Member Info for JGFFourie

Generally, good news. The equity placing at 422p was very fortuitous. It is unusual to see the share price fall by so much on such good news. At 376p, probably now a good long investment.

The market has responded in a negative way to the election of a right wing, reactionary Government with a policy of austerity. All REIT’s have fallen as a result.

Yesterday, the Company bought 148,827 shares at an average price of 293.71p. As the price falls, the news can only get better. The Company is buying up shares at about 75% of the value of the Company’s underlying assets.

The Company should have waited to start the share buy back. At 293p and falling, the shares now seem to represent a very good investment.

The company does not yet appear to have put out a formal statement confirming that the Tritax offer has been formally abandoned. It is an offer which is fundamentally ill conceived. It involves paying more for Tritax than its present market valuation. That, in its every nature, must dilute the value of Segro’s own shares. So, the offer based on a share price of 885 caused the share price to fall to 845, reflecting the prospective dilution in value. While it is true that the book value of Tritax’s assets is not reflected in the current market value of its shares, that is the case with almost all REITs at present.

The collapse of the ill conceived proposal to take over Tritax is excellent news. While the assets of Tritax do seem undervalued by reference to its current share price, that reflects liabilities which Segro would have had to have assumed. Segro would be much better advised to concentrate on consolidating its own land bank with careful development. In the current economic environment, maintaining strong liquidity should be the paramount consideration. Assuming the liabilities of Tritax would have been a retrograde step, however, attractive its assets might have appeared.

I think so. Tritax has been very much overvalued for the takeover, so, even at the share price today of 866, it is still excellent news for the Tritax shareholders. I have never really understood these takeovers. If shares in Tritax are such good value, why didn’T Segro just carry on buying shares in the market at their heavily discounted price, until it had built up a sufficient holding in the company to appoint its own nominees to the Board? This takeover dilutes the value of Segro shares, quite unnecessarily, in my view.

The take over is based on a share price for Segro of between 882p and 895p. Will the offer now be so attractive to Tritax shareholders, with the Segro price now having fallen to about 865p?

Gewillia, Thank you for your comments. I can only echo your sentiments. The loss realised on the disposal of just one asset has reduced the net asset value per share from 51p to 38p. It is rather alarming to think just what would happen if the company sold all of its assets in a forced sale. If all of its assets are also worth only about half of their book value, then there would not be much left for shareholders! However, on the plus side, the company now has sufficient cash to meet all of its maturing loans until 2027. The tenants still seem to be paying their rents and the company is providing a return of about 6% to its shareholders. The company’s assets are spread around several countries, which provides some element of diversity.

Cum div. until 22nd August 2024.

Yuri. F A little too pessimistic, perhaps. The company is now very well capitalised and should be able to withstand any head winds which the commercial property market might face in the next few years. I think that a long term share price of 27.5p is perfectly realistic. This is a discount to NAV of about 72.5%, which is similar to the discount for most British REITS.

The share price is likely to settle back a bit after the first excitement following the announcement of the sale of Value Retail. A realistic price would be about 27.5p which would give a return of about 6%. A good long term investment, now that the company is so well capitalised.

The fall in the Net Tangible Asset Value per share from 51p last year to 38p as just announced is quite a surprise. This represents a realisation of a huge loss on the disposal of the Value Retail by reference to its book value. On the other hand, the company is now sitting on a large cash mountain, which removes all threat of insolvency. Management have succeeded in saving the company from the fate which befell INTU. Well done!

The share price seems to have settled at about 30p. Of course, the share price of all REITs have been marked down today by about 2%. I assume that this is as a result of predictions that Sterling might soon rise to as high as $1.35. A rising pound has two effects - foreign investors in British REITs decided to “cash in” and take their money out of Sterling before it starts to fall again and, of course, British REITs cease to be so attractive to foreign investors as they are more expensive in their own currencies.

The decision to buy back shares to the value of £140 million should have a positive effect on the market price. The company will, presumably, wait until each dip in the share price to buy in at the most favourable prices. This will have the effect to stabilising the share price.

The dividend should increase from about 15p a year to about 18p a year. This should equate to a long term share price of about 30p.

For some reason (so far) Hammerson has not been as badly affected by the general fall in the prices of most REITs today as have most British REITs.

While most shares in the major REITs have risen because of the General Election (it is generally expected that there will be a strong new Government with a good working majority, likely to reverse the austerity of the previous Government) Hammerson does appear to have risen more sharply than might be expected. This is probably simply an “upwards correction”. Most REITs trade at a discount of about 70% to their net asset value. On this basis, the “correct” price for Hammerson should be about 33p. A correction towards this figure is, perhaps, overdue.

Very wise. Buy back in now at 885!

There was slight excitement in the market today for this sector. I am not sure if the prospects are really much better, however, when the price rose to the dizzying heights of 28.5 I thought that when it fell back to 28 it might be worth topping up a bit. However, not really sure.