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Price 52.70 this company is going only one way, they just do not respect the communities that they serve and they do not learn from their mistakes. They are controlled by people who have no idea of community in the UK, and frankly do not care. The communities they try to destroy have been here a lot longer than their company and will be here a lot longer than their failed business project will.
This company is heading to administration if they seriously believe they are serving communities. The reputation they have in Walthamstow and Luton is beyond contempt. The CEO will bail out back to Australia soon, his record in this company is beyond reproach. I can only believe he has been instated to bankrupt the company. i believe he has released a book before regarding his business pursuits, the title escapes me at the minute though.
Its difficult out there but the statement is mutton dressed up as lamb. They have steered away completely from putting a figure on whether rental income has fallen or increased overall
Suspect that like everywhere else some tenants have decided not to renew but if so at reduced rents No mention of other casualties You can't assume there hasn't been any
I see the update as upbeat in an attempt to bury the serious bad news that DEBS have taken a 35% haircut to the rents and the impact that will have
I guess it could have been worse and disappeared altogether !!
Well the Trading RNS is there for everybody or anybody to read themselves. I can't help but take a lot of positives from it especially with all the negative sentiment for the sector over the last 18 months.
"The new and renewals are for a quarter but the Debs figure is annual..."
Read it again The deals have beed done in the first 4 months producing an ANNUAL combined income of £1.2mpa
And yes, I'd be even happier to see them cash-in on their residential pipeline and reduce the LTV although it's not a net debt.
Unsure of the total rent payable by Debenhams but somwhere in the order of 5.6% That sounds like about £3.6mpa
They have announced an annual reduction of loss of £1.3mpa
That is over 35%!!! .That certainly puts pay to any potential rent increases on renewals elsehwere and more likely reductions as retailers will be demanding similar treatment
The new and renewals are for a quarter but the Debs figure is annual...
I wouldn't suggest that anything to do with UK retail is a good or safe place to be invested at the moment but it has had a slight upturn recently and it looks to me as if C&R have managed as well as if not better than other major retail property companies. There will always be a need for some retail property and it's good to see C&R focussing on needs rather than discretionary so I'm happy to give them a chance.
Where does it say a net gain of £0,5m?
Included within the £1.2m were renewals of existing leases
The devil is in the detail
It could have been worse with Debehams but still impacting Remember DEBS arent the only fruit prpeared to use CVA as a weapon with landlords
Dave Speak to some retail investment agents the market has changed a tectonic plate shift and C&R are carrying too much debt
I guess some people have something personal against this company..
At a minimum there is a net (annual) gain in rent of at least half a million. Reading the full RNS I still think this company is severely undervalued.
But don't believe me or any other poster on this board.... DYOR
"The Company completed 20 leasing transactions in the first four months of the year at an average premium to passing rent of 3.0% and 5.2% to ERV1, comprising 8 new lettings and 12 renewals for a combined annual income of £1.2 million."
Giveth with one hand although they have not identified what proportion of the £1.2m pa is fresh income Suspect the majority of that is retained income
Taketh with another
Debenhams
While none of the three stores in the Company's portfolio were amongst the 22 that Debenhams announced were due to close early next year, the Company Voluntary Arrangement ("CVA") that was approved in May 2019 is expected to result in an impact on 2019 Net Rental Income of approximately £0.7 million and £1.3 million on an annualised basis.
Suspect that they are experiencing loss of rent elsewhere
https://www.egi.co.uk/news/former-debenhams-property-director-joins-cr-in-advisory-role
No doubt fully aware of the various stores performances and the haircuts DEBS wil be requiring Uniquely placed to uderatke the negotiations almost akin to an arbitration role
CAL is cheap if you believe retail property valuations will take no further hits & rental income holds up with arrears & bad debts contained.......for my sins my training as a valuation surveyor tells me the banks' values are Uber conservative at the moment & CVA's are going to depress revaluations......the days of downward rental reviews are upon us. Watch this space.
Further pressure on rental income likely with CVAs kicking in
The book values were last year and any valuer advising the finance sources would stress that achieving anywhere near that figure in todays depressed market would be difficult .Its probably looking closer to 55% where the current valuation on Luton looks now to be full of holes They will be taking a hammer and a chisel into that next time around
They wont be drawing any comfort either from the recent awful deal that Intu did just to get 50% away on Derby having to agree to a "waterfall distribution "whereby they take the hit on any loss in rental income immediatley downvaluing their 50%
Even id C&R drop the dividend completely and reducing the debt by the "profit" will probably not even cover this year's impairment in value
They are now stuck between a rock and a hard place
Adjusted profit up to over £30M with Mcap of 139M
They already took the hit on revaluing downwards
Debt LTV against property is only 48%
remaining NAV per share is 59-60p
Only disappointment for me was the reduction in dividend but given the state of the sector it seemed sensible enough.
The Directors are effectively salarymen and won;t 'be digging deep into their pockets untill the downward spiral is halted
The only way they are going to be able to achieve that aim is to get one of the centres away to an institutional buyer at anything remotely close to book value and eat into that £400m+debt.. Good luck with that one
Maybe some light at the end of the tunnel towards the end of the year when the DEBS situation settles down and no more further CVA casualties
Banks valuers will be looking at those current book values where they could easily lop off another 10-15% which is too close to breaching loan covenants.Now totally on the backfoot.15p looking very much on the cards here
I'd take some comfort if the Directors were to show some belief in the company by buying shares in size at this 'bargain basement' level - their failure to do so is a clear enough signal imho that this has further storms to weather.
The days of "upwards only" rent reviews may be over now the retail tenant is able to call more of the shots....if that's the case, the whole business model has to be rewritten.
Buy the debt not the equity - The senior debt holders will have this over a barrel.
Remuneration policy changes: so, the Board is adopting a policy "necessary for retaining the right talent in order to achieve successful outcomes to the challenges facing the business".......how about a CEO that starts acting collaboratively with stakeholders rather than confrontationally? In the end you reap what you sow, and CAL's market cap reflects what the market thinks of it, its CEO & its prospects. Retail is doomed as we know it, the high street likewise & CAL's business model and management culture has to change & adapt or ........
All imho & DYOR
PS I note the absence of CEO and Board share purchases ......what dies that tell you?
One thing is for sure is that the DEBS CVA is going to involve some downward movement on rental income and further impact on retail investment values generally
LTVs tipping over 50% Its always the private shareholder who suffers this burden
...frankly, if you're asking for advice from a BB without knowing whose who, then perhaps you shouldn't be investing in individual companies anyway?
Have a holding in my SIPP, showing 50% loss. Should I sell?
Maybe better comparing it to Intu whose portfolio is super prime where there is more likelihood of a blue chip retailer stepping into any voids enhancing value
Those SPIVs who have bought single DEBS stores in provincial towns destined for closure are in serious trouble.The price paid for the investment reflected the long term lease and fixed rental uplifts The current rent bearing no resemblance to open market values which will be wipeing out any equity and putting loans under water
Valuers will be looking very hard at current book values
Interesting comparing the two considering NRR trades roughly on a 10% discount to NAV and CAL over 50%. The bulk of NRR is in community shopping centres, begs the question would CAL be a good fit for NRR, its balance sheet looks strong enough.
Some fantastic news for the people of LUTON this week as the Secretary of State confirmed he's not calling in the plans approved by Luton BC for the large mixed commercial retail development by the M1. CAL have fought this all the way, refusing to engage and work with the developer and the people of Luton who overwhelmingly support the scheme . CAL's CEO has tried every trick in the book to block it and has always maintained Newlands will decimate CAL's dreadful Mall. Well, he's now going to have his worst nightmare realised. Alongside M&S pulling out, and with DEB folding he can kiss goodbye to his 2 big anchor tenants. Replicate this across CAL portfolio and the business model is broken.
The M&S / DEB-effect isn't just on lost rentals, it's service charges too under threat, and it's the rolling impact on other stores which will see footfall suffer and in turn they will play hard ball on rental reviews and renegotiations as frankly city centre 'sub prime' Malls like CAL's in luton are where only the mediocre stores want to be.....yep, the yield at 14% looks very tempting, but how sustainable? It looked tempting when the share price was 35p and then more tempting at 30p, but like clothes out of fashion, it may get a whole lot cheaper yet.
Upwards-only rent reviews are now dead, high street shopping as we know it is dying and has to reinvent itself, the old business model of marginal operators like CAL is dead. Smell the coffee.