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Yuri, the reason for the difference is: LSE records records formal notifications of all short positions in excess of 0.5%. Short-tracker records all the short positions. So the explanation is that 5% of the short positions are held by "small" shorters, each of whom accounts for less than 3.8 million shares and 8% by the big boys, each with more than 3.8 million sold short.
Well JustMatt, the answer to your question would seem to be yes, at least in the short term. As you know, UK online retailing accounted for 18% of the total market in 2019. Then in May, the number for April, the first full month of lockdown, the online sales total was announced at 31% of all retail sales. Close to double.
The number for May must be due anytime soon. IMO it's a stretch that all these new online customers will remain online. People enjoy visiting centres. but I'd imagine that some people forced to shop online will stay there. Maybe around 25%, but that's just a wild guess.
Speculating like this Matt on the future of brick centres was what, for me, made Intu such a dodgy punt, starting in 2018. Online penetration has to stop eventually, but there's no logical or analytical way of coming up with a remotely accurate number. for where it will stop Thus, there's no way of analysing how much shopping space any town or city needs. If nobody knows how many shops will be needed in, say, 10 years time, then there's no way of accurately valuing the remaining centres, or deciding which need to be demolished and rebuilt as housing, offices, whatever.
It will be interesting to see what the bond and mortgage holders do with the assets that are now being dumped into their laps. Were I still practising, and asked for my views, my suggestion would be to hold the asset, if you can get a reasonably positive cash-flow. Why? Simply because right now just has to be the absolute bottom of a truly dreadful market. Bottom fishers from around the world will descend on any weak financiers holding Intu centres and pick their pockets clean. Online plus Covid = the perfect storm and history suggests that on a 3 to 5 year view, the investment market has to improve.
But what do I know? As events play out, I'll be glued to HMSO's ongoing results. Tenants on rent-strikes. Landlords legal rights shredded at 3 monthly intervals. Bondholders taking centres off the Administrators. It's all a massive Muldoon's Picnic, as my Irish forebears liked to say. And a gambling speculator's paradise, as the Intu share price and trading volumes have shown, once the SP broke under 10 pence.
Hello Sain, And in the immortal words of Mick Jagger, "Its' all over now." However, there's an unwritten story behind this debacle and I'm wondering if we'll ever find it out. Back when I first became interested in early '19, it seemed to make no sense that the largest shareholder, with over 50%, was just a non-executive director.
You and I both know, from our days between Berkeley, Grosvenor & Hanover Squares, that all large commercial property companies are built up from nothing by egomaniacs. They get "respectable" later, after the founder retires. But until the founder goes, the board are just window-dressing. What Napoleon says goes. Only later can the board have a genuine discussion on the merits of a proposed deal.
John Whittaker has always been his own guiding mind, building Peel Group up to the point where, it was said, you could travel from Manchester to Liverpool & cross the Mersey into the Wirral without ever leaving land owned by him. A journey of over 40 miles. He merged his shopping centres into Intu, for a half-share, & seemingly gave up control. Why? He's only 78, he hasn't lost his wits, so why would he take a back seat to a bunch of executive directors?
My question is; Did he really lose it over the past five years, per the truly dreadful Derby deal, or has he played a very long game to get control of everything? The CEO's who ran the company weren't remotely in his league, yet reading the Sunday Times long article last month, he was still behaving like an old-fashioned founder. His office is under the dome of the Trafford Centre. He flies in daily from the Isle of Man by helicopter. He's supposedly raised over £500 million cash from sales of other assets to refinance Intu.
Is this all BS, fed to a gullible journalist? And all the while he hasn't given an interview to another soul.
It wouldn't surprise me if he's got a deal cooking with the administrators for a package-deal to cherry-pick the best assets and, as you and I agreed last Spring, the losers here are the small shareholders, left whistling for their "investment".
I see from checking this column, before posting, that you advise that the vultures are already picking the carcass for certain centres. In a spirit of goodwill, I'll open the bidding with £100 for their 1/2 share of Derby, but I expect the Kuwaitis will gazump me - though not by much!
Seriously, please keep us all posted on developments. This is endlessly fascinating.
300zx, It's important to understand that existing institutional investors use a placing like this to average down the cost of their original investment. EG: I own 500,000 shares already. I buy 500,000 in the placing at 128p. This morning i sell my original 500,000 in the market at between 130 to 135p, say, average 132p. Meaning that by selling at 132, I've shaved another 4p off the placing purchase. My new buying price is just 124p.
So the price won't move much today, because of all this rebalancing going on, but I confidently expect to see 150p again by the late summer, unless a big 2nd wave of covid hits us. The US Tail will be wagging the UK Dog within 5 years.
Thank you for posting this, FeverClucker. It really bears out my thoughts, when I bought in during the last 1/4 of 2019, that once M&G start paying hefty dividends, the SP has to go north of £2.50.
With a forward PE of just 6.5 today, a similar rating to Schroders, would lift the SP to nearer £3. The fact that it's been rising from 121p, by a few pence a day, ever since the dividend got paid, suggests that many income funds are nibbling quietly and building positions. The dividend looks safe as houses, notwithstanding the punters moving gradually towards passive funds.
Strudel, thank you for your kind comments. Actually I have a pretty diversified portfolio, but having spent over 40 years at the coal-face in commercial property in the UK, Europe & North America, this is the one business in which I feel really qualified to venture opinions.
You should do well with your housebuilder. The market & the press seem to delight in jumping to negative conclusions over housebuilders, but my attitude is simple; People always need somewhere to live. Incidents like the Brexit Referendum are utterly irrelevant. I loaded up on Persimmon & Berkeley in July of '16, because I liked the managements, & almost doubled my money over the next couple of years. I knew something about both companies having studied them since about 2010 & was awaiting an opportunity when the market mispriced them. it duly happened. In I dived.
The housing market has to come back. Viz. My step-daughter has had a second child. Their accommodation in London is too small. Her man is an experienced accountant and she has years in the film industry, so neither will become unemployed & they need a larger home. Brexit, Covid, Armageddon & the possible second-coming of JC (That's Christ, not Corbyn) doesn't alter their circumstances. They're in the market to buy, at around seven figures, just as soon as the current Covid crisis calms down. And there are hundreds of thousands like her, which means that well-run house builders will go back to making good money. Although this time it might take 3 to 5 years to see top of the market SP's, depending on how Covid turns out long-term.
That's apart from "Sin". My Dad taught me that you'll never go broke with sin, provided whoever is selling the sinners booze, fags & the ability to gamble, is a reasonably competent business manager. Consequently, I opened positions in Flutter, GVC and William Hill last summer because my knowledge of the US suggested that the legalising of online & betting-shop-style gambling, would result in a massive new market over 3 to 5 years, which has hitherto been very profitably run by organised crime. And none of this was priced into the plc's because most people here have no idea how much the Yanks like to gamble on the NFL & NBA. It's possible that that their US operations might one day outweigh their UK businesses.
This punt is also a great example of things coming out of left-field to upset apple-carts. (I love mixing metaphors) No sooner had they all, very quietly, declared great results in February, than Covid trashed the share prices. Now I have no idea which of these three will prove the most successful, because I don't know the nuts & bolts of gambling. But I am prepared to believe that one of the three will hit the jackpot. Meantime Flutter is up 50% and the other two are washing their faces, having been 25% to 33% profitable before CV19. I think there's still an opportunity taking a 5 year view. But, and it's a big BUT, I have been wrong many tim
Moneyteam, your broker will have taken the money out of your brokerage account to cover the rights you purchased at £15 and given the money to the joint-bookrunners. They will give it to WTB in return for the new shares. The JB's will give your new shares to your broker, who will, in turn, credit them to your account.
All of this should be completed by June 10th - today. You should see the new shares added to your existing holding, the total purchase price adjusted for the rights, etc. etc. You have, of course, made an instant profit of £10 per new share.
Hello, dear boy. Are we having fun yet? I'm beginning to think that either one, or both, of us should change our account names to 'Cassandra'. You know, the ancient Greek goddess, who was cursed by Zeus. He gave her the gift of very accurate prophecy, but on condition that no-one would ever believe her, until her forecast actually happened.
I admire your courage in exposing yourself to the vulgar gaze of the rude and scoffing multitude, but am wondering why you bother? There's a whole new crew here, "investing" in Intu. The riverboat gamblers are having a field day, trading millions of shares an hour and up to 50 million a day. And more power to their elbows, I say. May they all make money on their coin flips.
You and I both know that this is an already dead corpse, but people keep connecting it up to passing car batteries, where it's leg or head twitches violently and the SP leaps to 8 or 9p. The battery runs down and it drops to 4p. Lots of fun for everyone in the meantime, but it doesn't change the fact that on 26th June, or thereabouts, the vicar will be pronouncing the last rites.
I checked back and you & I called this a looming bankruptcy over a year ago, with the SP around 100p. We were, and are, dead right. The saddest thing is that, according to The Sunday Times, John Whittaker stopped the previous CEO, David Fischel, from organising a refinancing last year, which is why he walked out in April '19. A great pity, but you can't stop a controlling shareholder from driving the bus over the cliff. This awful mess did not need to happen. They could have raised a billion back then. But, such is life. He's not the first and he won't be the last. Did you see Stern's obit a few weeks ago? Held the record in the 70's for being the UK's biggest ever personal bankruptcy. Great reading.
Now, with Online retail at 31% of the market in April, plus Covid likely to linger for a while, I strongly recommend the punters to make sure you aren't holding a long position at close of business on the 25th. You just might get your fingers burnt.
Cheers Sain. Have a good day. G.
I got in here last year, Jatw, because I reckoned the income would prove very juicy to income funds, at a yield of 6% to 8% pa, once the dividends started flowing.
Covid and the antics of the Bank of England pushed the price down to below bargain basement levels, 120p, but the institutions were wary. Would M&G cave in to undeserved pressure? But, now that M&G have cheerily waved the fickle finger of fate at the Jeremiahs, I reckon that the institutions are piling in.
Anyone with any sort of 'Income Fund' needs this FT100 heavy & steady dividend payer and I can see an SP of between 250 and 300p within a couple of years. So, with any luck, going from 120p on 21st May to 160p now is just the start of a steady rise.
This cash flow projection shows that Intu is even more broke than we already knew. The lowlights identified so far include two real gems:
The crown jewels - The Trafford Centre - is barely washing it's face. £12m net cash projected at 30th June falling to £5m net at 31st December next year. Metrocentre Newcastle is going backwards from £5m cash now, to zero at 31/12/2021.
Unfortunately as has been the case before (Derby), this Intu release is remarkable for what it fails to tell the punters. Today's big fail is the two line items, "Interest, net of deferred". Oh Yea? Just how much interest are they looking to defer? Well, the March accounts showed interest paid for the year of £224m, which suggests £112m for the half-year and that's confirmed by the results to 30/06/19 which showed a tad over £113m interest paid.
But this RNS shows a projected total of just £63m for "Interest, net of deferred", being paid to 31/12/20, which suggests that Intu are now asking the creditors to defer £50m of interest they can't pay. For 2021, the total is projected at £147m. That's £77m less than 2019, which means another eight-figure bath for the lenders.
So the positive, so-called, "Closing Cash" numbers for both periods are purest fiction. The +ve £24.1m for 2020 is really negative £26.1m and for 2021 the wonderful positive £62.6m is really a minuscule +£12m, less the 2020 shortfall brought forward of £26.1, for a net negative £14m for the 18 months.
Thus the centres aren't washing their faces at all, and this is before the lenders agree to forego the £100m of penalty payments now due for all the covenant busting that's going on through the LTV's and Income vs. Interest covenants that have been breached. So to my untutored eye, Intu are not only asking for forgiveness of penalty payments, they're asking to cut the interest payable by at least 1/3rd too.
That amounts to almost £250m - a quarter of a billion pounds. Frankly, I'm beginning to wonder how the LSE can continue to permit Intu to trade? The lunatics have taken over the asylum, with almost 100 million shares traded so far this morning at prices between 6 and 12p, for a company that is as financially dead as Monty Python's parrot.
This weekend Samuel Tak Lee has sold his 26% of SHB to Capital & Counties for just £5.40 per share, so providing business schools with a perfect illustration of how to be so keen, as a buyer, on getting a cheap bargain that you end up screwing yourself royally.
This is brilliant company, usually trading at a premium to NAV, with a lock on Carnaby Street and the areas around Chinatown, specialising in restaurants and fast-fashion. with 15 acres of holdings in London W1. It's a one-off. There's nothing else quite like it on the LSE, so control is going to cost anyone a pretty penny and, probably, a substantial premium.
It's not a business that should be too affected by online shopping, but Covid will hit restaurants hard, particularly while they're closed and transitioning back to open, via safe-distancing rules. But will those restaurants ever come back? My bet is that over the next two to three years, they will recover and so will SHB. The West End locations are simply too good to go cold forever.
Meanwhile ST Lee has presumably got his goolies in the mangle with the bankers back in Hong Kong, thanks to his hometown shopping centres being shuttered and rioting locals fighting the heavy-handed Emperor Xi. He has been forced to sell at a 90p discount to the SP. Which is all rather sad, when you think that he could have sold, at a good profit, at over £10 a share in early 2018, and at over £9.50 anytime between mid-17 and mid-18, plus from October '19 to early January this year.
Instead he faffed around with ****eyed tender offers to buy stock at a discount to market prices, niggly little legal actions against the BOD and a stubborn refusal to pay the price required to win control.
Hubris has once again met Nemesis. Bye-bye Mr. Lee, leaving us with the question - Will CapCo now mount an offer for the remaining 74%? Do they have the fire-power now they've sold the Earl's Court site after 40 years of failure to develop it? Are the PI's and institutions willing to sell substantial quantities of stock for less than £10 a share? I remain a long-term holder. This will be very interesting.
Baker, there was a "special dividend" paid last July 23rd. In June, WTB invited shareholders to tender all, or part, of their holdings and the price paid to tendering PI's was £49.52 per share. So nowt disappeared into the ether. Most went into my back pocket.
You also enquire whether the rights are worth taking up? City brokers seems fairly negative, arguing that a UK/German hotel company is unlikely to ever generate spectacular returns. And if you really like hotels, then they prefer Intercontinental Hotels Group.
My view is that it depends; If you have a small, and thus necessarily, a concentrated portfolio, then you'd be better off seeking higher immediate returns elsewhere. But if you have a large (£250,000+) and diversified portfolio, then a bet on UK & German hotel real estate, over a 10 to 15+ year view, should provide you with very good inflation proofing, in an era which just might see high European inflation, caused by the truly gigantic debts that all governments are taking on, to get us through the Covid epidemic.
Were I half-a-century younger, I'd be tempted to get in, because cash is always king in the property business, especially during bad times. WTB wants to build a German portfolio and expand here too. There will be plenty of distressed sellers in the very fragmented hotel operations business, in both countries over the next couple of years and this may be a once-in-a-lifetime opportunity to put together a quite large portfolio in Germany, in very quick time, and at very advantageous purchase prices. It depends how nimble the board are.
But what do I know, Baker? I'm often wrong, but I've enjoyed replying to your very interesting question. Good Luck, whatever you decide to do.
Flutter has raised £812 million cash, literally overnight, via a placing at £101.00, with existing and new institutional shareholders. Announced after the close last night and all placed before 7 am today.
The recent new shorters during March, who have to have sold at under £70, must now be investing in cast-iron underpants. Though maybe some of them subscribed, so as to close their positions? My heart bleeds for them.
Good Morning Sain - Thanks for pinning the 2018 sales partics to your note. I sit here scratching my grey hairs. The covenant warning is all over them, for anyone with eyes to read. Profits falling by nearly 50% between 2013 and '15. Wasn't it loaded to the gunwales with debt, by private equity spivs, and refloated in an IPO, during that time? Thereafter, it's ever-declining SP reflected the ever-diminishing profits. The quality press regularly rubbished it as an investment.
Thus, I have little sympathy for any "private investors" who bought it at a 6% yield and believed there was any chance of collecting on the fixed annual increases. Throw in the already well known facts that department stores have been dying for 30 years and online was eating more & more of the bricks-shops lunch, suggests that at 16% it might have been worth a punt, but 6% is total nonsense.
Having carefully inspected the site plan, I have a money-spinning repurposing to suggest; Its' just over two acres located directly between, and adjacent to, the Bargate Quarter and East Street Precinct redevelopment sites. Ergo, bring out the lead-ball and, bingo, lots of car-parking for the neighbours. Good for minimum 400 cars at, say, £5 a day times 364 days = £700,000 a year. That's got be worth £5 million of anyone's money, especially for a partially cash-in-hand business. Maybe keep the building instead, and remodel into a multi-storey sex supermarket, if that will justify £10 million. Perhaps those geezers from West Ham Football Club would take an over-riding lease on the whole building and then sublet parts to Ann Summers and all those types of businesses that they know so well. But I digress . . .
I see there's also an Obituary published today by Intu, following on from yesterday's similarly long article in the Sunday Times. Frankly it doesn't really matter, because I'm sure most, if not all, of the shareholders gracing the register 18 months ago have long since bitten the bullet and realised this one's a goner. Leaving the speculators to amuse themselves trading half-a-penny here and there.
My summation of this RNS is; "We're finished. However, the hospital has agreed to keep us on life-support, using a heart-lung machine, provided that all the lenders agree to defer attempting to collect any cash we owe them before year-end 2021. If you all defer for 18 months, we can take another look at a refinancing in 2022." In other words, Rothschilds has told them that a refinancing today is out of the question. A standstill is their only hope.
What do you reckon to their chances of getting one?
I've known this plc since the 1960's. Beautifully run & sensibly financed (30% LTV). Held the stock constantly since 2005 (In at £6.62). & doubled holding in 2018 (at £8.38). Biggest mistake was not selling half, or more, during Brown's time as PM, when it hit £24.
After this week's results several city brokers turned v. negative, especially with cancelled dividend. I realised that all positive emotions needed to be ignored & a long, cold look taken. Conclusion; while I've been v. realistic since 2017 over the existence of far too many shops, nationwide & worldwide, all getting creamed by online trade, this Covid epidemic might be a real turning point for both shops and offices. It was time for a "Let's throw the Kitchen-Sink and Armageddon at LAND" exercise.
So, assuming that Covid & Online will cripple shopping centres, even good ones and that Home-Working plus Recession for next few years will cause many tenants to vacate skyscrapers, I'll hammer the Book Values.
Offices at 31/03 are £6 billion. Retail £5.7b: Kitchen-Sink the offices by 1/3rd to £4b and halve the retail to £2.9b. Total debt today is £3.9b, reducing net Asset Value to £3, or £4 per share. Is that a floor to the SP?
What about cash-flow? Today it's £400 million pa. from Net rental Income of £583m, less £98m of interest on debt and £85m of management expenses. Let's hammer the rents by 40% down to £350m pa., leaving a cash-flow of £167m. Thus, even in what is, hopefully, a very worst-case analysis, the company maintains good positive cash-flow.
Are there any reasons for optimism? Yes. I think so. This plc has always been very well & conservatively run, from the founder, Lord Samuel to today. It has low, cheap, debt and its' cash flow will stabilise at a lower, but still over £100m pa. level. Plus, there are going to be some stonking opportunities to pick up, once-in-a-generation, prime assets from distressed owners and/or their lenders - See Intu & Hammerson definitely. British Land possibly - during the next two years. This may be a very real opportunity to go bottom fishing for assets that could be worth multiples more on a 5/10/15 year view.
My decision? Caution is the watchword. This was a major holding, and I don't want to be left holding the best Galleon Builder on the south coast, just as we move from the Age of Sail to Ironclad Steamships in the North East. I just don't know.
So yesterday I sold 60% of the holding and took advantage of the depressed market to buy 3i investment trust. It's well run but has spent much of it's recent life priced at a premium, sometimes up to 40%, over net assets, which I wasn't willing to pay. As 3i is now at a small discount to updated NAV, it seemed a relative bargain.
If there are any other old West End regulars of the Guinea, with opinions/forecasts on where Land stands today & is maybe going, I'd love to read them here.
Johns, If the dividends gets paid, it's really juicy; 11.92p ordinary plus 3.85p special = 15.77p. At today's 126p, that's an instant 12.5% return on your money, paid in advance too. I bought it last autumn because I believe it will be a real cash cow in the future.
Yes, the business has to have been punished by Covid, but looking out 2 to 3 years, I reckon it will recover along with the market in general.
Meantime, is the low SP reflecting Mr. Market's opinion that MNG won't pay these dividends? A real opportunity for the brave.
Sain, I just love your reference to Son of Dubs. I think SharkyT must be referring to his valuation of the remaining 50% of Derby. That alone has got to be worth £10 billion of anybody's money, and as for any debt? Why, £4.5 billion is a mere bagatelle. I often spend that on lunch at the Connaught, but only when you're paying, of course!
There's nothing like a little graveyard humour to cheer up the attendees at this particular funeral. At least SharkyT has managed to entertain thee and me, as he lost his virginity. But, if Intu ever sees 11p a share again, I'll dance naked round Nelson's Column (only after the restrictions are lifted, of course). That'll empty the square faster than a speech from Jeremy Corbyn.
Morning Sain, According to the 31/12/19 results, these swaps were underwater to the tune of a nominal total of £287 million at 31/12 and, worse, payments of £21 million are due and payable now in 2020.
But the really bad news is in 'Financing - Debt Structure & Covenants', where, if the portfolio falls by another 10% at 30th June (which seems reasonably likely to happen as the shopping-centres are shut) the company would be required to make debt repayments, as follows:
- £113 million at the "asset-level borrowings" level.
- £161 million on the Revolving Credit Facility.
And, if the Net rental Income falls 10% below the 31/12 number, another £34 million has to be paid down at the asset-borrowings level. This, we know, has already happened.
These three items total to £308 million. That's the equivalent of 18 months net rental income, before Covid struck.
Intu also owes HMRC £15 million of corporation tax because of non-payment of dividends, under the REIT legislation.
It all adds up to £344 million of cash debts due over the next two months. Faced with cash demands for one-third of a billion pounds in real money, my take is that the creditors waivers have given Intu a couple of months of legal breathing-room to 26th June, just so that Rothschilds can, or cannot, come up with a bail-out scheme for discussion by all parties, sometime this month.
This race is on the last lap. I'd be astonished if there's anything left for the small investors, when the smoke clears, but you never know. I'm even beginning to wonder if John Whittaker has the wherewithal to maintain his 50% equity ownership, because he'd need £650 million to do that - Given that the RCF has been conditionally renewed at £420m, provided the company raises £1.3 billion in equity. Interesting times.