Urban Logistics Reit Share Discussion Threads

[spectoacc] 14/3/2024 08:31

Either SHED raise, which they'd be mad to after their share price reaction, or it's CREI's or wind-up.

Will be an interesting split vote - some for SHED, many for CREI, suspect plenty preferring wind-up.

Fingers crossed that SHED walk, dcb, and I can sell :)

API ought to have given up the ghost at least a year ago IMO.

[skinny] 14/3/2024 08:07

· Accordingly, and for the reasons outlined in this announcement, the API Board continues to believe that the CREI Merger represents the best outcome for API Shareholders, and reiterates its recommendation that API Shareholders vote in favour of the CREI Merger.

· Nevertheless, the API Board has decided that, while it continues to view a Managed Wind-Down as a less attractive option for API Shareholders than the CREI Merger, it intends to pursue such an option in the event that the CREI Merger is not approved by the requisite majorities of API and CREI Shareholders.

[scruff1] 04/3/2024 18:08

Brexit is irrelevant
I think it depends on what you believe Brexit was about. I was referring to the view expressed by Baroness Altman. But as Makinbuks says - going off topic

[spectoacc] 04/3/2024 16:56

Agreed, & not sure why they're dragging their heels over it so much.

[makinbuks] 04/3/2024 16:50

Brexit is irrelevant to this argument. The point, irrespective of their origin, is that the rules are silly and having unintended consequences. MIFID similarly should be revisited. It is virtually unfeasible currently for an ordinary small business to contemplate funding growth through becoming a public company

[scruff1] 03/3/2024 13:11

Anything to ensure that Brexit fails. Altmann has changed her tune. She was a staunch remainer.

[skinny] 03/3/2024 11:49

FCA (again) :-

[giltedge1] 03/3/2024 08:10

Segro managed a large placing at about 8% discount to NAV. So good read across for SHED still good demand. Hope my API become SHED. Tempted to also add as recent weakness due to merger,

[skyship] 24/2/2024 13:25

"in such cases.....

Read the defining words Specto.

Also, not ignoring NAV; just prioritising earnings & yield.

[essentialinvestor] 24/2/2024 12:41

I held off adding on Friday, however towards £1.15 looks attractive?.

Would be surprised if institutions do not favour SHED (over CREI) as that combo arguably gives significantly more liquidity due to size - although markets can surprise, etc

[spectoacc] 24/2/2024 11:24

"In such cases NAVs are pretty irrelevant..".

Alleluja.

[skyship] 24/2/2024 09:12

"Unlike offices, the fundamentals of the warehouse market look solid in terms of demand for space and rental levels."

This is one of the keys to the future direction of most non regional office REITs. The other major factor is reducing inflation leading to reducing interest rates.

When you can buy well-managed, good quality REITs with yields c8% from covered dividends, then really there is only one way for their share prices - UP.

In such cases NAVs are pretty irrelevant - it is the yield that counts; and with rising rents, those yields may increase yet further.

# AEWU - Yield 8.9%
# EBOX - Yield 8.3%

These are two obviously attractive examples; and I would add the special situation of CLI whose offices are prime and in prime locations in UK, Germany & France. 68% discount and 8.5% yield.

[scruff1] 24/2/2024 08:23

Im not really up to speed with this but reading the article it crossed my mind that as there are lots of (should it be attempted) sales of commercial property which I assume includes offices which are currently being dumped both here and in the States presumably because of the declining demand - isnt that a part of what both SHED and BBOX have acquired and could that aspect become a ball and chain for their expansion plans?

[ammons] 24/2/2024 08:21

Cant post the graphs in the FT article, sorry. Its dated 21 Feb
==================================================================
UK’s scramble for sheds could be the start of a deals boom.
Deals could beget deals, with bigger companies meaning increased share liquidity which should broaden investor appeal

"Men in sheds” usually refers to British retirees discussing gardening. A more active group is shaking up London’s listed property sector.

There has been a flurry of share-based takeovers focused on warehousing space. Urban Logistics REIT, whose stock ticker is SHED, is the latest to pounce, launching a counter-offer for Aberdeen Property Income Trust this week with aims to create a vehicle worth £800mn.

Commercial property is in the spotlight because of the turmoil that writedowns on US offices are causing lenders. Higher interest rates have slashed valuations across the sector. Industrial property values and logistics in particular are about a quarter lower since the pandemic-era boom in demand. But the scramble for sheds is a sign that the cycle is nearing its trough.

Shares in Segro reflect the decline — they are down about two-fifths since the start of 2022. Smaller peers have performed little differently but ambitions of replicating Segro’s success as the largest UK Reit need one thing; scale.

Hence consolidation. Before the Urban Logistics offer, API was considering a lower bid from Custodian Property. It was low enough, in fact, that some API shareholders were pushing for the fund’s liquidation over a sale.

Other deals are in the offing. LondonMetric’s all-share offer for LXi REIT, at the start of the year, will bring the urban logistics owner together with LXi’s diversified portfolio with a market value of just under £4bn.

Tritax Big Box, which owns larger out-of-town sheds, has agreed to buy UKCM to become the fourth-largest UK Reit worth about £4bn. Simply sticking property assets together doesn’t create much value; Green Street’s Rob Virdee thinks Tritax is overpaying given that UKCM’s more diversified portfolio may not fit well with its specialism.

But deals could beget deals in this sector. Bigger companies mean increased liquidity in the shares, which should broaden investor appeal. Higher valuations will be important in an expected wave of dealmaking, says Paul May at Barclays.

Assets equivalent to the size of the European-listed sector could come to market this year as private owners, including pension and insurance funds, bail out of commercial property. Private equity firms in particular are expected to shift out of less attractive property assets as funds approach their end dates.

This would reverse trends of the low-rate era whereby assets moved from public markets to private owners. The winners should be those with the ability to raise equity more cheaply: greater scale translates into lower costs of capital and improved prospects.

Unlike offices, the fundamentals of the warehouse market look solid in terms of demand for space and rental levels. That should mean plenty more action for the City’s men in sheds.

[williamcooper104] 24/2/2024 00:35

Gift link for first three clicks UK's scramble for sheds could be the start of a deals boom https://on.ft.com/49rTcmc

[elbrus55] 24/2/2024 00:14

It says they anticipate lots of private sales of commercial property assets later in the year from pension funds and insurers and REITS will need scale to take advantage of it and this is a driver for the current consolidation in Shed reits which adds little value otherwise. Comment appears to originate from Paul May at Barclays.

[skyship] 23/2/2024 20:27

EI - subs only. Can you post content; or at least the gist. Thnx...

[jombaston] 22/2/2024 16:28

You are spot on Spec. The only way they can raise funds is to use shares to buy other assets, which they hope they can sell at a decent price.

Its inconsistent with declared strategy - an opportunistic and risky attempt to make money which shareholders haven't and shouldn't sign up to. That's being generous. Some might say its to do with inflating egos and bank balances.

[spectoacc] 22/2/2024 14:20

CREI have just come out and said they're still keen - and made this point, similar to ours:

"...ULR provides investors a ‘pure play’ on exposure to logistics real estate, acquiring only ‘last mile’ assets which are well located close to urban areas(2) and the ULR Offer states the combined group would “focus on the last-mile / last-touch mid-box area of UK logistics”.
The API portfolio is highly diverse across Industrial (48%), Offices (25%), Retail warehousing (11%), High street retail (4%) and Other (12%) (% of API’s portfolio by income as at 31 December 2023)(3).
The CREI Board notes that 52% of the API portfolio (as a % of API's portfolio by income as at 31 December 2023) does not represent industrial properties;"


So more than half of API isn't a fit with SHED.

[jombaston] 22/2/2024 14:10

Surely the API-owned offices will already have been pitched to potential buyers.

The unfixed part of API's funding is through an RCF at SONIA +150bps i.e. 6.7%. If this could have been repaid through sales, particularly of offices, surely it would have been done.

Of course, the API NAV, or at least the office part will have fallen in Q4. So at least offices will be a smaller percentage than currently stated :-)

SHED have a better chance of sorting out the API mess that API have on their own (and they could be lucky with interest rate cuts) but I'd rather they didn't take that risk.

Investors bought SHED because of their clear strategy and sensible financing. Hopefully that means that any bid which threatens this will be voted down. If the SHED management are deemed to have lost their way and motivated purely by selfish considerations then this could make SHED vulnerable to a bigger and better-financed rival

[essentialinvestor] 22/2/2024 13:07

Yes, interesting thought on a possible longer term top in logistics - particularly given BBOX move as well.