I had been expecting a switch to REiT status, as income from direct property investments is taxed within a regular investment trust (not sure about CGT), and you can see from the accounts that this tax would have been substantial had they not had deferred tax to offset it against.
Hence the switch to REIT actally benefits holders within an ISA, as without this the divi would drop due to the internally applied tax.
Not sure how it might affect the 2026 redemption (though without the REiT switch, ISA holders would definitely want to redeem).
Hope it narrows the spread: discounts to NAV I can cope with, but a wide spread leaves me looking for a way out. |
I hold those as well, but they will only be redeeming approx 10% of the company again via the issue of B shares. They seem to have stopped the opportunity to redeem excess shares and now redeem the same percentage for everyone. At the moment VIP may offer the opportunity to redeem ALL your shares at par. That’s a huge difference as it currently stands. Plus the dividend is double that of ASLI. |
Hmm - far better and more assured value in ASLI. First Tender likely mid/end March. Sp 60.5p; EPRA NTA c76p |
An announcement has just come out proposing that VIP be reclassified as a REIT. No difference at all if held in a SIPP or an Isa, but should make the shares far more liquid, as well as reducing the often ridiculous spread between the price of buying and selling. This maybe is the prelude to them offering shareholders the chance to redeem some or all of their holdings at NAV early next year. The NAV is currently about £2.20, which with a 7% yield in the meantime, makes it very attractive |
Does anybody know anything about the retail investor mentioned in the latest half yearly report? |
I am never totally sure exactly when a closed period applies, however I think they tend not to do buybacks in the weeks prior to release of annual or half year reports |
Perhaps they believe there is a chance the price might fall, not that I am suggesting the broker/market maker has any influence on that, of course. |
That buyback didn’t last too long. I’m not sure why you would pay a Broker to transact the purchases on your behalf and then stop after just after 1 week. If the NAVis currently £2.40 compared to the current price of £1.85 it seems silly not to buy back as many as possible. |
VIP are finally continuing their share buyback, which will hopefully go on for a few months yet before they allow shareholders to redeem some/all of their shares at NAV in 18 months time. The broker involved with the buyback looks to be slowly raising the share price trying to attract sellers. As few people seem to be selling , this could easily move up in the coming weeks. Plus it gives a yield of over 6.5%. |
Today's interest rate cut ought to be helpful here. Needs a bit of a push from somewhere! |
Agree your comments citytilidie. Yield over 7% now and a portfolio valuation due on 30th June. Last 3 valuations haven't been good but that trend can't go on forever. Given the recent trend into investment trust mergers/takeovers there may also be other exit routes opening up here once the property cycle starts to recover. |
Interesting comment in todays update. The 2026 AGM is to allow a vote to exit VIP at NAV less a few pence in costs. NAV is currently £2.40 compared to the current price of £1.80. This discount is likely to close sharply over the next 2 years on the back of this. Worth the patience, as you also get a 6% yield in the meantime. |
Topvest.... I agree with your thought process here. In my view, VIP is a well diversified, high yielding tiddler which could easily get swallowed up by a bigger property fish if interest rates and sentiment starts to turn. I note that buybacks have dried up over the last couple of weeks so management are clearly being canny about how many they buy and when. The only thing that disappoints me here is share price performance! |
I've added a few more. Rationale for me is a possible £2 floor on net asset value and an 8% dividend yield whilst you wait. Asset base is high quality and probably conservatively valued. There is the promise of an exit at just below NAV in a couple of years time. Relative cost base is high, but property management skills are top class.
Just a thought, but there is always the chance this trust could roll-over into SAINTS at some point given they have a property portfolio also managed by OLIM. What happens when the current major holder retires or wants an exit is the key question for both SAINTS and VIP, I suppose. |
I'd expect the net initial yield here to be higher than SUPR, given SUPRs larger, higher quality and often longer WAULTs. The running yield is still lower than 2009-2017, so could increase by another 0.5-1% in my view.
On infrastructure 3IN and Pantheon Infra have much higher discount rates as they go for much higher risk assets. The infrastructure discount rates are reasonably close, like for like, in my view. |
Ran the slide rule over what is a fairly straightforward business. The more direct hands on property management is certainly a step in the right direction compared with the former fund management model which was always going to be difficult in view of their small cap and scale headwind. As always, it hinges on interest rate levels. Will wait to see how things look at @150. |
Portfolio valued at a net initial yield of 6.6% vs SUPR on 5.8% (311223). Is the valuation of VIP more conservative, or does the type of property / lease justify the difference.
I've noticed this in some of the infra trusts too; 3IN is valued using at a substantially higher discount rate than many if the others.
Is the UK commercial property market functioning 'properly' yet, or do we still have instutes such as DB funds selling for regulatory reasons (in favour on bonds etc). |
 Hi SpectoAcc. No, they are probably not the best property play, but I like it for dividend, exit opportunity in a couple of years, reliable owner/management with aligned interests. Unfortunately, they switched to property 2 years too early, so have suffered a decline in valuation on pretty much everything acquired in the last 2/3 years. I was attracted to the Hollywood Bowl additions 8.5% from May...that's quite good. Much better than Stonegate Pubs that they have been exiting probably due to the weaker covenant. There is another pub sale at a lower yield due to complete in July above book value.
The debt is well fixed. I am not convinced that interest rates are going to stay "high" to be honest, but they will hopefully not get back to the zirp stupidity. I still think a global recession is coming and then the pivot will be well and truly on. They are out-performing the index most years and in the long-term. Matthew Oakeshott has out-performed the IPD Index 2 years out of every 3 on average. I like it, but am underwater so far! |
"...Index-related income". Hope the others adopt similar wording, but really - the latest acquisitions are capped at 3% pa, collared at 2% pa, at a time when we've just had 11%. Either there's an heroic belief in the BoE hitting a consistent 2%, or the different between 2% and 3% barely qualifies even as "-related".
VIP's problem is surely its scale - £73m market cap, at a time when even larger ITs are getting abandoned by wealth managers.
They've bought at 7.8%, sold at 7.5%, but agree the purchases are much better than the sales.
"VIP has no empty properties and no offices. 29% of the portfolio is in supermarkets, 28% is in warehouses/industrials, 27% in bowling, a health club and a caravan park, and 15% in hotels and pubs.
The average interest rate payable on VIP's debt is 4.0% (93% fixed), with an average maturity of 6.9 years and a 36% Loan to Value ratio."
If I was going to quibble, I'd say that for all the good dealing/lack of voids/strong tenants/fake inflation linkage, they're still seeing valuation declines and failing to outperform the index.
And that any IT with low debt cost is going to eventually hit a bump as debt costs ratchet up - ZIRP is over. Income rises at the same time, but EPS may not.
They're not expensive - but are they the best property pick out there currently? |
Update out today. Fairly positive overall. About another £4-5m off the valuation. I think that makes net asset value about 217p. I would guess that c200p (c7-7.3% yield, maybe versus the current 6.6%) will be a cyclical low, before recovery. What do others think? The portfolio is certainly very well positioned now and the dividend is fully covered. Some nice Hollywood Bowl acquisitions - look at the yield on what they have bought versus what they have sold! |
Be interesting to see the next property valuation here. 31st March 2024? Ours is not an unmanaged portfolio and interest rates are looking more likely to turn down after last night's announcement by the Fed. Not the most fashionable of property stocks, but it has a solid high yield and I would expect it to follow any change in sentiment towards the property sector............eventually! |
I had though that about REIT status too. However I'm not sure that this will have been that important so far, as rising rates will have reduced property values. Looking at the accounts this reduced property capital values have been offset against the income, so no tax was paid last year, and there is also a substantial deferred tax asset. Capital losses cannot be offset it a REIT AFAIK. At some point this might become important though (hopefully). There is a continuation vote in 2026. |
Really should convert to REIT and save paying corporation tax.
Just distribute 90% or more of property income net of interest and other related expenses to qualify. |
This one has been bouncing about a bit of late, although the underlying trend still seems to be very gently down. With both property prices and interest rates possibly on the turn, that trend should start to change. The high coupon debentures have now gone which should help cash flow. A good and reliable dividend plus the possibility of redemption at par should also be supporting the shares. |
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