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I lost shed load of money on this one sadly
Bought at 42p and sold at 31p
Will buy back in if Inglis sacked (i was very misled by his bullish comments in q1 last year and he is responsible for 'recycling' money from sales back into tne market in 2022, the desastrous squatestone deal, he is hopeless .companies reduce letting activity during elections. Hopefully 2025 will be better for the office market.
What happens if i offoce values fall again this year and the 60% ltv are reached?
I guess banks repossess property and sell?
Could they liquidate their interest rate hedges to raise cash?
In really simple terms. Assuming they have zero cash/zero rent roll:
Gross Portfolio Value (2 Feb 2024): 700.7m
Gross Debt: 431.693m
Net: 269m
==> they can still repay all the debt by liquidating everything - as long as property prices do not fall by more than ~38%. That's a fair bit of breathing space and that's the worst outcome.
There are no secured debt maturities until Aug 2026, so they also have breathing space as long as they don't breach lending covenants and those aren't going to happen all at once. In reality, they *do* have cash on hand, they have a significant rent roll and the interest rate is fixed at 3.5%, which is pretty low.
In summary: As a holder of the retail bond, I'm not shi*ting my pants yet. I think the collapse of the retail bond price is just a sign of poor liquidity. I'm not currently buying any more, but I might consider it once we get closer to maturity, depending on the FY results in March.
Maybe it makes sense for them to start buying back the retail bond?
FYI: that debt figure is a bit old. DYOR as I could be 100% WRONG.
Pity no mention was made in the update.
I am not a subscriber either, if anyone is perhaps they could enlighten us.
Worrying so many sells at this price.
On the other hand, it's not going to surprise me if they've breached one of the covenants (most probably the one with Santander). I really doubt that they're going to be Mr Nice Guy if that happens; I reckon they'll force a liquidation of those properties before they drop any more. They will not give a monkey's about the pain inflicted on equity holders; that's not even going to factored into the thinking.
I thought you might be interested in this if you didn't already know about it ..
Sorry but I am not a member so I don't know any more
The divi (~£6m/quarter) dwarfs the retail bond coupon (£1.125m).
In the normal scheme of things, the divi would be cut/eliminated if there was any chance of the bond coupon being missed or principal not being repaid. I don't think there's any problem with that coupon. In the event of a firesale, I still think they can repay the secured lenders and the retail bond. Obviously the equity holders might be wiped out in such a firesale, but I don't think we're at that stage yet. On the other hand, it depends whether or not the banks want to lighten their exposure to CRE.
Previous payments havent reached my HL a/c until 10th or 11th, so dont panic if it's not there by the end of this week!
Any bond holders actually received coupon (due yesterday, I think)?
Inglis has a long history ( not alone in the sector) of providing information which ignores the negative trends in the business.The annual reports and company presentations do not mention the LTV covenants in financing structures or if they are ring- fenced from claims on the company if there is a shortfall ( unlike NRR or Capital and Regional).Most LTV covenants are normally in the 55- 60% range but can be varied or waived.
The update from 2 Feb is typical of the stance of ignoring the liquidity crisis caused by the failure to address the imminent maturity of the bond.
RGL is a distressed seller so achievable prices for sales will be under valuers figures which are based on a normal market scenario.That is why they have only sold £26m.Just look at the Canary Wharf office price drop.It is more about distressed sellers having to take big hits.
Divi announcement in two weeks.Prelim results on 26 March.What odds on tangible developments on the bond.It is to be hoped so.
Noticed some large sales yet the share price is not down much, someone buying shares up.
They have said they can refinance the bond, it's not a problem,don't they have some cash to reduce the amount unless they have spent it but guessing it will become clearer in the next coming months.
The board have said they are looking to reduce the LTV to 40% so perhaps something is imminent, perhaps Oakdale house is about to be sold.
The whole sector is unloved.
Someone could buy this and make money
RGL shares have been sliding for some time- 24p currently, down >15% in the past week alone- and reading between the lines of the update on 2 February, I'd be worried as an equity-holder about being wiped out at some stage due to an inability to realise enough value from future sales to cover the debt. So my guess is a (single?) holder of RGL1 is worried enough about their ability to refinance this bond and repay us in full. I'm still assuming that some combination of cash, a dividend cut and a sale or two will allow them to scrape together the £50m by August, but I'm not confident enough to add to an already very large holding.
That's a significant drop for a bond, definitely a red flag for distress. With it being unsecured, if they did default practically speaking there wouldn't be a tangible creditor to fire the gun on administration, so the company could in theory stagger on. But the consequences for the company would be almost as disastrous in terms of ever accessing credit again.
CaneToad,
I've just been looking. Ouch! I'm glad I thought better than to buy the bond....leave it to people who know more about it.
But I agree with you that defaulting on the bond would be unimaginable for the company.
0715 and others have been right, they should have offloaded some properties to get the LTV down when they had more time. Now they need to do it urgently, and that is not a good place to be.
Inglis really should be issuing statements explaining what they are doing to stop this. Perhaps his silence is because they don't have anything to say that would calm people!
All rather worrying.
Guitarsolo
Big volumes of the retail bond being offloaded (actually, it's just 5 sales as of 9am, but there's no liquidity). Somebody wants out in a hurry.
On the other hand, it's suspicious that somebody wants out of this so quickly, given that it matures in only 6m time. I guess they think they're not going to get repaid. It looks like a bargain, but I'll be keeping my exposure below 1%.
The bond price has collapsed today... sp = 87.7 currently, giving an annualised yield of over 30%, that's a 10% rise o/n... it could just be the extreme illiquidity or that somebody knows something. I don't see them defaulting on the bond as it would surely kill the company. I welcome other views!
Can someone share the instructions holding information please or let me know where to find it. Many thanks
How can they sell property under the market value to his own other company. Institutions are also holding shares in RGL. Conflict of interest.
Yes.
When you buy the bond you pay the clean price quoted and for interest accrued to the purchase date.If RGL do not pay the interest ,you lose out.That is one reason why you will sales before a coupon date on risky bonds.
I've never bought a bond.
Does this mean that if you buy that bond at the end of July, you wouldn't actually get all of the 2.25p interest payment due on the 6th of August? You'd only get one week's worth of interest because almost all the rest of the 6 months was accured to a previous owner?
I do think this is oversold.
A large buy and a large sell gone through.
React reported Oakdale house is for sale it's in old Trafford area you had to subscribe to read it so couldn't read the article.
Could Inglus float another company to buy some assets and convert them to flats??
Or another company may be thinking that,pay the bond off and you get nice cheap finance for a few years.
Divi cut perhaps but I don't think it's going busy.
Yield on retail bond now over 20% (sp: 92.436). Clearly somebody thinks there's a sizable risk of default.
Time is not going anywhere. All the REIT are in same position. Look at GRID, yesterday I have started taking position from 48p and will be keep on investing in RGL if it really hits 20p. Directors have bigger holdings than us. Hold tight.
Don't need to panic. RGL don't need to sell properties in panic. Nothing is cheap here. Please hold tight. If they do not give dividends then they will be in much better position in LTV. Keep buying on lower prices.