Member Info for damofarl

2 of 2:

Where I do see China being influential to world markets, is their governmental focus on securing long term supply agreements for oil/lithium/rare earths etc, and using that control to leverage the wider economy.

This month's nav show a slight drop, but in the context of the Divi outflow in the period actually an increase.

Agricore; i think the few of us here all do the number crunching, spend some time, sometimes a long time, and then go. And we go for those, having done such, that others inexplicably don't want to know. Are willing to ride the tide of doom/irrationality that we sometimes seen thrown up. Patiently. So like you, I have had some unloved stocks gain favour/appreciation, albeit I have a couple of convictions that are looking pear shaped at the moment, that I'm revisiting my stance on. Times are hard, and day to day UK societally much is struggling/ sustaining , but not broke or bankrupt, and as such all year I think the despondency in stocks (and society) has both been irrational and overdone. I think the UK will plateau/consilidate for 6 months, and then I think it will really kick on, irrespective of colour of Govt. This year, I have managed to add stocks that I have liked for a number of years, but didn't meet my focus for 10% sustained yield income, but through investors irrationality/dumping have now become such.

My only problem in the last three months, having a fixed pot, is which is the greatest amongst a strong slate to add, and my long term conviction/ hold style, to recycle/sell/top slice. An example is both BGEO and CGEO that I hold. They have both EXCEEDDED my desires, yet I feel both still have considerablly more to come, being, along with SEPL the best choices I've made since personally investing.

China - wow you ask a big question there, and I'm going to have a proper think about that, but my instinctive thought is that China is struggling, and they are struggling because they adopted western capatilist growth/profit ideologies to play, but crucially without the controls generally concomitant with such. Hence Evergreen. A capitalist vision of profit is good whilst demonstrating communist views of being honest for all. I've long felt that China's importance to the world economy is overstated, and not withstanding that just on a volume of populace they could produce 5 times as much as anyone else and corner/flood markets, this has ignored that their are over populist countries (India), that can also produce volumeously and cheaply. Vietnam, Brazil are growing and contributing for example, and they are all competing more with China than western countries, and nibbling away at China's powerhouse.

Well that's me got my ticket. Love free wine and canapes.......

The Trotsky; agree with your last post, and all its points, in it's entirety.

And even a little chuckle....I haven't heard anyone say down the swanny for quite a while!!!!

Good rise today, yes amidst a rising tide that lifted all ships....

The question here for us seasoned holders is, as it rises to 50 as it will, do we sell, with experience it will drop to 35 again?

Thetrotsky; I pretty much agree with your comments on interest rates.....whilst acutely aware of the disproportionate leverage affect on those who were already less comfortable/struggling, I've pretty much felt that the long term impact/tenure has been overdone, seeing it as a harsh quick step blip rather than a medium toong term trajectory path pain, and as such for most of this year I've been contrarian to the pervasive pessimism both in society generally, and in stocks specifically. And in the way 'markets' are probably 6 month forward looking, they, stocks, will turn, well efore the man in the Clapham omnibus is feeling more comfortable.....

Thetrotsky; just on business savings, a quick search found 4 accounts offering between 3.8 and 5.5% all above the cost of the asset backed debt, for which RGL would be eligible. I wasn't specifically thinking banks, I was just thinking that more could be earned than the cost of not reduced the debts, and as Agricore pointed out, their access as a corporate to other sources of income, means they could easily access deposit interest greater than the debt. A quick glance at government yields shows they could access at par, cpi+ .125, so we are talking 7%, and yes the expectation is that that will reduce over the next 12 months, but I doubt it will be below the cost of debt.

Tickhittim; I think you are playing with semantics there....yes, it means a new bond at higher rates, raised just before the expiry of the existing one, so current holders do not have to elect to rollover, they are repaid from the new issue. Semantics aside, that is a rollover. And whilst I agree it will be in a less receptive environment, as long as rent roll/occupancy is maintained/improved, it is supported and will get away. Without really thinking about such, London and Scottish could loan, bond like, to RGL, knowing RGL can sustain it whilst earning a hearty interest chunk.

General monty; the answer is they are all irrationally undervalued, underappreciated and oversold....that's why all the stocks you mention rose, within the context of a rising tide lifting all ships....

Whatever out standpoint, good to see the up % wise, which I'm surprised at in short order. Just as I don't agree with the doomsayers on RGL, I don't think that % will increase more imminently.....I think it will be a long slow 18 months rise to parity, and being patient that's what I see, a patience rewarded in the meantime by the current (rebased) dividend.

In that Edison note they suggest...

'The c £75m disposal proceeds are used to repay secured debt while the maturing retail bond is refinanced with unsecured debt at 10%. The interest saved on the repayment of secured debt only partly offset higher unsecured borrowing costs in FY24.'.......

Not withstanding any asset sales, I do think they just accept a roll over of the bond, albeit by that time I'd think probably nearer 8/9 than 10%

Would rather they kept cash on deposit at the current higher than debt rate rather than pay secured debt down.

Thetrotsky; thanks your thoughts. I agree the SP/Dividend/LTV are connected, but not in isolation to rental income/occupancy.

Occupancy. Agreed, increased occupancy is what is needed, driving straight through to profits, but seemingly slow to realise. Yes a WFH contagion but I believe that hiatus is ending.

You riase some good points on the Glasgow sale. If you look at public lettings details for the 2 properties, they are split 10 units to one, and 13 to the other, which whilst unable to be definitive, does suggest that not all units were multi let across 13 renters, and as such under utilised/inefficient, so in that sense a sale is a good release to repay debt.

As for the increase to book value, but not necessarily the purchase price, again an excellent point. Indeed making a 25% 'gain' on something that has previously lost 30% isn't sustainable profitable business. Whilst unable to find the original purchase price, the 2 properties were book valued at a maximum of £8.4 million in 2017, in more prosperous times. At that top limit, taking into account rental income, in 6 years it's wiped it's face rather than earn an income. The properties are actually part of a bigger regeneration (by London & Scottish), which may explain the headline gain, but also suggest this was a fortunate one off in achieved price. It does also beg the question if they were in a less debt constrained position, whether they would have ridden out (any under occupancies) for a better price. I personally believe that London & Scottish have bought this, being the proposer/applicant of that rejuvenation.

Whilst this might be a fortuitous swallow, I agree that the selling of properties progressively negates RGLs purpose and ability to generate income (rental) and hence pay dividends/debts.

At current rental, they can refinance and extend the debt.

Reducing income (through sales) isn't the answer. Increasing it with greater occupancy is, and on that I totally agree with you there needs to be progress.

Increased occupancy gives more income to reduce/renogotiate debt. A reduced portfolio only reduces and compound's RGLs ability to do so.

Gavster NBC;

Early in the year we were discussing TOROs dip; these presentations refreshingly highlight that whilst their performance was not directly impacted by CS AT1s performance was strongly impacted by their proactive (but wrong) repositioning to safety, thus losing the upside.

Couple of take outs from the commentary....they see high single digit income going forward, which makes me contemplate that current NAV based yield is partially returning assets rather than purely from income.... presumably the leverage bridges the gap between income earned/dividend paid? More positively, I do like the explicit conservative/capital protection investment style they promote (albeit that caused a drop in performance earlier in the year).

Chenavari Investment Managers

https://www.chenavari.com › ...PDF

Lyxor / Chenavari Credit Fund

https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.chenavari.com/wp-content/uploads/2023/10/20231018_MI_Chenavari_UCITS_New_Paradigm.pdf&ved=2ahUKEwiHwey1uryCAxWTQkEAHYXXBOUQFnoECBAQAQ&usg=AOvVaw3b6VL8tdyDFZ78_9P027P5

Ethotheipi; spot on with your posts. Thanks.

I was struck with the comment earlier that RGL, with it's update, was 'treading water'. Yes it is, but I think that's quite excellent considering the surrounding and pervading economic situation and concomitant investor nervousness.

You've nailed what seemingly so many miss here, that the dividend is related to the rental income, not the SP. Simplistically for me, whilst that income isn't changing materially, the preoccupation with LTV breaches is misguided in ignoring such, as that continuity through cycles is able to service the debt. If a property bought for a £1mill is earning £70,000 in rental, because market vagaries/gyrations currently value that at £500,000 doesn't change the rental that covers the cost of debt based on a £1mill property.

Work from home impact - this is definitely having an impact, but long term I only see a 10% reduction in office use/ occupancy, and believe that regional provision doesn't have the key king maker professionals that can choose their own work environment, and the impact on RGL is overdone.

With regard to LTV breaches causing an inevitable collapse/crash, your comments regarding a wind down are pertinent. If I was to disregard your time frame, and an orderly timely liquidation, and considered an armeggedon liquidation today, at a firesale reduction, holders here would still see all the debt repaid and cash remaining equal/greater to the current mkt cap. All disregarding ongoing income.

And that's the problem with the down view here; concerns (rightly) on LTV whilst totally disregarding income, the ability to service (and subsequently renew/renogotiate) debt.

I'm not a fan of selling assets to reduce the LTV, I am a fan of selling properties (as with the Glasgow sale) that aren't income generating and/or offer a premium, a strategy (selling properties that have greater value under repurposing), that was outlined by Inglis about three updates/presentations ago. I AM a fan of this orderly, no panic attitude to selling.

In a nutshell, I agree and thank you for your considerations. If as seemingly so many currently do, one views this through a short term prism, one sees a debt distressed company providing product nobody wants.

Property companies don't work in a short term prism. And in my opinion that's the disconnect here. And in that disconnect, for those with a long term wide prism, value.

I've joined you in the TENT today, having considered for quite a while.

Just a quick thanks to the contributions I've trawld through which have fleshed out my initial view.

I'm a contrarian value yield investor, who takes a long term view, disregarding SP gyrations, focusing on income generation.

At this price point, with index linked income exceeding debt costs, and longevity of such income, this is filed in the forgot about (SP gyrations), only considered when a dividend appears part of my portfolio. For the patient, there is deep value here, a patience smoothed by an unthreatened dividend.

GLA

Reader61;

The 80 is a progressive dividend as higher than it's predecessor. The 109 you refer to included a one off BHP merger/acquisition payment.

I liked the update. No panicked sales, some acceleration on EPG upgrading, which along with the small debt reduction, may explain the cash at hand reduction, albeit EPG upgrading was previously highlighted as part of usual ongoing factored costs - maybe that's just a timing thing.

Glad to see no panicked property sales

Would liked to have seen the cash that was used to reduce debt put on deposit, at current higher rates than the loan cost, and a comment to such affect.

But all in all, weathering the storm, and happy with the unfazed business as usual approach.

Nice results. This for me is a rare share in that simultaneously it offers value, growth and yield. One just had to ignore the SP gyrations....

Yes dividend held, but long term I see the dividend inching up incrementally.

PUTUP; just catching up here, and noticed this comment from a week or so ago:

....."At the end of Q1, 2023, USD 294 million and Euro 310 million of KRG oil revenues remain held in bank accounts in Lebanon. Banks in Lebanon continue to restrict the movement of foreign currency outside the country"....

Pardon my ignorance but why is KRG money restricted in Lebanon? What's the background to this? And why did KRG sell to someone who would restrict payment? Thanks as ever

A bit peeved that the upcoming quarterly webinar is for institutional clients only.

Whilst it does give one a definitive steer on who this stock is aimed at, I do think it's poor form not to acknowledge, allow access, for small investors.

Irrespective of target investor, surely you would want to promote yourself to as many investors as possible. Niggled me a little, so may register surreptitiously anyway!

.... Cost of loans

Seemingly I was in a very small minority that liked the last update. And frankly I feel this one will mirror the last, nothing shooting the lights out, nothing worryingly detrimental, just a boring business as usual.

I do think they just need to stick to their knitting, and ride out the cycle, until the general market/economic fog passes.

I would like to see affirmation that cash at hand is static, ie income is sustaining the business day to day, and also a steer that that cash is on deposit earning an income itself, greater than the cost of lianst.

Hi Agricore, I pretty much agree with your post, having done pretty much the same calcs/considerations a couple of days ago.

Whilst inherently I am not a fan of debt fuelled growth/leverage, what I think is too easily and often lost in the mists here of leverage focused panic, is the income being continually produced. And as long as it is, it's ability to service the debt cost will see this rise phoenix like to prosperity.

The bond will be refinanced, any hey maybe at 8%, and maybe this time with a lien on property , because the rental income generated is enough to support such, removing the immediacy risk that seemingly worries so many. And despite being the current higher rate, using income to reduce the lower longer duration LTV linked loans would aid reducing/removing any LTV ratio reaches, why would you, when that income can currently earn the company more on deposit than the cost of loan?

I hold a number of property stocks impacted by concerns of LTV debts, and the common factor is people's focus on short term property prices, LTV concerns, in a vacuum of disregard of the constant income.

The lack of understanding on this stock can be seen by the reaction, hope of change demonstrated here to the change of investment manager RNs - anyone that had done any diligence on this co would know, it was a de facto status quo.

I personally don't desire or see the need for property sales to reduce potential LTV breaches, beyond the selling/repurposing of those that are no longer required/appropriate.

I remain an unstinting holder of RGL, and seemingly the only person on this board not remotely concerned about the bond/debt/NAV dystopia omnipresent.