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Still nervousness about the ability to complete on the local housing stuff….and the lost income.
Just looking at RESI first time, which looks set for v good income and/or gains, and wondering if I am missing anything?
- 1.2x covered divi of 4.12p >8% at todays price, which is not under pressure after rebase
- v good long term debt majority at 3.5% fixed with >19 years to go, most of the remainder already peaked at 1.1% +RPI capped at 5.5%, with >20 years to go
- Record demand, turning people away, nearly 100% occupancy and rent collection
- Rents increasing 9% this year
- Sticky tenants with demand not cyclical due to shared ownership & retirement units focus, unlike warehouse/retail/office
- Plan to remove the smaller FLR component of debt in early 24 by sale of social housing, under offer and already over 1/4 of units exchanged. Concerns over FLR if they are paramount seem overblown.
- Further margin improvement by reducing mtce costs and revised fees calc
- LTV still at 50% even with reduced NAV calculated Dec 23 and further mitigated by v. good loan terms
- Refurbs are organised to be accretive to income by justifying improved rents
In a year or two 50p could look cheap in the rear view mirror. Yet even with no SP increase the compounded dividends are nearly 50% gain in 5 years at todays price.
Is it just the smaller REIT size putting this under the investment radar or still recovering from a shock of temporary divi reduction?
The company still has a high level of debt, which they are trying to address, but the dividend cut and interest rates 'higher for longer' means resi sp is under pressure despite rising rents.
This will turn around once they can pay off the floating rate debt and stabilise the dividend. Sub 50p is probably a good entry point and I will be reinvesting the dividend to average down.
Towards the end of last year they announced they were going to cut the dividend. Then yesterday they made the official dividend declaration, and some people apparently got the news of the dividend cut for the first time, so the share price fell. I think many people invest in this sort of share for a regular income, and if the dividend is cut they get cold feet and sell, regardless of the fundamentals.
The headwinds that eventually led to the dividend cut are old news now. Since then there's been some good news. At the same time they originally announced the dividend cut, they also announced that they'd agreed the sale of the last of the local authority housing (good) which will let them pay off the remaining variable rate debt (very good). I was still a bit concerned about whether the sale would go through. But yesterday they announced that they'd exchanged contracts on one sale and the rest were proceeding satisfactorily. I'm more optimistic now, so the fall in share price suited me. I took the opportunity to buy more shares.
Decent results today.Optimistic outlook.Share price dropped 20% in January.Somebody know something we don’t?
Correction to one of my previous comments: RESI can't suspend the dividend. As a REIT they're obliged to pay out 90% of earnings.
Ive been in since initial £1 placement average 93 now.
I only bought recently, knowing the problems, and still think it's a reasonable bet at this price, for long term income. They just need to deal with the floating rate debt (which is only 10% of their total debt).
Thanks for that tich, might off load a few then and take a hit.
High interest rate on the 10% of debt which is floating rate. High energy costs (on heating communal areas). Currently only covering 86% of the dividend (if I remember the figure correctly). They are trying to sell some non-core assets (probably the local authority housing) to pay off the floating rate debt, but they probably can't get an acceptable price for it. If they don't manage it soon, I think they should suspend the dividend for a year or so to pay off that debt.
Hope this is now bottom why is the sp so low? Anyone!
Should RESI have reported half year results today?
Director buy might indicate the low point reached. I hope so, I have increased my holding.
The fall may well be connected to the vicious short attack on HOME
Having just watched the webcast, I am mystified by the current SP, having dropped 22% over the last few months. The Company's business model (affordable residential property) seems bullet proof, even in a recession. The capped interest on borrowings together with index linked rent increases seems to guarantee that the dividend, currently yielding 5.75%, will be sure to increase every year.
I am thus very satisfied with this being my largest holding by value, as I expect 2023 will prove a very tough year for investors, especially the second half. Thereafter times might be very tough indeed for many months.
Definitely feeling a little nauseous now was going to sell some earlier in week.
Definitely feeling a little nauseous now was going to sell some earlier in week.
Altitude sickness @114
Most of the buying, and selling, has been A trades.
Looks like Motley Fool recommended it as one of their top picks in the UK market yesterday.
No idea, assumed it’s just an algo anomaly so sold at 113+, will buy back later.
Good question. I was wondering the same thing and came to this board in search of the answer. The SP spiked up above its previous all-time high and has fallen back slightly, but still looking strong.
....why this is up 7% today? :-)
Agreed! 5%+ return maybe 8% in the future. Don`t know why SP took off to 112 a few weeks ago though.
Look ok - good to me: NAV and divi increase. Bought in first thing this morning.