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August deadline is very tight in context of time it takes to complete commercial property transactions. Anything coming onto market today would likely be too late, unless they resort to auctions.
Realistically the only way out is sales, sales, sales. An optimistic reading of the Edison report is that this was put out there to a) test the market and b) demonstrate that the company theoretically has 'options' and therefore not undermine any ongoing sales negotiations by appearing to be a forced seller.. This has been very painful but it is worth remembering that even if the whole portfolio was sold at say 100m less than the last reported NAV, it would still generate approx 40p per share for equity holders.
This will continue downward until the big sales are announced.
A couple of years ago the portfolio was worth over £900 million and now £700, and dropping around £20 million every quarter.
If inglis would have sold earlier could have sold £200 million of assets and still have £700 million today. The debt would have gone down by £200 million.
Still one last chance left to dispose before the it breaks covenants (in 4 months time) and goes bust i, time is running out, very badly run.
Yes, in 2024 sell off 100 million of assets, first reduce the bank debt by 25m to keep the banks happy, then pay the retail bond 50 mill, then another 25 mill off the bank debt by year end, and finally pay the divi for 2024 in April 2025 to stay within the Reit constraints. End of 2024 the assets should start ticking up after first interest rate reductions., and can still sell off another 50 mill in 2025 if needed, to get back to the 40 percent LTV. in 18 months time the situation could all look a lot better.
Just pay dividend end of the year instead of quarterly. This will help
At this discount if someone does buy up the shares and then break it up they would be on to a nice payday. The parts are worth more than the whole at the moment.
Doom loop can easily break if low cap sparks rumours of takeover
A scrip dividend approach going forward which is allowable under PID rules?
Being dilutive is a given, the bigger picture is more existential. The more the stock decreases, the less they can practically raise. That doom loop arguably well underway and gathering momentum, problematic when bond alone is now 50% of the already bombed out market cap.
Given anything from Edison is sponsored by the REIT you can regard it as heavy odds on the Inglis solution is a new share issue and reduced dividend. This makes sense if there is no appetite to issue a new bond to finance the redemption where the coupon would need to be north of 10% and carry conversion rights at a favourable price into more ordinary. Yes it is dilutive but what are you expecting?
If a placing does take place, the share will drift towards the placing price so a chance to top up … it’s not the end of the world. Dividend at 20% means a placing at 10p would still ge an excellent return.
We seem to be heading for a bit of a stitch up. A share placing rather than a rights issue is coming at a low price.
This will be good for creditors, it will mean inglis keeps his large management fee, the large shareholders will get to participate in the placing, but the small shareholders will get massively diluted.
I 100% agree that asset sales are absolutely the way forward. A rights issue at the current price is madness. The office market was one of the most liquid sectors last year, despite pricing difficulties there are plenty of buyers for the assets. They need to sell as much as possible and then use the LTV headroom to negotiate an RCF facility with the existing lenders to bridge the gap. This could bring LTV to 45% and would position the shares for a rerating. I can see an equity issue working as part of a broader strategy once this is done, but if they follow the Edison recommendation when the SP is at 20p it will devastate shareholder value.
If he would have listened to me months ago we wouldn't be in this mess. Every inheritance REIT has sold offices at NAV so it's not a case case they won't sell. Inglis is choosing not to sell.
He needs to pull his finger out and get rid of £100 million of assets. Sure the dividend might need rebating but if the NAV is really that high then its the best way ford to get things under control, rather than rights issues, etc.
The longer this goes on the more trouble it will cause. Get a move on.
At this point even a discounted sale of the portfolio would be preferable to a rights issue at the current share price. It would heavily dilute existing shareholders who cannot participate. There may still be options with the existing lenders for an RCF facility if they can continue with asset sales at current levels, which would temporarily increase financing costs but would create more certainty in the medium term while they continue to pay down the debt.
We assume that Edison has access to company info or at least an audience as RGL is paying them to promote RGL To their credit,my interpretation is that they think RGL needs a rescue ( my words) share raising.Of course it does.Been blatantly obvious for months.The Board has been effing useless listening to Inglis saying he can sort it.Left it far too late.New Board required.Sack Inglis and the other padding and particularly the chairman who has demonstrated no backbone or strategic skills.Best thing for shareholders is for ARA to step up and get cash into the company from serious investors.Sooner rather than later.
A pretty decent analysis. Quite stark in places despite RGL paying for it, touching on same themes we've discussed here, such as worse LTV than any peer and challenges around bond refi. Naturally leads to question of why they agreed to have it published. I guess they're intentionally warming up market to report's proposed solution of equity raise where "new shares would need to be priced at a significant discount to the current share price".
Regional REIT disposals have so far been at or above valuation. Looking at the equivalent yield profile for RR it looks very much in line with MSCI movements and yields. The London office market was also arguably far overpriced and slow to recognise valuation drops in 2022, whereas the regional markets had already reflected much of the pain by the time we got to June 2023. I see that Derwent are reporting a 5.5 EY is below the prime office yield consensus of approximately 6.5%. It is misguided to try and compare London office markets to regional assets - and the investor market does not necessarily reflect the income story. There may be a little more pain to come on RR's portfolio but I suspect it will be single digit and we may even see a hardening of yields if rates start to come down.
Might be of interest that Derwent results this week pointed to a -10%+ downgrade in their portfolio valuation over the course of the year. They're prime largely central London, and that reduction despite widely accepted flight to quality in office space market. Meanwhile Regional Reit with their ageing provincial stock are asking shareholders to believe their valuation has not dropped as much. Something amiss here.
You overlook the fact that the sp fell over 1.5p yesterday; the fact that we're only down 0.7p today as I post is cold comfort.
Surprise, surprise we are UP for the day, yes thee share price is -0.85p but today the SP has gone X-divi by 1.20p and so far we have recouped 0.35p. And about time time the last couple days of the mark-down, I wonder if some Institutions did not want to get the Dividend
note: Ex-dividend date 29 February 2024 -- Pay date 05 April 2024
Good to see positivity fighting back on the other board too!
If the Board had a deal in place to refi the bond by the divi day announcement,they would presumably have said so?
Good to see rises in bond and share prices.There are buyers for the bonds at current levels.
Cancelling the dividend would have sent the wrong message to potential new money providers?
Significant asset sales still required in the shorter term unless values increase,imho.
Absurd is the huge volume today with large trade changing hands, suddenly up to 25.35 and down again to 24.50p.
volume... http://uk.advfn.com/p.php?pid=staticchart&s=L%5ERGL&width=550&height=205&p=1&t=1&dm=2&vol=1&cb=