs of some "Legacy companies" controlled by 2 directors?
Why taking 400K of shareholders assets to pay someone else obligations?

How can the nominated adviser be comfortable with this?

[rimau1] 31/12/2019 15:40

Nice update this morning, q4 should be the busiest so its a pity execution slowed but just a timing issue with a stringer Q1. Nice risk on play on a recovery in the house market in 2020 and the discount to NAV should continue to narrow. I like the reduction in bau costs although non material its good messaging and shows they run a tight ship.

[williamcooper104] 07/11/2019 15:23

See page 3 under structure - states that ManCo to be owned by management of UE and RT Curiously doesn't mention what management should pay for it I suspect it's likely to be a fee rebate and/or some form of earn out with minimal cash upfront

[stemis] 07/11/2019 15:18

Where is the detailed proposal?

In the letter "UE" seems to be defined as Urban Exposure PLC. If it's the management, what does he assume they'll pay for manco since I think UEX bought it off the management for 7,151,300 shares?

[williamcooper104] 07/11/2019 14:51

Falling again today - keeping watching this The problem is that if it falls below a certain point RTs position (which I don't know but I'm guessing it's a CFD) will be margin called which could mean a quick un-wind of a huge shareholding Tempted to go back in all the same

[williamcooper104] 07/11/2019 14:48

UE is either management of UE or UE plc - in the intro letter it's confusing In the actual detailed proposal it's clear that the manco is to be owned by the management of UE and, of course, RT for his support and guidance

[stemis] 07/11/2019 14:31

"After the carve-out the management company will be majority owned and controlled by UE."

[williamcooper104] 07/11/2019 14:17

It does get a 1.5 percent fee to RT Don't agree with all of what's proposed but certainly turning the listed entity into a simple credit fund seems sensible

[williamcooper104] 07/11/2019 14:16

The idea is that the manco is spun out of the listed entity and privately owned by management (and RT wants a stake too :)

[stemis] 07/11/2019 13:33

Except the 'debt fund' would still own the management company so still be exposed to it's earnings.

As to liquidity, they proposed to pay out £48m as a dividend, then raise £35m in a share issue. More shares, each worth less. Don't see how that will improve liquidity.

[williamcooper104] 07/11/2019 12:45

Turning it into a simple externally managed debt fund ought to help Means you know as an investor what you are getting - credit risk on resi development - you are not buying into a fund management/growth story Fundamentally short duration loans with no credit issues should not trade materially below book value Anything that creates better liquidity is good as the current bid ask is horrible

[stemis] 06/11/2019 23:43

I'm struggling to understand how that would make a difference.

[spob] 05/11/2019 21:45

Robert Tchenguiz returns to shareholder activism

Property investor launches campaign to restructure listed real estate lender Urban Exposure



Judith Evans 2 hours ago


Property investor Robert Tchenguiz has returned to shareholder activism with a campaign to restructure a listed real estate lender in which he owns shares, after years embroiled in litigation over a failed probe by the Serious Fraud Office.

Mr Tchenguiz on Tuesday said his company, R20 Advisory, had built up a 12.6 per cent stake in Urban Exposure and had written to its board proposing to restructure it as a listed debt fund.

“UK plc is riddled with these types of companies where they sell mixed messages, and mixed messages are not what the investor base wants,” Mr Tchenguiz said. “This is a prelude to a much bigger one I’m working on.”

Before the financial crisis Mr Tchenguiz was one of the UK’s most aggressive activist investors, intervening in companies such as the pub group Mitchells & Butlers and supermarket J Sainsbury before the lending behind many of his stakes collapsed in the crisis.

He and his brother Vincent Tchenguiz were arrested in 2011 in a Serious Fraud Office investigation into the Icelandic bank Kaupthing, prompting years of litigation that lowered the brothers’ profile as investors.

The SFO later dropped its investigation into the brothers, and in 2014 it apologised to the pair and paid them £4.5m in damages. Related lawsuits continued until last year, however, when Robert Tchenguiz dropped a legal case against accountancy firm Grant Thornton and several other defendants, after reaching an agreement with Kaupthing.

He said at that time that he hoped to rebuild his business interests. But he now operates separately from his brother, who has amassed a biotechnology portfolio and owns billions of pounds of residential freeholds.

This year Robert Tchenguiz expressed support for an activist campaign being waged by the US fund Coast Capital at First Group, the rail and bus company, in which he also owns shares.

Listed on London’s Aim in 2018, Urban Exposure lends to residential property developments in the UK from its own balance sheet and manages loans financed by third parties, such as the private equity giant KKR.

It trades at a discount to net asset value of 25 per cent, Mr Tchenguiz said. Shares traded at 57.8p each when markets closed on Tuesday.

Mr Tchenguiz said: “The guy who wants exposure to the debt [issued by Urban Exposure] currently has to take a risk on the management.”

R20 proposes carving out the management company from Urban Exposure, saving what it said would be £12m-£13m a year. It said the management company would be majority-owned and controlled by Urban Exposure.

R20 said the group should pay a dividend of 30p a share, worth a total of £47.5m, and should also issue 100m new shares at 35p to improve liquidity in the stock. It said it would underwrite 57 per cent of those shares and had identified a broker for the rest.

The group said the new structure would mirror that of publicly traded debt funds such as Starwood European Finance.

Urban Exposure said: “The board of Urban Exposure notes the announcement by R20 Advisory Limited . . . [it] will evaluate the proposal from R20 and will issue a further statement if and when appropriate.”