Member Info for steph

I recall one incident in California I was familiar with. An Italian fund invested in a large golf course residential development in Sacramento. Planning officers said yes. Council said yes. Then a rival started a petition under California's referendum laws. It was funded by the local competing developers. Got enough signatures so vote went on a ballot. Referendum vote was against which sterilized the site for at 10 years (can't have referendum on same issue for at least 10 years). Italian fund sold the land at a loss and never to my knowledge invested in the USA again. Makes our system seem positively predictable.

Easy appeal to the minister given officer recommendation to approve. Government no friend of the TH Labour party. Mayor of London can call in for decision if deemed strategic. He has not called it in now and is not really the appeal body so may continue to stay out. Hope no planning inquiry called. That is endless delay and an uncertain conclusion. If TEF can make a few face saving tweaks and try again at TH then do so. That is the fastest and safest. If the tweaks needed cost millions should appeal ASAP. To appeal need a clean refusal though. Sounds like it is in limbo. Frustrating when members do not follow officer advise but it does happen. Barriers to entry I keep saying even though it is a pain when it happens to us. Imagine a foreign builder going through this. They would wonder whey they are in the UK. All part of the barriers to entry that keep our juicy market opportunity to double every 5 years or so unfettered for 15 or 20 years.

https://www.rics.org/Global/1._WEB_%20January_2018_RICS_UK_Residential_Market_Survey_tp.pdf see Brendon's assessment of tef patch under London sales comments.

http://www.bbc.com/news/uk-politics-42977967 Irony that the brexit supporting areas of UK will be the most hit. They were all sold snake oil. London even with no deal will survive (3.5% less GDP over 15 years) due to the resilience, diversity and international orientation of the economy. Any sort of a deal and London will hardly notice the hit. No so the midlands who are dependent on complex industrial supply chains that will be disrupted.

http://www.telegraph.co.uk/business/2018/02/07/londons-demand-offices-defies-naysayers/ Can't say the same for UK's regional markets (same that voted Brexit). I can't see where the new jobs are gong to come from in the midlands. Well pensioned retirees are not enough to prop up those regional housing markets forever and the new jobs just not there for the young outside the public sector. Where will be the private sector drivers?

Keeping a good percentage of the mix below 500,000 is probably important going forward. I'm a bit of a fan of micros in well located well appointed blocks with lots of shared services (including guest dining rooms and bedrooms that can be booked). Sweet young things on good starting salaries will tolerate dreadful personal space standards to get on the housing ladder and be in a hip location. Later when they have school age kids (if ever) they will flip the flat but can suit for a good number of years.

I've always been surprised that TEF has never received a take over formal offer at some point -especially the years it's SP was below NAV. I suspect the senior management have sent out signals that a offer would not be welcome. There was once a rumour of a staff buy out and going private. I've often been longer than my finances suggested as ideal due to thinking someone must see the hidden value and make an offer resulting in a sudden SP adjustment. Such a great company for someone trying to grow a London portfolio. I thought maybe even a foreign builder interested in the UK market and starting with London. As TEF is poised to grow the best in the sector organically for the next 10 to 20 years there is little point in acquisition for TEF to grow faster. Maybe the conditions for that might emerge if there was anouther sharp downturn and tef was in good financial shape in the middle of it and there were some stressed sales about. Lets how that sharp downturn is a ways off.

https://www.bloomberg.com/news/articles/2018-01-31/rich-folks-are-fleeing-london-and-lagos-wealth-report-shows lucky for us TEF don't target that part of the market. Worrying though. It can be an indicator that is the canary in the mine. I am hoping our Brexit will be on the mild end and the current jitters will reverse themselves when the new relationship is clear. A nation of lions led by donkeys at the moment but that will pass too. McDonnell got a large audience (much lager than May) at Davos which is interesting. The big money seems to be able to tolerate a leftie labour government and runs on the pound now quite unlikely. So much incompetence on the economy now factored in it will be hard for Corbyn to do worse and the expectation by the smart money is he may do bit better -mainly by delivering a softer Brexit and by borrowing a lot to build infrastructure.

https://www.bloomberg.com/news/articles/2018-01-08/london-beats-out-new-york-among-foreign-investors-in-real-estate just shows how strong the London market is. Brexit just means slower growth rather than a reverse, assuming of course there is an orderly exit and some sort of deal on financial services (perhaps less than full pass porting but more than start over again). Trump helps us. If you are Asian, middle eastern, African or even Latino and want to invest in a stable anglo saxon refuge the USA is looking less attractive by the day. New Zealand and Australia and Canada small and overheating. Boris is a stable genius compared to Trump. If Boris/Fox/Gove and Davis are the worst we have in government than we are miles ahead of the Yanks if an investor is weighing political stability. Of course Andrea might give some in the Trump team a run for their "crazy of the day" money but she is getting further from power by the day.

https://www.ft.com/content/f9b57fca-e415-11e7-8b99-0191e45377ec At least at the micro level TEF doing well. Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour. https://www.ft.com/content/f9b57fca-e415-11e7-8b99-0191e45377ec Britain faces Brexit dilemma over ties with rest of the world UK set to fall out of at least 750 agreements when it leaves EU in 2019 As Britain seeks to decide what kind of relationship it wants with the EU, another issue is racing up the agenda: the country’s post-Brexit relations with the rest of the world. .........

Great to have without any dilution needed

https://www.theguardian.com/politics/2017/dec/10/no-deal-brexit-odds-dropped-dramatically-david-davis

roll on 15 years and wake me up when this ride is over. Crashing out of EU now a lower risk even DD has noted that. Yet taking all this economic risk just irritates me. What for? A Canada plus plus plus agreement even if available means loads more paperwork for British firms exporting to the EU not less. You can't be pro free trade and anti common market. The common market was established to achieve the freest possible trade (both within the EU and between the EU and the world) which is why the Corbyn lefties were against it back in the 80's. IN the intervening years the Tory free trade right has gotten so confused by the trees of the common market regulations that they have lost site of the free trade forest it was set up to establish.

Brexit news today has certainly helped London luxury niche BKG .Should in time help us a bit. Agreeing enough to get to the actual negotiations is hardly reason to cheer but it is a lot better than I thought would happen . Basically May pushed by eu to agree a soft border between all of uk and eu in order to avoid a hard border between n an s Ireland . Also appear to have agreed citizens rights and budget. A shambles but at least there is a responsible adult at the table even if they do report to the eu rather than ourselves. Odds of a chaotic exit now back down to 5% or so. We can take s bit more risk now. Armageddon delayed.

Land bank management is such an important criteria for SP. We have no measurement of the wise or unwise management of the land bank. Is TEF's land bank light approach a stoke of brilliance that indicates more ability to grow or just avoidance of a necessary enabling asset for high margins no matter how restraining that might be to fast growth. The caution of the market indicated by low P/E ratios to the sector is for a reason. Too large a land bank, especially if leveraged on borrowings, is a liability not an asset in a sharp downturn. Too small and growth can be constrained. IS TEF the not too hot not too cold asset manager?

Multi-person households There were five regions in the EU where the share of multiperson households (composed of unrelated individuals) was in double-digits; all of these were in urban areas of the United Kingdom, namely: Inner London - East; Inner London - West; Outer London - West and North West; Nottingham; and Brighton and Hove. Among the 30 regions in the EU with the highest share of multiperson households composed of unrelated individuals, some 27 were regions in the United Kingdom, the three exceptions being Hlavní Mesto Praha (8.4 %), Byen København (7.7 %) and Heidelberg, Stadtkreis (also 7.7 %).

I suppose holding a land bank is a bit like owning a factory under construction from a P/E point of view. Lots of hard cash and risk on the ledger and no income at all until finished. I was amazed that for so long after the crisis the liquidation value of the sector was more than the market value of the companies as going concerns. Strange business model yet one that may have significant arbitrage for us. .

Can't find and have never found a long term UK data chart. Yet a crucial statistic. US builders have better historical data but us sector always seems to have higher P/E ratios than ours -probably due to faster turn around between land bank acquisition and sales. Holding a key enabling, but never the less a non performing, asset like land bank is I guess not a great way to have a high sectorial P/E.

https://files.datapress.com/london/dataset/housing-london/2017-01-26T18:50:00/Housing-in-London-2017-report.pdf note pages 7 and 8 for trends in frustrated demand.

https://www.gurufocus.com/sector_shiller_pe.php scroll through this US data link. P/E does bounce around a lot but rarely is much below 10 for any length of time. We are now nearly 10 years of pretty consistent sub 10 P/E for the UK house building sector which is unusual. Dividend cover is now substantially higher than bank base rates which is also unusual. Either we are about to go into another deep recession or the UK builders sector is significantly undervalued. Don't forget London builders can make good money sustainably for the foreseeable future even in the middle of a long hard recession at substantially lower cost per sq foot so long as they don't get caught out with a big land bank bought when prices were higher. We are not Spain or Ireland who overbuilt against demand and were left with empty properties in 2010. Lots of pent up and unsatisfied demand in London that would be released at lower price points. London is near unique in the world to have a high number of persons per household/room. This is a measure of "frustrated demand" No doubt a response to price pressures and not just the fact we like living with mom an dad and friends. Institutional rental funds derisk the land bank significantly for TEF. found this report worth reading (when unsuccessfully looking for floorspace per person in London stats). http://www.knightfrank.com/resources/global-cities/2016/all/global-cities-the-2016-report.pdf