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Strictly - a really good post that - appreciate it. You work the numbers (I don't go on TEF or BWY chats - maybe i should) but I can't talk about that side of things because I don't have enough knowledge (perhaps I should you say - and yes you're right!). I think t's best to try to only speak from your strengths so I never talk about the numbers - I just try to fill in the gaps from a rationale/on-the-ground/direct-experience perspective - that way I don't clog the board up with nonsense or fiction (that doesn't help anyone).
I still think Inland are spread a little thin too (but they'd argue that their hugg homes, for example, is brilliant at sweating a given asset as it generates income whilst waiting for planning to come through). I'd agree on that point but I also think that that concept could be massively rolled out for much more robust long-term income (but should that be rolled out via a split-off different company or within inland?) - there are lots of good ideas within the business but is there enough personnel to do it all I wonder? the affordable/contracting elements will get them through the difficult times but there's barely money in it and depending on the contract, you can be caught with a fixed-price and abnormal/unspecified costs cropping up of course. But it's cashflow - gets you through. What I think they want to do is capture the planning and sell the land for the uplift with the build contract as a stipulation of the deal - there's definitely money in that. Affordable Housing companies tend to struggle when buying land in m experience (although there are some v canny exceptions to that general opinion I have - some v good people in HA's but overall, not).
It's funny - when I was at a national building firm that Bovis were a rival of; we were always impressed with how their employees in our patch bought land and worked the market. I'm surprised they've gone off the boil tbh. St Modwen's was always a betwixt and between company for me - spread too thin across too many disciplines. You simply can't employ that many top line specialists (too expensive!). I've never given them a second thought. I'm still in workplace, berkeley and Inland. Tbh - it's going to need to the Telegraph or somone to highlight the benefits of inland to a wider audience - just can't see the shares moving soon? Might be wrong? I'm certainly not selling however.
Demos - yes - I read 'legacy sites' as those that were bought for too high a price (or deal structure .....or both......) that means the site is always going to struggle to make a massive profit. There's clearly demand out there for sites (note Avanton's recent announcement that they've £500mill for a BTR development pipeline and are now looking for suitable sites) etc etc. I'm going to have to park these shares and come back in 2 years time or something. Doesn't feel like anything is going materially change for a some time.
The master brewers has been around for years and hillingdon always seemed to have a problem with the site. I think traffic is an issue (it's technically on the wrong side of the junction to both the shops and the station. Tesco owned it for years and years (if i remember correctly!) and failed dismally to get planning (combinatiion of locals up in arms and planning policies/traffic).
Yes to BTR; easy commuting etc etc but I always found that area (the micro area I mean) a bit soulless, downtrodden, wind-swept and noisy (you've got the M40 and the airport - raf northolt - literally on your doorstep) I'd be amazed if it was £500psf around there. Hang on I'll just check.....it's actually £501psf for terraced houses and flats around there. £506psf for just flats. Which is actually where Inland, I feel, will thrive - sites that deliver £450-£750psf. Perfect.
Stephen Wick's is in this week's Property Week - regarding delays in planning......;
Stephen Wicks issued the advice after he wrote to housing secretary Robert Jenrick last month lambasting his decision to call in the developer’s Hillingdon scheme (pictured) on a former Master Brewer site.
Jenrick U-turned on his decision just days after receiving Wicks’ letter and Property Week understands Inland Homes is expecting to receive the go-ahead for the 514-home scheme from the Greater London Authority in the coming week.
“Planning is now so bad and it’s become so political, I think you have no choice but to try and make a fuss,” Wicks told Property Week.
“We were going at it not only as a direct lobbying approach to Robert Jenrick, [through the] media, and I think we started to make them feel slightly uncomfortable.
“If you make them uncomfortable, you will get a certain amount of traction — that’s really our strategy. I think you will see a much more assertive Inland.”
Wicks estimated that the delay after the call-in on the brownfield site had cost the business around £750,000. He urged other developers to follow in its footsteps and apply pressure on government to move schemes on.
“We are hoping that other developers will help us to try and get the politics out of planning, which is what we need if we’re going to get to these targets the government are asking [of] us.”
Earlier this week, Inland Homes reported pre-tax profits of £3.7m to the year ended 30 September 2020, down from £25m in 2019. Revenue also dipped, coming in at £124m compared with £147.9m a year earlier. Net asset value per share fell to 103.97p from 113.69p.
The group said it had been “actively disrupted” by the Covid pandemic.
In the UK rhatton - sorry - I'd forgotten about that and just jumped onto plus and logged in (but I don't use it to trade I just wanted to have a login to see what it looked like) - I'm not a day trader or active in the markets tbh. Sorry for the forgetfulness there.
Excellent Ghostrider - all I'd add is that I feel we(general public) have imperfect knowledge of this share/company. It's the only conclusion I come to ; there's a reason why corporate investors aren't piling in at this level. I'm being cynical I suppose but it's the only conclusion I can come to - they know something that we don't.
I shudder to think about Bitcoin and Plus500 - but I've tried (just now in fact) to search for bitcoin within my trading account at plus500 and I can't find it - nothing comes up. Perhaps there's hope they've not been caught out on the wrong side of the bitcoin rise. tesla's investment baffles me actually but that's an aside.
Strictlybricks - thanks for your kind words; I'm actually in the game myself. I buy development at the moment and I've worked for some national builders (not redrow but the one that had a helicopter in it's adverts back in the day) and some medium housebuilders (rivals to london departments of the national builders) and then boutique/small developers too. I've actually bid against inland on some sites, tried to introduce sites to inland, and I know alot of the agents that inland use too and some of their third-party consultants - architects and the like too). I'm not very good at translating that knowledge into financial acument regarding the share price of inland or anything but I think I can put myself into their shoes, a little bit, anyway, on what's happening/the rationale/the issues they face/planning and other elements that aren't in the public arena. I'm by no means an expert on them but ironically (bearing in mind me saying the exact opposite in a post two days go) I bought into Wicks, not the company when I invested (I said in a previous email that buying a company is an expensive way to buy land and you then get rid of the people.....but I meant the staff not the principle when saying that) in Inland. Like Berkeley Homes and Tony Pidgeley - I invested in him, not the company - he was simply amazing - and now that he's gone......for me there are massive question marks over Berkeley (the only other housebuilder share I own besides inl). Buying land is hard - extremely hard and capturing planning is fraught (never mind understanding how to maximise the value of the land with the built square footage you place on that land), extremely expensive and often at the risk of your own equity (it's tough to borrow planning costs - but banks are happy to lend once you've captured your consent)....... I'm not buying any more - I'm overweight in them but I take your point strictly bricks. I think redrow leaving london is a mistake - it's the one place where you can add massive value (at great risk) and the existing market(s) has enough headroom to really make some money. If you're selling a house for £150psf - there's really not alot of heardoom to make a margin - the only way to create a profit is to cut costs (because the market is simply not rising to any extent in those types of areas where £150psf is prevalent). In Clapham it's £900psf, West Ken £1,500psf, Teddington £600psf - your costs rise of course but there are angles to create further value (by using transport nodes to increase the density perhaps or through cunning design, through choosing a site where you can go higher, through understanding the affordable housing tenures and perhaps deriving greater value there, by anchoring the site with a mix of uses (a co-op for example on the ground floor or some b8 storage or a dentists - I'd have said offices in the past but.......), maybe being able to justify a car-free site etc etc. loads of angles........
It's a tough one Alan; I bought in to Inland because of Wicks - him and Paul brett are/were (but Paul has left of course) deal doers. Wicks knows alot (and I mean alot) of people. I think they started out to find sites, get planning and flip them for a profit (not the greatest profit of course - that comes with building sites out - assuming everything goes according to plan......). But as with everything things change(d) and they decided to build - they did well in Feltham (the hospital site they bought - might be nearer heathrow than feltham - but that area anyway) and they were good times - but of flippage, bit of development, happy days.....but then I think things started to get ahead of their ability to cope. They're in Beaconsfield so I guess they felt they needed a site there (but they aren't many left). But working capital for building sites is onerous. And so is planning and there's risk - there's a v real chance you wont get planning - that's why it creates such amazing uplift in values. They did that deal with Tesco (which I thought was going to be absolutely immense and open up all sorts of other sites for them.....but it hasn't so far. They did well to get rid of some of their WIlton park; yes it's easy to build houses - but when you've got 20 or 40 or 60 houses to get rid of at £1mill+ - the sales rate can be tough/slow and income to offset the mega outflow can be v v hard to manage. I think they were going to really kill it this year/last year.....but corona. The master brewers site being called in - not good news - delays like that cost companies absolutely bucket loads in holding costs and therefore they don't make the decision for the next site....... They've done well to extract extra elements of income but for me it's all a distraction from the main thrust(s) - building affordable homes (whether private or affordable) and capturing the uplift on planning consents. Wilton Park - imo is a London Square or Berkeley Homes site (in terms of pricing/specification and sales and marketing expertise needed). Tesco is your redrow/barratt/persimmon non-London division market. A bit like the RAF site Inland built and sold 5 or 6 years ago. There are massive profits to be had (in the London Square/Berkeley Homes end of the market) but there are massive risks too. there are usually less profits in the middle of the road (non-london division) areas but cashflow is greater and risk much, much less. For me I'd prefer to see far more middle of the road sites than high-end stuff because overall, in my opinion, cashflow and risk is far more manageable and their knowledge and experience is absolutely proven in that area of the market. I'd ship WIlton Park out and stream line things a bit. I'd like to see more visibility from the Board on which part of the market they are aiming for too, going forward.
The only issue is that taking over a company is a very expensive way to buy land (and the value is in the land, not the people imo). I'm not sure they are vulnerable to a takeover tbh. Might be wrong. I think they are betwixt and between tbh. They've got a range of avenues that seem to be generating money but none of them are stellar. I think the Hugg element has alot of potential definitely scalable imo- that could be split off perhaps? Otherwise I'd be concentrating on capturing planning on what they have, and turning it/flipping the sites and then handing the profit back to the shareholders. Lovely to see they've got £3.1bn of land or whatever it is but it's not reflected in the shareprice rather than doing for other companies in a capital light fashion (master brewers). Why work for someone else's partial benefit when you've got 10,000 of your own plots that need doing something with (capturing planning, selling or developing). I've been in this so long it's painful now - watching over builders really motor......and us......not.
Married to an ambassador too (i think!) - so moves in the top echelons of Israeli society - well-connected nationally and internationally I'm assuming. No idea whether she's up to the job however.
Fair enough rHatton - I agree that they were clearer (but I chose to not believe it!) in their update - think I've become a bit cynical over the years with Plus. Let's see what April brings - but I think they'll definitely been v busy in Jan.
I think Plus definitely has momentum, share price growth and income. On those metrics it should be on alot of people's investment horizons/hit list to research/invest. If only we could set aside our collective reticence when thinking about the clarity of earnings this company er, doesn't provide! It'd be £25 if they would only be clearer with what is going on (of course, they'd argue they are being clear but you know what I mean).
Sorry - two paragraphs there that completely contradict each other - wrote the first then had another think and wrote the second! Sorry for wasting people's time (you can't edit or delete messages unfortunately, otherwise that one would have been consigned to the bin!)
I think that's the worry Ghostrider......that the backroom staff are no better informed than us and that perhaps (and it's a big perhaps) they did get caught on the wrong side. It'll be interesting to see if the house broker updates things prior to the next Plus announcement.
I think January will have been a crazy (good) month for Plus. Just feel it in my waters - and the fact the share price is just starting to nudge up - to me indicates that slowly, but ever so surely, people are realising that Plus is well under-valued presently.
Unless Ghostrider.....unless.......(and I hate to say it)...........they know something we don't? Who was it that said 'once all avenues have been explored and dismissed, what's left is the answer?' (or words to that effect!!) :) Someone sort of famous probably - By all rational analysis, Plus's share price doesn't make sense.....so there's something that has either been ignored or missed. If things had gone materially against Plus they'd have to release that news right? Perhaps things haven't gone materially against them recently but they've already released quite a dour update last month, that most of us refuse to believe.....! that's why that UK fund manager bought the IPO, rather than Plus; in his eyes Plus is the much greater risk (not just for the hedging issue but for the myriad issues everyone has already discussed in previous posts). I'm not adding to my holding in Plus (but neither am I selling!). I might be making a huge mistake at the current price - but truth be told - I've no idea if this is the deal of the century or a turkey that needs shooting! :)
That's an excellent summation Ghostrider imo, thanks for posting that.
If we get past £3 I'm selling! :) Praise be to reddit, er, sort of.
Could Plus potentially have been caught on the wrong side of the price fluctuations?