Member Info for CaneToad

Suppose you buy 100 units of the bond at a price of @91p each. You'll receive £2.25 interest on 6 Feb and another £102.25 on 6 Aug (£2.25 is interest, plus the notional value of the bond, which is 100). This gives £104.50 in total. That's a profit of £13.50, which is an roi of roughly 15%.

In summary - most of the profit comes from the capital gain on the bond.

There's some 'bond maths' involved if you want to do a more accurate comparison, but I'll leave that to you!

dyor.

I crunched the numbers again today for RGL and for the £50m Retail Bond - RGL1.

The RGL common stock is yielding about 15.5% while the Retail Bond has an (annualised) yield of about 15%. The Retail Bond can be repaid even if property values fall by another 50%, while common equity would be wiped out under that (silly/extreme?) scenario.

The UK/10y is substantially down from a month ago and I think that the retail bond is quite attractive now that the price has fallen back to the low 90s. I've taken a small position in RGL1 (@91.79p); I'll keep an eye on office values, but from what I am seeing, only *prime London commercial offices with high sustainability ratings* are holding up; regional offices with poor ratings are continuing to fall heavily. That explains a lot here. Maybe the recent collapse in the UK/10y will ease things a bit, but I'm not a gambler and it is clear that covid has changed working habits. There is a good discussion about this in the latest report from VIP (Value and Indexed Property Income Trust).

Edison has always been incredibly bullish here which is not a surprise because they are being paid! Their articles from 27 Feb, 17 Apr and 25 May continued with the fiction that the dividend was sustainable, while on 27 Sep they announced that the divi reduction was pragmatic! What a joke! Now they're saying that they've 'trimmed their forecasts, but continue to expect dividend cover even on the reduced divi'! I detect some caution in their latest document and will not be buying the common stock at this point.

Good luck

@Andy144: "Will DEC have to purchase the shares into treasury and then issue them in the US?"

I'm wondering if they'll use the ones purchased in the buyback?

All looks positive to me. I think they've done a good job of the presentation; I didn't realise that the debt was rated investment grade.

I picked up another tranche of DEC, bringing my portfolio weight to 2%.

Hopefully this dispells the idea that the dividend is unsustainable. In a logical world, I would now expect many onlookers to take a nibble here, given the attractive dividend on offer. At least, I would expect some of the income funds to snap some up. Let's see if it holds/leads to a change in direction in the coming weeks!

@Trek: Good luck. I tend to run a large number iof positions, with nothing bigger than ~2.5% or so. You never know what the market will throw at us tomorrow. This is a decent dividend though, comparing nicely to US BDCs and lower risk - IMHO.

The MTM changes in bonds will reverse as rates stabilise/drop. The MTM change in bond valuations are not an issue that impacts the dividend any way.

It will be difficult for any Porsche-driving clown (sorry, I mean, 'shrewd' short seller) to claim the divi will be cut when the expected cash generation has just increased by £400m!

Very positive. I'm happy to increase my position size based on that news.

"Need to be investigated as we are seeing big drops followed by buying and further big drops which looks like manipulation and manufactured swings.."

I am afraid that is just the UK market....... it is the most corrupt market that I have witnessed. Some of the manipulations (take note: not on this stock) were blatant and in full view, e.g. with CEOs selling their stock 1-day before a profit warning and then fleeing the country before the share collapse! They were examples of some of the most blatant insider trading ever - BUT THE FCA DID NOTHING. The FCA are totally useles and have no regard for PIs whatsoever. They are a useless bunch of toothless muppets. You will learn that if you ever try and report anything.

Hence I avoid most UK stocks now, as do most companies avoid listing in the UK!

But I am still invested in DEC. Let's hope it comes good.

@G_G_G: I hope you are wrong about a split.

Just look at how lowly UK Oil & Gas companies (e.g. Serica, Harbour Energy,..) are valued - and that is for companies that have a large production base. I can't see any value in a UK-only listing. It would be amongst the weakest of AIM energy companies if it did. The Canadian part of this company is the only part with any value.

@WCSBCanuck: '"You simply cannot analyse these small caps based on fundamentals - and you will lose money doing so.".... Yes you can.'

I've lost count of the number of times where somebody has done a brilliant job with fundamentals, only to have the investment lose money... If it were true that being an expert with fundamentals was the key, then accountants would make a killing in the stock market - but they don't... Warren Buffett claims to have never done a DCF calculation.

We don't know what's going on here. But the strong technical downtrend for over a year is a hint. Thank God I ignored the 'experts' here and exited my largest tranche over a year ago.

BEWARE OF EXPERTS IN CHATROOMS

@Trotsky: There's no need to use expletives such as 'WTF' to people here ...

You make a lot of assumptions:

'One would also assume that occupancy levels...'

'I think the quoted increase...'

'fair value of their properties, for this purpose, appears to have remained at...'

'Ignoring any potential valuation changes between...'

'one would have assumed that capex would normally...'

'the cash decline in the quarter may not be solely, or wholly...'

'you can't draw any firm conclusions about the cash movement...'

'I appreciate that property valuations generally may still be falling but...'

'It's ability to cut its dividend is therefore limited...'

It appears to me that you might have fallen in love with the story here.

There are dozens of US companies with investment-grade ratings yielding close to 10% atm. RGL has a *lot* of debt and a retail bond that is *unrated* and *unsecured*. At the current rate of repayment, it would require more than 20y to repay, if the £5m/quarter figure from @GeneralMonty is accurate.

Good luck in your investment, but please don't become angry if others choose to wait-and-see before investing in such a highly leveraged penny stock. The vast majority of such companies disappear entirely losing their investors most of their money.

That's definitely something that I'd support, though it's exceedingly unlikely to happen. I would have no interest whatsoever in buying shares in the UK operation, though would probably increase my holding in the CA business once the technical downtrend is finished.

To my eye, the update is disappointing. I don't see much progress

- good news on a sale above valuation

- rent roll reduced from £69.8m to £68m

- occupancy dropped from 82.5% to 80.7% in 3m

- LTV increased from 51.9% to 52.6%

- big drop in cash balance from £50.1m to £32.6m. WTF...

- gross borrowings only slightly reduced from £440.8m to £428.5

Most things look to be heading in the wrong direction.

Results look solid - not what I'd call 'exciting', but solid nevertheless. I'd expected to potentially hear about a divi increase, but I think that will eventually happen, while the current divi is attractive. I've opened a small position.

My biggest worry here is that the CEO borrows even more money for M&A. If so, the share price could totally crater and I think I'd try and exit promptly as well. There needs to be a clear message of debt reduction and dividend consistency.

FYI: I am in neither the 'Doom Society' or 'Armageddon Club'.

I'm just a careful investor, having previously suffered a loss on a small RGL position. I'm waiting for some more *facts* to emerge before considering RGL again.

I've also had a very good look at the RGL retail bond and am of the opinion that it's significantly overpriced. For something that has no security at all, people are amazingly blase about what is a relatively low yield compared to the rest of the market. I see it as extremely unlikely they'll be able to refinance at the current yield.

I read an article recently (I think it was from Barclays) which suggested that many regional commercial offices were worth no more than the land on which they stood. If true, it makes a mockery of the NAV claimed by many reits. It's simply not true that many of these offices can be repurposed into residential buildings. I remain open-minded here, but extremely cautious.

@jonthb: No, I don't think there's anything unusual about being commercial RE. Being a REIT means that the company itself doesn't pay tax, but instead YOU do. But whether or not YOU do, depends on what type of account you have; e.g. none within an ISA or SIPP