Assura REIT gets potential offer :-
Might be some read across activity on Monday. |
 Certainly a very welcome change and the inv mgr has taken one of the biggest cuts in its income in the IT space. By my calcs it will still leave divi uncovered by free cash flow although I have to qualify it now as having to make assumptions (they've not stated anything in Q3 trading update) that they are using disposals to lower the RCF. Also the disposals are causing NRI to fall as well and whilst they have lowered debt and got caps on a the majority of it currently 100m of the 250m caps expire in July 25 so that will increase finance costs later in the year.
The bottom line is the dividend needs 27.2m pa and with contracted rent c41m im not sure any other REIT comes to close to that level of payout. Finance costs are c18m charges (will increase 1.5M in H2), c3m on adhoc costs then finally 5.6m was going on inv mgt fees. Material though the saving is it will still leave the divi uncovered by a fair margin.
Anyhow its surprising someone doesn't just buy them as they can immediately wipe out the divi cost and the mgt fee. |
All IT boards should take notice. Charge linked to nav is nonsense if the share price is at a heavy discount, as either nav is fake, or the management is incompetent to not realise the value of the nav. In either case they are not worthy of being paid by linking to nav. |
With increased revenues and lower management fee I suspect the dividend now covered. |
Finally - a sensible and material change to the IM fee |
Thanks Spangle and Sky |
Thnx to Spangle93 for posting this on the CP+ thread: |
sf - all well & good; but certainly don't agree with you on this bit:
"ignore the divvy and the discount, they confuse the issue imho"
Both indicators are fundamental to the value here and in many other REITs.
SERE, SHED, SREI, SUPR & WHR all have LTVs in the 33%-36% range
WHR has the highest discount at 36.0% and the 2nd highest yield at 8.15%
IMO WHR the most likely bid target; along with SHED perhaps. |
i have quite a few reits and have finally got round to reading the reports.
my take on them all is that large investment companies look on them as bond proxies, and recently bonds have given certainty, whereas reits come with inherent risks of companies. so reits have become a sell and bonds a buy.
but recent worries re gilts show that they might not be as safe as we think. and this might well lead on to some reits being particularly good value atm.
i am ignoring dividends and discount. in this climate people need certainty. in terms of financial certainty LTV is an important marker, and WHR is relatively low compared to similar reits (33%)
i am happy to be challenged on this, but i see LTV in reits as i would %leverage in an IT.
so if the asset has been increasing in value you do better with high leverage/LTV, but questions get asked in falling asset value times if a high LTV might lead to horrible sounding terms like breaches of banking convenants.
so WHR seems one of the safest reits to me to invest in atm. also their risk mitigation pages read very logically and comprehensively and i saw nothing to worry about. some reits look terrible.
it also strikes me that there is consolidation going on. if another company wants to reduce their LTV, WHR is a good buy for them if they can muster the cash. and if interest rates behave and do come down, any purchaser can then ramp up their LTV (as can WHR if it isn't taken out).
either way, low LTV=best prospect for future returns. their assets are wanted and tradeable. ignore the divvy and the discount, they confuse the issue imho.
and the chart looks stronger than other similar co's, it has support below current sp
so i think this is one of the best buys in the sector |
If you are being picky there are a number of reasons why you could decide not to buy WHR, several of which have been touched on. However, a major driver for many months, has been the continued selling by Rathbones. Hopefully, Fidelity have taken some of their overhang. |
When fidelity increase their stake by 5% things can’t be that bad |
As 10% of assets are in development land, the value of which is falling on rates and the new NPPF this deserves a slightly wider discount than say shed |
The dividend is not quite covered, which I think is largely due to their relatively high debt costs. I must admit I'm holding this mainly on the expectation that this gets taken out, given the strong demand for these assets and the very deep discount. Blackstone spent £1bn last year on UK logistics, and the likes of SGRO and LMP are also looking to acquire - I'm sure there are many others. |
WHR still not covering their divi I believe? With some large refinancings ahead. |
With medium term rates trending higher, you might allow for a further cut to NAV. Even then, the numbers look strong. |
Possibly top value in the sector IMO.
At 75.4p for a 40.9% discount and 8.5% yield. Clearly a possible bid target; so consider this.
A bid at a 12.5% NAV discount would deliver 111.6p and a 48% gain!
A bid at a 15.0% NAV discount would deliver 108.4p and a 44% gain!
Bought quite a few today - averaging c75.4p |
Wasn't questioning whether it was an acquisition target my view remains the share price of this one is far more realistic compared to its peers so if that transpires can't see the premium being that great but a premia is a premia. |
Exactly, a bidder such as Blackstone would be able to refinance at a much lower rate. Given the strong institutional demand for warehouses I would be very surprised if this is not snapped up in the next year or so. |
nick - the debt cost irrelevant to a bidder; they use their own cash or re-finance at their much lower rate.
WHR very vulnerable; just like SHED. |
Divi well uncovered at the cash level. It also has one of its interest rate caps rolling off in July which covers 100m of debt at 1.5% which albeit will probably lower than todays rate is going to be above 4%. This why they are trying to off load Radway so they can lower debt.
This one deserves to be at this share price its peers less so. |
Looks very good value on a 38% discount and underlying property looks good. Only downside is the expensive debt which partly explains the lack of dividend cover, but this will hopefully start to come down a bit as rates fall. In any case, this wouldn't be an issue for an acquirer who would simply refinance at a better rate. As well as Blackstone, you also have LMP and SGRO on the acquisition trail so can see there being a strong demand for logistic REITs if the UK stock market fails to value them. |
Here's .
I sold the bulk of mine @155 in June 2021 and have been looking to add - perhaps now is the time? |
Story in the Times about how Blackstone are busily buying up UK warehouses - apparently spending £1bn over the past year. They seem to be focused on last mile warehouses where they're seeing strong demand coupled with limited supply. I have a position in SHED which I expect to be snapped up soon. Haven't looked into WHR in much detail but wondering if this could also be a target. |
First exploratory purchase at 80.225p; also a small CFD purchase.
A minute after my trade someone bought 250k @ 80.3p. Need to see more like that! |
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