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To provide shareholders with stable, long term, inflation-linked income from a portfolio of Social Housing assets in the UK with a particular focus on Supported Housing assets.
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The problem here is the management have none of their own money invested and so likely to squander PI’s money, no skin lost to them.
Avoid.
Question is - how low will it go? That's always a dangerous one to answer. The concern is the pattern starting to emerge in the rent collection, which was consistently 100% up until 2021, then dropped by a miniscule amount in 2021 and plunged to 91.8% in 2022. The golden question is what it will fall to in 2023? SOHO's largest tenant amounts for a whopping 30% of the rent and has been deemed to be 'non-compliant' by the regulator, who thinks they're unsustainable and vulnerable to financial problems. Like always there's lots of paranoia.
Ya morning, ya new low. This isn't about numbers anymore, just about paranoia. I can't help thinking here's serious $$ to be made here calling the bottom.
Winnings = Whinings
@Winnings. You are not invested here, after you sold last month.
Why keep on with your whining and not move along?
Results out today look good, but a growing chunk of the rents unpaid is somewhat worrying.
Then we have the valuation of the properties, how reliable is that? After all, the valuer gets paid by SOHO, how independent is that? Easy to take an optimistic ‘glass full’ view.
Just now read today’s RNS at HOME REIT, sounds awful, only 23% of rents collected, much of the properties in need of expensive repair, worrying to say the least. Could SOHO come to suffer some of those risks?
The fact that Parasol has had a regulatory notice since Dec 21 should have raised mgmt diligence. That there seemed no urgency to unwind I find worrying . If extrapolated across the group, this lack of mgmt diligence, how many "aren't" in trouble/paying rent fully but are also subject to statutory notices, warnings or judgements?
Fundamentally, the business model of SOHO and the whole supported housing REIT is valid, and will only grow in relevance, as it the continuance of premium rental allowances to support vulnerable people (it is still cheaper than alternatives - The Salvation Army, one of the biggest providers of supported homeless housing for instance, charges eye watering rents well in excess of these reits). The concerns for me are not the funding sources, but the providers - and SOHI and it's ilks complacency (laziness) on such.
Personally like what they said. My Housing properties would drop 38% of the Sept Value if they went into administration, if you extrapolate that across the whole portfolio, so throw the kitchen sink at it, the current share price would still be trading at a discount.....added more.
Probably have rent guarantee insurance
Lessee My Space Housing (7.9% of rent roll) cannot pay the rent. Now joined by lessee Parasol Homes Ltd (9.65 of rent roll) unable to pay the rent. Combined 17.5% of the rent roll in difficulties. Will more follow? Picture does not look good to me.
Sitting tentants cannot be moved out, what is the value of properties where rents cannot be paid/collected.
In my VIew the entire property portfolia needs to be devalued, to take account of reduced rental income due to the rents being too high for future easy collection.
There would be a major problem if the block-tenants cannot pay the rent - due to whatever macro economic circumstances (e.g energy costs, high repair/maintenance costs).
What would the appartments be worth with sitting tentants and rents unpaid. Current book values will then look absurdly high. Hopefully things are not quite that bad, but there is some smoke....,. j
It's a bit worrying that they haven't. The NAV is based on the value given to the units, assuming that they are compatible as social housing. The main problem HOME are having is that the NAV is now considerably less as they do not comply. This now means they are now near to ( if not already breaching ) their banking covenants as the LTV is considerably more than would otherwise be allowed, due to the fall in NAV. If the units let out were within the private sector let to normal tenants without receiving a 40-50% premium, it would be far easier to work out the NAV. The circa 38% LTV here assumes all is ok, however the market appears to think not. This could either be a great buying opportunity or there is a major problem brewing. Just my thoughts.
I would love to see some large director buys to help stabilise the price at these steep discounts to NAV.
Anyone know if SOho exposed to them?
Social Housing Budgety more than likely to increase rather than decrease. Social Care Budget to increase as already announced by the Government.
Quite astonishing. Bottom line is what happens if the government simply cancels the whole special assistance social housing budget (can't and won't happen BTW)? If SOHO had the repurpose the whole stock for normal residential, this would involve losing c30-40% of value, but as the price is a 50% discount already, this absolute worst case is priced in. The reality is that the social housing budget will remain (as it's much cheaper than looking after these people within the NHS, which where they'd end up) - they just need to sort out these not-for-profit Registered providers, which is admittedly a poor system, but the funds to house vulnerable people will be maintained IMV. My space is the latest problem but only represents 7.5% of SOHO's rents, and can be replaced by a different RP if SOHO desires.
So, there is chronic undervaluation here, and I wouldn't be surprised if some acquirers begin sniffing around at these levels.
Market Cap at current share price (51p) is now less than half the company's Net Assets - (property value minus debt).
Can the share price realistically still go down further? I cannot help but think that at 51p we must have reached the bottom.
Little steps up from here could reasonably be expected....
IMHO
Like the look of that, added .
Thank you for your email & patience whilst we liaised with the Investment Management team. There has been some recent negative share price movement off the back of two RNS’s that The Triple Point Social Housing REIT (“SOHO”) has put out about My Space one of SOHO’s lessees. These followed the publication of a Regulatory Judgement by the Regulator of Social Housing on the 19th of December and an Enforcement notice, following on from the Judgement, on the 16th of January. As at the 30th of September, My Space represented 7.5% of SOHO’s contracted rent roll. Triple Point is working closely with My Space to, as much as possible, help them address the concerns of the Regulator raised in the Judgement and the Enforcement Notice, whilst also considering whether it is appropriate to put in place alternative arrangements for some or all of its properties leased to My Space.
It is worth noting that the performance of My Space is not reflective of the performance of SOHO’s wider portfolio of lessees.
SOHO’s full year results are likely to be in March in-line with previous reporting timeframes and will be accompanied by a presentation. Further commentary on what we are doing to try to reduce the share price’s current discount to NAV will be provided in the accompanying report.
I hope this response is helpful and if you have any further questions please let us know.
The value of the underllying property would have to fall lby 50% to bring it down to the current low 53p per share.
Due diligence to shareholders for not checking that the companies that they were dealing with were compliant and had a financially sound operating model. It's not good if one of your clients is under investigation, but more than one would suggest that the board of directors have been asleep at the wheel. This potentially could open a can of worms, for example did they overpay for property's based on inaccurate information etc etc
To what extent (if any) can SOHO be held to blame for My Space to be in 'troubled waters'?
I would think the temporary loss of rents from My Space is all SOHO has to deal/live with.
Thanks for that information Gate13Boy, it seems I may have been wrong to be complacent. Ive just looked at there account going back a number of years to ascertain who they are dealing with and its not just my space, but Parasol Homes, Inclusion Housing CIC, Falcon Housing Association which are there largest clients. I certainly wouldn't top up now until things become clearer.