Urban Logistics Reit Share Discussion Threads

[nimbo1] 08/12/2021 10:00

Hi Jonwig, thanks you might be right on the discount front. Anyway I hold some shed and I've aired my reservations so will be quiet now. I started working in commercial property in 2009, which was interesting! So I suspect we have similar experiences on what happens when things in the sector reverse.

[jonwig] 08/12/2021 09:36

OK, nimbo. So far as I know there is just one quoted commercial propco which follows your preferred model, Highcroft (HCFT). It has 30% gearing and buys properties only on sale of others. The key thing is that its NAV discount is around 30%! And it's been stuck there for years.

The term "dilution" has been used, and it has more than one meaning. The general definition is share of voting rights. If you hold 10% of a company, you need to take 10% of any fundraise to avoid this dilution. I don't think that's a major factor for PIs investing their limited funds.

More common is dilution of earnings. When a propco raises new cash, it earns nothing for maybe up to a year so the property income is spread over more shares and hence reduced. But this is temporary, as the cash is invested, so the earnings blend in.

There is a potential downside: in a property crash, assets lose value and the shares lose more value and move to a discount. They can't raise more equity or, usually, borrow more. Don't tell me that won't happen: if you were an investor in 2007-10 you'll know it can. (And 1974 was a lot worse - I'd just started investing then.)

[maiken] 08/12/2021 09:05

the shares haven't traded consistently above NAV,they've recently moved to a premium.They may stay there,they may not.Nobody knows.

Also the ability to renovate and maintain portfolio value is entirely independent of raising new money.Just pay for an ongoing programme from rentals.Of course this fact also renders your point about ability to raise loans redundant.

All previous share issues,apart from the latest,have been dilutive and expensive to existing holders.The fees to the broker.lawyers etc at least 3% of money raised,1% to the agency purchasing,cash drag,and let's not forget stamp duty.Furthermore the placings have been at a discount to NAV and private investors have mostly been excluded.I recall one of them had a 1 for 273 participation offer for existing investors !!!

There are advantages to scale and a main listing including potential institutional interest and maybe the suggestion of a 250p NAV fron nimbo1 is a tad optimistic but the points raised remain valid in my opinion.I remain a holder.

[nimbo1] 08/12/2021 09:01

Hi Jonwig. When this first floated the nav went up about 40% very quickly... why and how? because the management team were dealmakers - they would buy the properties, asset manage, sell, capture the gain and move onto the next one. Brilliant alpha creation. Now they are just asset gatherers collecting their fee.

I understand everything you say though.

[scruff1] 08/12/2021 08:47

I sort of agree with both arguments - if thats possible. However my previous comment was in response to barbello 454. If a company issues more shares you are diluted - isnt that why they are called shares?! Fine whilst trading at a premium not so good if it turns south. Looking good at the mo though

[jonwig] 08/12/2021 08:08

nimbo - not only institutions love it - so do I (and I bet most here)! They key is that the sahares trade consistently at a premium to their nav, which rather proves the point.

There are propcos which follow your model, but just about all of them are private - ie. unquoted. And buying an holding commercial properties means increasing maintenance costs spread over a small base. The ability to raise loans is reduced owing to lower security of the assets. As properties get older, they lose value unless this renovation is continued.

So the nav wouldn't have been 250p or anywhere near that, and the shares would be trading at a discount to their nav.

[maiken] 08/12/2021 08:00

couldn't agree more nimbo1

[nimbo1] 07/12/2021 22:20

You can avoid dilution - by not issuing more shares. If this investment trust was relying on the initial couple of capital raises from the first 12 months of launch the nav would probably be about £2.50 at least.

Management are hugely incentivised to raise as much money as possible - they get fee's on AUM and get fee's every time the trust buys a property as their agency collects a fee of c.1% of the transaction value!

Institutions love it though - hence it still works as a vehicle for PI's to make money from - but its not nearly as good for capital growth as it could have been if they'd have remained small and focussed.

[scruff1] 07/12/2021 19:29

Cant avoid dilution. 147m new shares in the co.

[barbello] 07/12/2021 16:12

Having said that I participated in the raise as I like the company / management / sector

[barbello] 07/12/2021 16:11

I assumed that there was no dilution if new shares are at premium to NAV but maybe that only holds if new money buys assets with the same potential returns...mmmm and if mkt heating up that may not be easy...you got me thinking..

[cwa1] 07/12/2021 14:36

7 December 2021

Urban Logistics REIT plc

("Urban Logistics" or the "Company")

Admission to the premium segment of the Official List and Cancellation of Admission to Trading on AIM

Urban Logistics, (LON: SHED) the specialist UK logistics REIT, is pleased to confirm that its entire issued share capital will be admitted today to listing on the premium segment of the Official List maintained by the FCA and to trading on the premium segment of the London Stock Exchange's Main Market (together, "Admission"). Admission to the premium segment of the Main Market follows the Company's recent issue of shares to raise GBP250 million, highlighting the significant investor demand for the shares. Trading in the existing ordinary shares on AIM will be cancelled simultaneously. The Company's ticker, ISIN, SEDOL and LEI remain unchanged.

The Company's issued share capital consists of 471,975,411 ordinary shares with voting rights. The Company does not hold any ordinary shares in treasury. The above figure may be used by Shareholders in determining the denominator for the calculation by which they will establish if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

Nigel Rich CBE, Independent Non-Executive Chairman, said:

"We are delighted to be joining the premium segment of the Main Market, an ambition of the Company's since floating on AIM in 2016. As the only London listed REIT with a pure focus on last mile / last touch logistics properties, we have a strong platform and ambitious strategy for further growth and we see today's achievement as the next exciting chapter in the Company's development."

[nimbo1] 07/12/2021 09:27

well I bought back in yesterday - im still annoyed at size of dilution etc but market doesn't care so I'll get with the programme.

[gbcol] 06/12/2021 13:22

Looks like I’ve been allocated 86.5% of my applied for (via AJ Bell). Not too bad but would like to get a few more. share price might fall back a penny of so in coming days but more than likely going to have to pay 174/175p+ now - not complaining though now I’ve got a chunk at 170p.

[jonwig] 04/12/2021 07:17

2wild - At 30/09 they said:

Our balance sheet remains strong with loan to value ("LTV") at 16.9%. The average interest rate remains low at 2.5%, but whilst most of our borrowing is at fixed rates, it is likely that rates will rise if inflation persists.

- which is pretty good in every way.

[2wild] 04/12/2021 02:55

scruff1
I suspect you got 97% as an existing shareholder under the open offer and 87% was allocated via the intermediaries offer, which is fair enough.

Does anyone know the rate of interest being paid on SHED debts?

[scruff1] 03/12/2021 21:55

2wild
Very interesting. I got 97% through PB but with HL. dhoulti gets 97% through HL and you two got 87% through ii. I wonder if its arrived at by dividing a block application/allocation

[dhoult12] 03/12/2021 21:47

I also got 97% from HL

[2wild] 03/12/2021 21:20

I applied through the intermediaries offer by my ISA with interactive Investor and have received 86.5% of my application. Apparently percentage was the same for all applications regardless of size with i.

[octaviab] 03/12/2021 19:01

Thanks CWA. I already hold Urban Logistics with ii. The cash taken for the subscription offer shows as a separate entry within my portfolio: "Urban Logistics Offer for Subscription". And it's still there. No sign of any allocation, nothing in my transactions. I just called them, but of course the person I spoke to said it was outside their area of expertise and it has to wait until Monday.

Recently, I've had one problem after another with ii. Endless errors and some very lame excuses. I would prefer it if they put less effort into flogging themselves to abdrn, and more to keeping their coding up to scratch and looking after their customers.

[rik shaw] 03/12/2021 18:57

Thanks scruff1. Hopefully I'll get similar allocation with HL.

[scruff1] 03/12/2021 17:18

I got 97% of 6000. PB. Wont be in HL account til admission on Tuesday. Id love to know how they arrive at 97% and in CWA1's case 87%

[cwa1] 03/12/2021 17:14

There's an entry in my portfolio. The refund cash is in the transactions history as well. Remember to check under Urban Logistics rather than SHED ;-)

[octaviab] 03/12/2021 16:49

Nothing showing in my ii account yet. Did ii send you a message about the allocation CWA or did the Offer for Subscription entry just update?

[cwa1] 03/12/2021 15:29

87% of what I applied for :-))