Wt Wner Usd Discussion Threads

[scburbs] 06/7/2009 21:53

The 31 March 2009 valuations for APIA and AIF are available. Assuming WNER hold the same 27.43% and 6.52% that they held at March 2008 then the values are £30.45m and £17.04m. The total (£47.49m) is pretty much exactly in line with the estimate (£47.5m) below. I can't believe I was £0.01m out!





scburbs - 22 May'09 - 13:24 - 139 of 144 edit

I have had a more detailed stab at the WNER NAV at 31 March.

Starting with the JV/Funds:

Radial - nil (83% LTV at 31 March 2008)
Agora Max - nil (79% LTV at 31 March 2008)
Greater London Office - nil (75% LTV at 31 March 2008)
Agora Shopping Centre - £15m (62% LTV at 31 March 2008)
APIA Office Fund - £29.5m (the 31 December value is available and was £34.87m)
AIF - £18m (31 December value was £21.33m)

Total value of JV/Funds - £62.5m

Owned Properties - £215m (after adjusting for disposals this assumes 22.5% fall in H2, being the average of British Land (20%) and Land Securities (25%))
Debt - £(256.5)m
Net current liabilities - £(3)m

Total NAV - £18m (or 30-35p per share)

In terms of covenants these will be breached on central borrowings and every JV, but APIA and AIF may have avoided a covenant breach (these are really where any residual value lies). The danger on these is that they decide to raise funds to protect against a covenant breach. WNER would not really have the financial firepower to subscribe to an equity raise and could be significantly diluted (as has happened to CAL on The Mall and The Junction Funds). This dilution could wipe out the remaining NAV.

[nickcduk] 30/5/2009 08:36

Do you have any further details on the banks taking control?

[scburbs] 29/5/2009 17:12

"Banks to take control of Warner jvs
Mike Phillips 29/05/2009 15:00

Lenders to Warner Estate are set to take control of £524m of joint ventures they hold with the REIT following defaults on banking facilities.

...

Negotiations on the best way to proceed were continuing as EG went to press."

Source EGi

[hybrasil] 29/5/2009 08:44

Yes Nickduk
I am in wich as well.


I think its likely the same will happen here.

[nickcduk] 29/5/2009 08:09

WICH results were dire today. I think WNER won't be far off reporting a negative NAV as well. They are going to have to hope to catch their bankers on a good day to be given a reprieve.

[nickcduk] 22/5/2009 13:28

Excellent analysis scburbs. WNER is effectively bust. The banks just don't want to take the properties onto their books. Ratcheting up the rate on borrowings is effectively all they can do. They will get their pound of flesh somewhere along the line though. Once valuations start to pick up and they get a decent offer they will likely call in the loans. Until then its a dead man walking situation.

[scburbs] 22/5/2009 12:24

I have had a more detailed stab at the WNER NAV at 31 March.

Starting with the JV/Funds:

Radial - nil (83% LTV at 31 March 2008)
Agora Max - nil (79% LTV at 31 March 2008)
Greater London Office - nil (75% LTV at 31 March 2008)
Agora Shopping Centre - £15m (62% LTV at 31 March 2008)
APIA Office Fund - £29.5m (the 31 December value is available and was £34.87m)
AIF - £18m (31 December value was £21.33m)

Total value of JV/Funds - £62.5m

Owned Properties - £215m (after adjusting for disposals this assumes 22.5% fall in H2, being the average of British Land (20%) and Land Securities (25%))
Debt - £(256.5)m
Net current liabilities - £(3)m

Total NAV - £18m (or 30-35p per share)

In terms of covenants these will be breached on central borrowings and every JV, but APIA and AIF may have avoided a covenant breach (these are really where any residual value lies). The danger on these is that they decide to raise funds to protect against a covenant breach. WNER would not really have the financial firepower to subscribe to an equity raise and could be significantly diluted (as has happened to CAL on The Mall and The Junction Funds). This dilution could wipe out the remaining NAV.

[scburbs] 15/5/2009 14:31

On second thoughts a zombie refinancing would not work within the REIT regime as there are minimum interest cover requirements. Interest cover may be fine now, but perhaps not after a zombie refinancing!

Perhaps WNER will just have to leave the REIT regime given the distribution and interest cover requirements.

[scburbs] 14/5/2009 07:56

Negative NAV would make a debt for equity swap rather tricky for a bank! My money is still on a zombie refinancing. HBOS are currently doing a number of zombie refinancings for property companies that have good cashflow, but are 100+% LTV. Banks don't usually want majority equity or the property as it impacts on their capital ratios.

The APS may play a key role here. If they can do a debt:equity swap and keep the equity insured (in the same way the loans will be) then this increases the probability of this route being followed as they get capital ratio relief for insured assets.

[nickcduk] 13/5/2009 18:05

I think NAV goes negative here following LAND statement today. They were certainly being grim about current market conditions. WNER with central London offices and secondary retail will get hit hard.

[scburbs] 13/5/2009 15:02

That statement from LAND this morning can't have done much for the slim hope that there is any value left in these shares.

[scburbs] 27/4/2009 10:43

Nickcduk,

Interesting point about banks taking control to block dividend. The REIT dividend announcement will be very interesting. I think they actually have until 31 March 2010 to pay the dividend so it is possible that they may defer the decision.

Options seem to be for this to be run as a zombie fund for the banks with the existing debt financed at expensive rates to wipe up all surplus cash flow (i.e. the interest charges in future will eliminate all profits and the need for a REIT dividend) or for the major shareholders to take some action to prop it up either through a take out or providing finance themselves (similar to Mapeley).

This is the only property stock I am aware of (other than London & Stamford) that currently trades very close to (quite possibly above) its net asset value. Given the current position any take out is likely to be on poor terms.

It is quite hard to assess current net asset value. My guess is that Agora Max, Radial and GLOF will be negative (which will report as nil to WNER). The NAV remaining in the others is probably around £50m. Against this the on balance sheet properties are likely to be worth less than the on balance sheet debt by around £40m, leaving NAV of £10m. Therefore, group NAV is likely to be in the £nil to £20m range in my view or 0-35p per share. This puts WNER at a 25% premium to the top end of my NAV forecast or one of the highest rated property stocks on the market!

Last year they had a trading statement on 17 April 2008, it will be interesting to see whether we get one this year.

[nickcduk] 26/4/2009 16:49

The budget didn't do WNER any favours. WNER are trying to avoid paying out the dividend that they compelled to pay because of their REIT status. REIT sector had been lobbying the Government for concessions on the rule that 90% of profits be paid as a PID so that they could avoid LTV issues. Nothing was forthcoming from the Government. Banks may just decide to foreclose here so they don't avoid missing out on the 10m or so the company would otherwise pay out in dividends. The company is effectively bust. I would be very wary of taking a long position here.

[scburbs] 24/4/2009 16:01

"LIM snaps up Waitrose
Bridget O'Connell 24/04/2009 13:00

LaSalle Investment Management is continuing its shopping spree, buying a 32,000 sq ft Waitrose supermarket in Weston-super-Mare, Somerset, from Warner Estate for £10m – a 6.65% yield."

Source EGi

[scburbs] 21/4/2009 09:37

This disposal appears to be for a loss of £60m! Agora Max had property of £276m and debt of £234m at 31 March 2008. Given the sales price of Pallasades and the movement in property values since 31 March this JV must have a NAV of nil or below. The properties in Agora Max were bought for about £297.5m using debt of £233m (78% LTV) [source is the 2006 accounts]. Therefore, selling property at 60% of cost effectively wipes out all of the equity.

"Warner Estate Holdings PLC ("Warner Estate"), the property investment company,has today announced that, on behalf of the Agora Max Shopping Centre Fund ("Agora Max"), it has acquired the Pallasades Shopping Centre, Birmingham from The Mall Limited Partnership for £151.47 million. The purchase price reflects a net initial yield of 5.36% rising to 6% on reversion in September 2006."



"Warner Estate Holdings PLC announces today that Agora Max Limited, a 50/50 Joint Venture with Halifax Bank of Scotland, has exchanged contracts for the sale of Pallasades Shopping Centre, Birmingham to Birmingham City Council for cash consideration of £91m. Completion is due on 31 March 2009. The proceeds of the sale will be utilised to reduce the debt within Agora Max Limited."

[scburbs] 21/4/2009 09:19

Land Securities, the UK's largest REIT reported a 20.1% fall in property values in the period 1 October 2008 to 31 January 2009 (values have been falling further since then).

If WNER reported a fall of this order in its 6 months to 31 March its NAV would be nil! WNER was exposed to £971m of property (probably now around £800m after disposals), a 20% fall will knock around £180m off NAV. NAV at 30 September was £175m. Due to the non-recourse of some debt it will probably have NAV slightly above nil as it will not recognise a negative value for those JV/Funds (like Agora Max) which probably have a negative NAV.

Difficult to see how WNER is not in breach of most of its banking facilities. Given the massive risks inherent in the overleveraged WNER it represents a useful hedge against some of my long property positions and I have opened a small short position.

"Land Securities' combined investment property portfolio has been valued at £9,967.0 million as at 31 January 2009, which compares with a value of £12,530.3 million as at 30 September 2008. After adjustments for property investments, disposals and capital expenditure the valuation deficit over the four-month period is £2,446.2 million, representing a valuation decline of 20.1% in the period."

[hooley] 16/4/2009 16:14

I took the 5.4p final out of Segro, having bought them @ 21p. This one looks much less risky, with a possible 11p final - and a certain 6p. The planned cost saving in the year just started is £3m, enough for another hike in the total divi to 25p. The £250m loan book is on a rate of under 4%. Still, these are facts and fear is stopping a recovery towrds the net worth of over 200p. Unlike other REITS in the sector, Warner has degeared through property sales and doesn't need to raise fresh equity finance.

[hybrasil] 16/4/2009 12:29

2 chances hooley

[explorer88] 16/4/2009 10:40

o/t BXTN breaking out ... :-)

[hooley] 16/4/2009 07:08

Another 9 days with the shares falling at yesterday's rate of 5p brings you to zero. The management might like to buy-out at this crazy level?

[forethought] 15/4/2009 22:23

Sorry for my ignorance Hooley but what is significant about "another 9 dealing days"?

[bearstalker] 15/4/2009 16:33

I'll certainly be buying more if we get back to 37-39p

[hooley] 15/4/2009 16:07

Share price down almost 10% on the back of selling £75,000 of stock. Not so much a shake as a chainsaw to the trunk. Another 9 dealing days and a net asset value of over 200p a share will be on offer for nothing.