Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
To deliver an attractive total return to shareholders with a strong focus on income, from investing in UK commercial property, predominantly in the office and industrial sectors in major regional centres and urban areas outside of the M25 motorway.
Find out MoreLondon South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
LOL! Yeh someone commented here that the 20p=>13p tank, following the bizarre RNS a couple weeks ago, was on no new news whatsoever, and therefore it should trend back to 20p. Et voila! And now: an ER which says.. nothing everyone didn't know already. How many of us are kicking our own behinds about not doubling-down at 13p!?! Some talking head - was it ware Buffet? - said investors have enough brains, but not enough balls...
Last week everyone thought RGLs days were numbered. Now it's climbing 10% in 1 day. Easy money if you know how to play the game.
Now I can see light at the end of the tunnel SP should start going back up .
š¤
Finally getting somewhere. Ā£22 million under offerand another Ā£20 million under negotiations.
Total Ā£42m if LTV is 55% should leave Ā£20m free after Ā£22m is repaid loans.
With the other cash Ā£35m+20m that should cover the Ā£50m bond.
More sales to follow should turn round this sinking ship, shame inglis didn't do it 18 months ago, would have got much better prices.
Correction: NAV per share is 59.3p, giving a discount of 69.3% ( My maths is bad today... one minus...)
Santander LTV 52.1% as at 31st December. ~Ā£2.5m of the loan paid down further. Ā£10.9m paid down in total.
The new known unknown is by how much any of the loans have been paid down since the year end.
NAV per share of 56.4p, which with a share price of 18.2p is now at a discount of 32.3%
No news is... no news...
Still a chance to pick up the bonds @ 94p if you're feeling confident, for a YTM in excess of 20% (assuming my calculator is working properly). Yes, only 5 months but it beats cash in the bank.
Obviously not out of the woods yet, but such a relief to some some detail on a significant disposal programme. Personally, I'm not tempted to buy any more whilst there's a possibility of a capital raise, but it appears they are no longer asleep at the wheel.
Looks like the asset sales are well advanced so covering the bond is not an issue now. I think that the share issue was a last ditch opportunity to ensure that if sales did not materialise then they had the funds to ensure survival if all else failed. I donāt think it is a realistic option now.
In the Debt Financing and Gearing Section unrestricted cash is stated as Ā£25.7m,whereas in the Financial Resources Section it is Ā£30.2m .Why the difference?
58 āassetsā are up for sale totalling Ā£130m.Is an asset the same as a property ? They have 144 properties valued at Ā£700m.So they are selling the smaller stuff,basically.Bigger stuff will have to be used to repay the institutional lenders.
A dump to get the bond covered.No bad thing.But Ā£100m+ needed to get out of the Straight- jacket.
I do not believe there is any vaguely significant likelihood the business cannot continue as a going concern. The retail bond concern is a minor irritation for which there exists a wide range of alternative solutions. In 2023 the business had an operating profit of Ā£43.1 million. As at the year end there was Ā£30.2 million unrestricted cash.
2.2 Going concern
The Board have performed an assessment of whether the Group would be able to continue as a
going concern for at least twelve months from the date of the consolidated annual financial
statements. The Directors took into account the financial position, expected future performance of
the operations, the debt facilities and debt service requirements, including those of the proposed
refinancing of the Companyās Retail Eligible Bond, the working capital and capital expenditure
commitments and forecasts.
The cashflow forecast indicates that the Group requires additional liquidity to fund the Retail
Eligible Bond obligation during the next twelve months; and the Groupās ability to continue as a
going concern is dependent on its ability to obtain the necessary additional funding required through
a capital raise or alternative funding sources, which are currently being considered by the Board.
This condition indicates the existence of a material uncertainty that may cast significant doubt on
the Groupās ability to continue as a going concern. The consolidated financial statements for the
year ended 31 December 2023 have been prepared on a going concern basis as, in the opinion of
the Directors, the Group will be in a position to continue to meet its operating and capital costs
requirements and pay its debts as and when they fall due for at least twelve months from the date of
this report, as the Board are confident they can raise the necessary funding to replace the Retail
Eligible Bond due to be repaid in August 2024.
I dont quite understand the recent buying given that it has been announced they are considering issuing shares at a significant discount. Why not wait until after if you wanted to buy?
Given that refinancing has recently been flagged via Edison then an official announcment is in everyone's best interests - especially the Board's. The (bad) news is expected so they ought to take the opportunity to get it out into the open. Failure to do so might suggest an element of panic.
Interesting to see lots of trades buying into the stock over the past couple of days ahead of the annual results supporting the price up a bit. Do you think the we / the market will get the clarity over debt and financing it clearly needs from the annual report and / or any statements issued at the same time?
LTV covenants are not published in the RGL annual report for any borrowing facility.Covenants can be amended- temporarily or permanently- at any time by mutual agreement.How an LTV covenant is calculated could vary for each facility.Certain properties,such as unoccupied,might be excluded,for example.Typical covenant level is 60%.With an LTV of 55% RGL has not much flexibility.All guess work as RGL does not disclose useful information of this type.Slippery or what?
The change to the Santander LTV limit is recorded in the prospectus for the 2019 capital raise - page 166:
"11.11.2. .....On 18 June 2019, the facility amount was increased to Ā£66m and the term extended to 18 June 2029. A further 18 properties are now secured against this facility to support the increase. This amendment has resulted in the applicable rate of interest increasing to LIBOR plus 2.20 per cent. per annum plus mandatory costs and the financial covenants have been amended, such that:
ā¢ historic interest cover must not be less than 300 per cent. at all times;
ā¢ projected interest cover must be not less than 300 per cent. at all times; and
ā¢ loan to value must be not more than 60 per cent. until the fifth anniversary of the amended facility being signed and 50 per cent. thereafter."
That last point. The loan won't need to be refinanced soon - matures in 2029 - just the possibility that some might need to be paid down sooner. And SONIA now rather than LIBOR.
ZDPs would certainly be an option, but their issue is that interest is being rolled up as capital which would be paid out of assets upon redemption - or a larger capital raise alternative. They're a creeping incremental liability on the NAV. That's fine if the assets are increasing in value, more of a problem if they're stagnant or falling in value. The risk is this uncertainty, whereas fixed-rate debt is a known (not necessarily a nice known, though!).
The numbers just don't stack up at the moment.
A recent This is Money article reported that Peel Hunt analysts estimate that RGL would need to line up more than Ā£175m of disposals (c25% of its portfolio) to reduce its LTV to to c40% but their calculations either seem to be based on the premise that the retail bond forms part of RGL's secured loans or that the disposals would need to be made in addition to a capital raise! IMHO they're living in cloud cuckoo land if they think RGL can sell cĀ£175m of property in the current market within any reasonable time-frame (it's been an unrealistic expectation for the last 12-24 months); buyers generally either don't have the cash or the credit lines to purchase that much property as one lot and it's going to be a puch to sell that amount piecemeal.
I just don't see that a capital raise of cĀ£75m is going to be enough. It smacks to me of Inglis, yet again, living on a wing and prayer i.e. hoping that between now and August 2026 interest rates will have started to drop, property prices started to recover and that the RBS loan can be refinanced on similar terms for another (say) 5-10 years whilst paying off the retail bond plus cĀ£22m of the Santander loan to reduce the LTV to c40% (assuming that the maximim LTV is to reduce to 50% in three months time - I can't find any reference to this in the FY22 accounts). Inglis is just pushing the problem further down the road in the hope that the market will come riding to his rescue and we could just end up finding ourselves in exactly the same problem in two years time. What is the end game? There doesn't appear to be a plan to pay down debt; just continue to refinance with medium term loans.
In reality, RGL could probably do with raising cĀ£150m (cĀ£75m of which, certainly with the benefit of hindsight, it probably should have raised when it acquired the Squarestone portfolio back in 2021, in addition to the cĀ£83m that it did raise at the time). cĀ£150m would enable RGL to repay the retail bond and pay off c25% of its secured loans (reducing its LTV from c55% to c41%). Reducing the LTV to c40% should be the starting point not the end point at this juncture.
If not Ā£150m (a huge ask), then I think RGL should really be looking to raise at least Ā£100m. It needs more headroom and, if it must continue to dispose of property, to retain control over the disposal process and maximise value. It should also be considering ZDPs for, at least, part of the equity raise if it can.
True for full year accounts, should have said 30th April rather than 28th March there
Shows how useless these newspaper share tips are. At least they admit they got it wrong recommending the equity before share price went on to collapse. More than can be said for quite a few rampers on here when it was 30p+, who seem to have now gone very quiet?
I think for annual results they have 4 months to announce
Will be very interesting to see what auditors have made of all this. If they've not signed it off, depending on how open the company are, first signal of something amiss could be a delay in publishing accounts.
Management must be approaching boundaries of trading insolvently, certainly if they continue status quo. With early Easter, hard deadline for publication is 28th March, failing that suspension the following week. One way or another it has the feeling of an end game.
Matt, the numbers quoted are those for the Santander loan only - from the tables in Annual and Interim reports 'Debt Profile and LTV Ratios'. cĀ£430m is total debt which is made up of four secured loans and the unsecured retail bond. Each of the secured loans have their own LTVs, and each have their own covenant terms (as does the bond in the case of the latter).
I brought the subject up because most of the focus, on here and elsewhere, is on the need to redeem the bond in August and I think that a bit of attention needs to be paid to something which could be an issue before then - and only 'could' until we see the actual numbers.
Irrespective of what happens to the LTVs of the other loans and the overall LTV at the Group level, if the individual LTV for the Santander loan has risen above 50% then it will breach the new maximum limit which comes into force in June. Whilst Santander would not be compelled to take possession of the properties which are collateral to their loan, they would have the option. Would shareholders want to allow them that choice?
My interest her is solely as a bondholder - no financial interest in the equity. But I do think that an equity raise is the least-worst solution for shareholders.
RGLs immediate problem is one of refinancing which is exacerbated due to too high a level of debt being secured on illiqud assets. Regardless of anyone's opinions about board/management, or having assets sold either to just reduce debt or have RGL wound down, the immediate issue to be addressd is the refinancing. The other issues need to be treated seperately.
Just my own opinion, though. But however the refinancing is raised there is going to be a cost to shareholders - either up front or further down the line.
Very disappointed that the management didn't do something earlier - its all about confidence and whats known.
i.e. to sell property it would be at a huge discount as everybody knows its a fire sale - so not really on, especially if already collateral. A share raise is now a disaster as the more the price sinks the lower the price needed for any interest, again especially as the institutions know this. What price here - could be 5-8p.
A historical precedent as usual is available - e.g.this happened to mighty Segro some time back when poor management overstretched it, and didn't believe Capital Economics telling them interest rates looked set to plummet - it then offered millions of virtually worthless shares as the price dropped over 80% - then hey presto - has a huge share consolidation so that existing holders (including staff - and I was one!) were wiped out, but the new institutions rescuing them were quids in on the cheap price and subsequent phoenix rise. oh, and the CEO - he went off with his gold plated pension after huge amounts of the staff were made redundant! This involved going from Ā£10 to a penny share and then back to circa Ā£2.50 again with many forgetting that the Ā£2.50 should be divided by about 20 for the true share dilution price destruction.
Can't believe I was daft enough to think these managers knew what they were doing - part of their job is to read the market, prepare for hard times and unexpected events.
I'm afraid this is near wipe out time if you either sell out at a huge loss or have to shell out for a massive dilution.
Not pretty and after much procrastinating I'm still unsure which option to follow even now!!
Said it all along the bonds are the play here