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Anyone got an opinion on the debt level? . It seems very high at 111 mil . Even the board says it is not within their own risk level. How is it being paid off. I am more used to a "revolving credit facility"
This is a red herring...
With approx. £302m in Assets and debt at circa £112m, net assets are £189m... Debt to equity is roughly 0.37 (37%) which in most sectors is considered good... The boards target level is 30-35%, so only 2% over this after a global pandemic which hit property values! Debt facilities and covenants have plenty of headroom, so very little risk...
Revolving Credit Facilities normally have higher interest rates and are aimed at business' that will dip into and out of them when needed for cash-flow issues... EPIC has relatively good cashflow so wouldn't typically need that type of debt facility...
As for "how is it being paid off!"... the aim isn't to pay it off... most business' operate with a proportionate level of debt permanently as the "Gearing" allows for them to make more money! Case in point... Credit facility has an interest rate of 2.86%... But EPIC can make 18% from that same money...
OK Tim Bob. I accept that logic, but I am an old fashioned conservative and don't like a debt that can always be called in or interest rate hike as with a mortgage. Ever heard of negative equity? I do hope that debt level will be reduced.
Operastar... debt wont be paid off/reduced in £ note terms; if that what your looking for, id suggest you look elsewhere...
EPIC typically maintain the credit facilities at the £110m mark an reinvest surplus funds in further developing the property portfolio... thus giving investors a better return.
OK Tim Bob. So what you are saying is that the asset value will have to increase to meet the prefered debt to asset ratio. That is what I would like to see. Apart from that, it does look quite sound with a good discount of share price to NAV.
Current Debt % is only marginally above the companies target of 30-35% (currently 37%). This is mainly due to the de-valuation of the property portfolio over the past 3yrs (its was in a healthier position prior to COVID)... I suspect this is why the board hasn't been overly concerned with debt being above its % target; a single year of 5-6% asset growth would put them back into the target zone...
EPIC focus' more on Retail Warehousing, which seems to have been tarred with the same brush as High Street Retail... In my opinion the assets have been de-valued too much and the real NAV is higher still... With a healthy dividend yield and cover, its a good buy... If your looking for long term growth; reinvest the monthly divi... if you want an income, you get a little bit every month (so you dont seen too many price spikes when they go ex-div like some organizations).