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Gyms just starting to open up but many fighting for survival
Unfortunately all too late for Xercise4 less who are as they prepare for administration
Not good news for RLE as they occupy 2 of the 4 units at Barracks Road Newcastle Under Lyme .Following on from Bathstore demise
The remaining unit occupied by Dominoes . The investment bought in 2017 for £2.8m
Https://www.unquote.com/uk/news/3020312/bgf-backed-xercise4less-prepares-for-administration
The gym operater in Redditch due to open after the lockdown
Yes thank heavens for small mercies .With the SP hovering around 30p those who bought in at 70p on Jan 2016 having been suckered in with the fluff about the Commonwealth Games and HS2 must be scratching their heads at the poor performance .
Adv I suggest you get your calcualtor out to see if your investment has been ahead of the game
Slowly coming to terms with the fact that the real beneficiary here has been Bassi himself . Decent salary ,share options
his private estate agents Bond Woolf hoovering up annual fees
Even managing to shovel in a few private assets and the chance to create a family dynasty
What next ?
Maybe sell a bit of the best family silver at close to book hoping it might lift all boats
Nice dividend received today, thank you Mr.Bassi.
WEST BROMWICH-WEST PLAZA
RLE acquired from Bond Wolfe West Plaza for a chunky £8m in March 2016 The majority of income secured on Premier Inn where there is a break clause in April 2021 .
The portfolio already brimming with kit based in West Brom .Why not have a little more indeed ? especially a building which is likely to need plenty of cap.ex in the future
One of the main justifications for the purchase from one of Mr Bassi's private companies was a potential marriage value with the property owned next door ,Metro Court
"[We] also believe there may be additional marriage value from combining the property with Metro Court, the adjoining property,"
Not much of that then as they sold Metro Court for £2.1m in 2019 .
https://www.sharecast.com/news/aim-bulletin/real-estate-investors-buys-west-bromwich-block--1068583.html
So work started on a brand spanking new Premier Inn in 2018 recently opened close by West Plaza,cheek by jowel
Clearly that deal struck sometime before then prior to construction
Is there room for 2 in W Brom town centre? .Investors will be keen to know whether Premier Inn have triggered the break .Let's hope they haven't as it will leave a gaping hole in revenue ? Certainly an opportunity in any event for Whitbread to negotiate favourable terms
Https://www.expressandstar.com/news/local-hubs/sandwell/west-bromwich/2018/05/11/work-starts-on-building-new-premier-inn-in-west-bromwich/
Chasing high yield usually involves buying properties with short leases in good locations with the "hope value" that the tenant will renew their lease and if not the property is capable of being let to A N other within a short period of time
An investor I knew used to buy industrial property investments where one of his main purchase criterion was heavy plant and machinery insitu in sound industries where unlikley to become obsolete and would carry a high cost of being relocated
For some reason in a region of a thousand industries there is almost a complete absence of industrial and logistics properties in RLE's portfolio
So here lies the dilemma for those properties who have important lease events on the horizon. The wide range in value from outcomes .None more so than Birch House Oldbury
Acquired in 2015 as a brace including the empty Birchfield house from Stoford .nicely located by J2 but unfortunately been unable to let it
Meanwhile they have been trying to flog Birch House let to N Power since 2017 without success to try and recoup some monies seeking £6,070,000
Https://www.expressandstar.com/news/local-hubs/sandwell/oldbury/2017/09/30/npower-offices-in-oldbury-up-for-sale-for-6-million/
The problem they now face is that N Power lease length has been getting shorter and shorter expiring next April where they are currently paying a hefty £517,000pa ,the open market value is reducing
Its now a dice roll on the continuing occupation of N Power
With the empty building next door the prospect of N Power vacating would be disastrous
What would it be worth with vacant possession is anyone's guess but certainly substantially under £6m
If Npower do decide to remain they are in a very strong position (with the long time empty unit next door) to make a big haircut on the rental of£517,600pa
RLE will be desperate to get them on some sort of lease with 5 years+ to extract some sort of value
We wish them the best of luck with that
You need to take the rose tinted spectacles off for a moment and smell the coffee
Here is another comment today :
"I'm a little uncomfortable with the scant detail in the market updates, I would even liken it to 'spin-doctoring'. Not breaking down 'secured rent collections' into deferred, monthly and actual is deliberately and unnecessarily obfuscating imho."
ADV
It must be the sound of the bonnet being lifted Apprecaite you are in some sort of lovefest
Impossible to glean from today's RNS what the current revenue is It does nobody any favours not spelling out the current situation clearly
Here is a very appropriate comment today lifted from another share chat site on the RNS
"I have read a large number of RNS's over time on RLE and learned that this company has mastered the art of doublespeak or "non-information by omission" in a way that means I don't trust them whatsoever.
That doesn't mean I'm not prepared to invest. Just that I have to spend extra time diseceting everything they say and my entry price is lower than it would otherwise be."
The background noise in this room is terrible. Like a constant whining. What can it be ?
Yes all sounds pretty encouraging but as ever with RLE -the devil is in the detail . It would be so much easier if they were more straightforward to get a proper steer and give an actual figure but I guess they don't want to do that
Rather than spell out the amounts of the actual rents received they use the words "collected" which includes variable income like the quite substantial car parking at Redditch and Crewe which understandably would have taken a big haircut during the lockdown
They then go on to qualify the very satisafactory 90% received for March QD with the wording (adjusted for monthly and deferred agreements) The 10% being "rogue"for want of a better word
So happy to be corrected but surely "deferred agreement"means they have allowed certain tenants to defer payments to a future date which translates to less income now
Then of course there are properties which have become empty with a further loss of income like Sainsburys at Nottingham
As ever
Very positive update today. Great to see a company keeping its investors updated.
Good for you ADV . I hope it works out well . However it does look that Investec will take advantage of any investor demand and release more shares to satisfy that which might put a ceiling .
Difficult times ahead and no doubt plenty of pressure on rentals on lease renewals
A late top up from me to maximise my dividend and cut my average.
50 percent of dividend X Double the amount of shares = happy adv11.
At this late I'll be able to afford to move to Crewe.
Made my first town centre trip in 3 months today. Shops busy, no queues, everything flowing very well. Only Halifax still closed, but they never did like customers.
Yes encouraging to see them have more skin in the game
Certainly important to match actions with words
. Bassi has a small holding in RLE compared to his other interests and the fact that his agency Bond Wolfe enjoy substantial annual fees for their services and his son Bobby is employed there ,to be frank you would expect nothing less.
Able to buy in at 34p where the company had to go wading into the market place at over 40 p to pay for the shares to fulfill their obligations to reward Directors but there we are
Interesting to hear if the Travelodge has escaped the haircut on rent in the CVA ?
Very difficult to see however that HI will avoid their Ist loss unless of course the valuers aren't brought in
Be intersted to hear whther
Fantastic show of faith in the company. Well done directors.
One positive development at Crewe is that plans have been submitted for a Drive thru Burger King which will take out some car parking
https://www.cheshire-live.co.uk/whats-on/food-drink-news/drive-thru-burger-king-proposed-18275782
A potential loss of car parking income but certainly should add value mitigating some of the rental cliff fall in the centre
"Getting back to normal" . It doesn't quite work like that.
You really do need to look under the bonnet coming out with these fanciful posts and dubious arithmetic .You are in denial of what is taking place in the property market . There is no magic wand
Believe me Crewe is not going to get back to "normal"
Its only just started raining .Rents in Walsall town centre wont be returning to"normal"anytime soon
"Contracted Income " That wording covers a multitude of sins. That is in freefall
CREWE
As of the 5th June the £120,000 pa from Unit C has gone which has yet to impact Following on in August a loss of £94,200 00 pa from Units 18/19
Not to mention the contracted rental income of £85,000 pa from Brighthouse who are in administration They are also in Kings Heath too
Does that contracted income include that of Bathstore who are in adminstration?
Lets not forget the contracted income of £388,000 pa goes forever when HP lease expires in October expires in Telford
and......
So buying today at 32p. will give yield of well over 6 percent even with the problems staying as they are, with a probable year end bonus, and a yield of over 12 percent when we get back to normal.
Surprised there is no one else commenting today. All too busy buying ? Or maybe all the West Midlanders are queuing at the shops to spend their pensions/benefits ?
Adv
Your loyalty can only be admired
No doubt RLE coping with a bad situation well but like others this is a portfolio under distress
No doubt you will be adding more at even the more crazy prices today
Some great news this morning, just as things start to get back to normal. Doubled up last week at these crazy prices, so my dividend income remains on track, may pick up some more if other peoples negativity destroys their ability to see through the black country smog.
A satisfactory update today on one level with 81% of the rents collected for March which in the circumstances only to be expected .Whether that will hold true in a couple of weeks time with the June quarter day looming is anyone's guess .
These updates however always sadly lacking in any flagging up of bad news like Sainsburys having broken their lease Whether that contracted income of £17.3m pa is due to fall as properties become empty or lease events is anyone's guess
"The last three months have been an active period with Covid-19 related negotiations on rent being agreed alongside lease extensions, which has resulted in 18 new lease events, leading to an improvement in our WAULT (Weighted Average Unexpired Lease Term) to 4.96 years to break and 6.63 years to expiry (31 December 2019: 3.82 years to break and 5.79 years to expiry).
These agreements should act as a catalyst for some valuation gain or at least assist in combating downward valuations."
This unlikely to help much on valuations as this is still relatively short term income and no mention of course whether
new lease events have been achieved without any haircuts on the rentals .Kept well shy of mentioning that leaving investors to guess the likely outcome
In October the lease on Titan House ,Telford expires for example so that will be a loss of £388.973 pa of contracted income
unless they replace the tenant
"Our diversified portfolio ensures that we have no material reliance on any single sector, asset or tenant,2
Although the Market Centre Crewe represented 10% of total portfolio value where the valuers are unlikely to be kind
Well this is where you and I differ .I don't see this as a waste of time at all ,far from it trying to evaluate the properties and match that with being stated in the updates .For some reason best known to yourself as someone with" 15 years in the game" you sound best placed as someone who could but choose not to
Again no comment from you regarding your opinions of value .You keep ducking that one
Keen to invest in a property company with a W Midlands bias Mucklows was my company of choice.They served me well Rupert and Justin ,steady hand on the rudder.creating long term value. When they were taking over a year ago naturally looking for an alternative home so naturally gravitated to look at RLE in more detail
So far from wasting my time and gone wading in to RLE having read the impressive Jilly Cosgrove 's Barques designed Company reports at face value without any further research I would now be suffering a heavy loss
Which bit about that you don't understand?'
As for potentially considering an investment of 25p and in your previous post you state in a previous post
"Once we get out of sticky entry into 40's this is easily 45-60."
According to your estimation I would therefore be in for a 1 bagger+ so that would make it a great entry point . Another strange comment by yourself
You need to stop stamping your feet ,trying to shoot the messenger.Don't blame me for the fact that you are holding a loss here,you are sounding petulant. It sounds very much you are wasting your own time sparring with me .
I have looked at their report which is of course now historic and IMHO ,the portfolio is not worth £220m today Lets see if the valuers agree with me You seem to have forgotten that since then retail has deteriorated and of course a pandemic ,which will not only leave temporary damage but permanant too
For someone with" 15 years broking experience " quite baffling you cant see that
You wasted all this time to try and achieve 25! LOL!!!
Look at their financial report. Doesn't look like a company struggling to me!
You should also post their lease agreements. The bank has extended their near term debt repayments by 12 months ;p
"Their core strategy is yield "
Let's take a little look at that strategy and see how it's all playing out in real time .
What they have been doing is effectively "Value hunting",nothing wrong with that of course buying decent product where there are break clauses and shortish leases where they have been able to pick up some seemingly "bargain buys "at around 7-11% yields .
Hoping that the tenants will remain and renew leases and not exercise break clauses or go delinquent .
In addition where possible work existing leases to extend and vary ,improving yields which they have successfully done on a number .All good so far
This all works well when the winners outnumber the losers
However the problem RLE are now facing like many others is that some of those dice rolls are becoming a cropper as evidenced all too clearly by the seemingly "rock solid neighbourhood / convenience store at Notingham which underpins their portfolio (their words not mine )
So lets take a little look at the yield on Nottingham .Bought with a healthy initial yield of 8.49% With just the charity shop as last man standing what yield do you think that investment is showing now 2%
In addition elsewhere tenants looking to renegotaite rents dampening yields
Worse still when buildings go empty they slip into negative yield as unallocated management costs and service charges kick in .Marketing and letting costs
Furthermore ,capex to improve chances of letting ,possible configuration of cost adapting space to tenant's requirements
What is surprising is someone with 15 years experience this all seemingly all flown over your head
Try your hand at this one ?
MAYPOLE -DANCING AROUND IT
The Coombs twins are nobody's fools , in fact the polar opposite .
Picking perfect timing to sell on (2017) the suburban hybrid Maypole development ,neither fish nor fowl .Developed the site,secured Travelodge on a long lease negotiated a lease with CPI rent review kickers to max out the value.
An impressive selection of ground floor retail tenants assembled too.
You can only salute them for a job very well done .
Having acquired the site developed and let .Just the thorny problem of getting the resultant income producing investment away for a good price and banking a decent profit
Mindful of course that it was only in 2012 that Travelodge were in trouble and gave landlords a good kicking .
It couldn't happen again ,surely not ?
Suspect Peachey / Williams of Ramsdens were very happy bunnies managing to getting it away for their clients to RLE for £6.1m at a very respectable yield of 7.22% with a rent roll of £471.874pa .£201 ,000pa "secured "on Travelodge
So fast forward to 2020 ,rinse and repeat as Travelodge VC backers put the gun to landlord's heads again . Accept a 38% crewcut or risk getting SFA
That means RLE are facing potentially a rental haircut of £76,000pa (backdated 3 months) on Maypole til Dec 21
I wonder how much that will rock the investment value ?P utting aside any distressing on the yield of the ground floor retail Night what value would you place assuming this agreement is reached on the 19th June the risky Travelodge income now of £124,000pa with a reversion in 18 months to £201,000 pa or possibly a vacancy £1.7m?
As ever DYOR
Certainly don't think RLE are likely going to go bust ,far from it .You are now reduced to putting words in my mouth
In fact I would seriously think of an investment at 25p .
However the revenue is going to get a kicking and replacing quality tenants in empty buildings is going to be very difficult
Good luck to them on that
You mention yield .That has a nasty habit of disappearing over the horizon with its backside on fire when the lease expires and the building lies empty .Soon going to find that out in Telford when Hewlatt Packard lease ends A Herculean task of attracting a tenant of comparable quality
Noticed you dodged giving your opinion of the current value of Crewe . Perhaps you don't have to give one when broking product or maybe you are labouring under a grave is understanding it's prime.