Member Info for TheTrotsky

I'll have some of what that man's drinking! Either that or his keyboard has gone into Wingdings "mode"!

"Old man day"? Do you mean you've hit the bottle to lessen the financial pain? ;-)

Damofarl, I limited my search to easy access accounts only (because at present I don't think RGL has the surplus funds to lock them away in a fixed rate bond or notice account) and, apart from Metro Bank, all of the accounts I could find were sub-3.75% (Dudley Building Society). Also, the other thing to bear in mind is that most, apart from Cynergy Bank and Metro Bank (both of whom have a £10m maximum investment limit), have an maximum investment limit of £1m or less. As I said, I'd avoid Metro Bank for obvious reasons at the present time and, personally, I would never invest funds in a bank which is ultimately owned by a Cypriot or Maltese bank (purely because of the potential links with Russian organised crime). Also, given the lack of any financial compensation scheme, I think the use of small bank/building socities is best avoided.

I like the idea of UK gilts apart from the fact that we are likely to see a fall in CPI before we see a fall in the BofE interest rates (the BofE isn't going to move interest rates down until it's seen a meaningful and sustained fall in inflation i.e. CPI, RPI etc.). That said there may be some other indexed UK gilts trading at, or below, par that might offer a better potential investment but there's still the risk that if BofE interest rates do rise from here that such gilts would be marked down. I don't think the potential reward warrants the potential risk.

I also have been fairly contrarian and have been continuing to re-invest dividends and not hold cash. I also, rather foolishly in hindisght, invested all of our ISA and SIPP allowances in April (thankfully the damage isn't too bad to date). However, I've avoided putting any more into RGL (and DEC) recently because I was already fairly heavily exposed. Although extra income is always great it's not so great if the dividend is suddenly cut or stopped, or the investment goes compeletely pear-shaped - I don't want all my eggs in one basket. I'll probably regret it later but it's better to regret a lost opportunity than to regret your whole portfolio going down the Swanny (IMHO).

Teits? That's a new one on me ;-)

That's the boom/bust nature of markets for you. You might be witnessing the first green shoots of a stock market recovery or a dead cat bounce; take your pick. Based on the analysis of previous market cycles its not uncommon for markets to start to recover before the general "feel good" factor returns. I would imagine that FOMO may be driving the recent market uptick but it will need fuel (positive economic statistics, funds etc) if it's to continue its current upward momentum.

Personally, I think better economic statistics are on the way and it's starting to look increasingly likely that there won't be any further increases in the BofE base rate (interest rates on easy access and 1-3 year fixed rate bonds are already beginning to fall) and more probabale that BofE interest rates might actually start to fall in mid-to-late H1 next year (I'd rate the former at 80-90% probability and the latter at 30-40% probability at this juncture). However, nothing is certain and, as the last few years have shown, we could still be blindsided out of the blue.

I think there's an error in the RNS. Either that of they've somehow "lost" PLN3.8m of Polish LFL sales in Q3!

According to the RNS, total Polish sales in 3Q23 increased 7.1% YoY from ~PLN51.4m to PLN55m and the corresponding LFL sales supposedly increased 14.1% YoY from ~PLN47.6m to PLN54.3m. However, barring the closure of any outlets YoY, you'd have expected total Polish sales for 3Q22 (~PLN51.4m) to be the LFL comparitor for 3Q23. It's not.

I've gone back and analysed the figures for FY22 (which is quite difficult because of the haphazard nature of the disclosures in FY22 - they didn't always release quarterly updates and some updates were in GBP rather than PLN) and it would appear that total Polish sales in 3Q22 were ~PLN51.5m and the corresponding LFL sales were ~PLN51.4m.

QED I think they have used the wrong comparitor figure for LFL sales in 3Q23 and that LFL sales in 3Q23 actually increased only ~5.6% not the stated 14.1%. Nevertheless an increase is an increase, particularly in the current economic climate, and is not be sniffed at. Plus, the YoY increase in their total Polish sales in October looks very promising (October sales already amount to ~43% of 4Q22 sales!).

Savings rates offered to businesses are generally lower than those offered to individuals. The best easy access accounts for businesses are currently only offering about 3.3% (apart from Metro Bank which is best avoided for obvious reasons). So paying down debt is likely to be the more cost effective.

Just to clarify. A transfer in specie from a SAYE into an ISA would (as I understand) normally only apply to a member of the SAYE, not their spouse. However, if Aviva can transfer shares into your spouse's name at maturity, it does no harm to ask whether said shares could then also be transferred in specie into an ISA in your spouse's name. I suspect the answer would be "No", but if you don't ask you don't get ;-)

You could also consider transferring some of your shares to your spouse (if you have one); such transfers are exempt from CGT and it might at least enable you to utilise 2x annual CGT allowance. Don't know whether Aviva could facilitate a transfer of some of your shares into your spouse's name at maturity.

It's a pity that your SAYE is maturing on 1 December; if it had matured on (say) 1 February you could have used both this year's ISA allowance and next year's (both would have fallen within the 90-day window). One would assume that any shares transferred into your spouse's name could not be transferred in specie into an ISA in her name too, but it's worth asking.

Also, don't forget that the annual CGT allowance is falling to £3,000 per annum from 6 April onwards (if you were thinking of holding onto some of your shares and selling them aftre 6 April).

It would appear that, like me, he expects/hopes that DEC will increase its quarterly dividend to 4.5 cents from Q3 onwards.

If I'm honest, I was bit disappointed that DEC only raised its quarterly dividend by 0.125 cents last year (I had hoped for 0.25 cents like the previous year) but this year I'd take that.

Https://www.fool.co.uk/2023/11/12/3-magnificent-dividend-stocks-to-generate-passive-income/

Personally, I'm hoping for a bit more and have pencilled in a final dividend of 2.9p (bringing the total to 4.1p) but would settle for a final dividend of 2.8p.

It seems that both sides are trying to "game" the market. The suggestion seems to be that on the one hand Venture Global is deliberately trying to limit its contracted supplies to push up the open market rate and sell at a higher profit whilst on the other hand Shell, BP et al are trying to buy at lower contract prices from Venture Global so that they can sell at the higher market rate.

What's quite clear is that asking a, so-called, "independent" US regulator to sanction a US-based company in favour of overseas-based companies is never going to happen; regardless of who's at fault.

Judge-mental, if they don't know the content of the RNS then having advanced knowledge of its release does not constitute insider trading. That said, currently it doesn't seem to much matter whether an RNS contains good news or bad news; the opening price is marked down regardless (just more if it's really bad news). Or perhaps that's just my shares ;-)

Damorfal, A couple of caveats. Firstly, the dividend and LTV (an bey extension the share price) are intertwined. If RGL is forced to sell property to pay down debt then net rental income (after interest) will decline and the ability to maintain the current reduced dividend of 1.20p per quarter will come under pressure and, by extension, the share price. Secondly, we know that the Glasgow property was sold for more than its valuation at 30 June but we don't know (from the RNS) if it was sold for more than its original aquisition cost; buying properties and selling them for less than their original acquisition cost is not good business and/or sustainable in the long-term. That said, if a property is underperforming and there's little or no prospect of a turnaround in its fortunes in the medium/long-term, then selling the property may indeed make commercial sense, even if you have to settle for less than its original acquisitsion cost.

The one thing that was unclear from the RNS and does need to be addressed asap (and has been needed to be addressed for at least the last year) is the continuing decline in the EPRA occupancy rate. Although the additional letting at Norfolk House since the end of Q3 will help, there had been a further c2% decline since the end of H1 despite RGL selling some under let properties in H1. Also, it was not entirely clear from the RNS regarding the recent sale of the Glasgow property whether or not it was fully let, i.e. all 23 units were let on just 13 leases - it's not uncommon for adjoining units occupied by the same tenant to be let together on one lease, or whether only 13 of the available 23 units were let at the time of sale. The former will not help the EPRA occupancy rate whilst the latter will. Inglis often talks about increasing the EPRA occupancy rate but there's been little recent evidence that he's actually making any headway. I think RGL is still working through the WFH contagion and, as of the end of Q3, have not yet turned the corner but they do need to start delivering soon and show that demand/occupancy has started to "normalise" (as indicated by their tenant surveys). An uptick in the EPRA occupancy rate at the end of H2 (or even a plateau) would go a long way to restoring confidence.

CaneToad, I suggest that you re-read your own original post. What's good for the goose is good for the gander. Don't tell other people not to use expletives when you dish them out first. Pot calling the kettle black me thinks.

I make some (not necessarily unreasonable) assumptions based on previous RNS, presentations by Inglis and analysis of the figures. The update lacks a lot of crtitical information to make a proper analysis e.g. P&L, balance sheet, cash flow etc. and so you are therefore forced to make certain assumptions and do some (basic) maths.

30 September fell on a Saturday so its wholly feasible that some payments went out on the Friday, e.g. loan repayments, whilst some receipts, e.g. rent, were only received on the following Monday (the cash balance wouldn't have been adjusted for receipts that might otherwise have been expected to be received on the last day of the month). It's not uncommon for payment runs to be bulk processed at the end of the working day and/or rent to be paid by SO/DD on the last day of the month, so such a payment/receipt mismatch is not far fetched. The cash balance is just a snap shot on a given day and no significant conclusions can be drawn without first seeing the balance sheet.

If you do the maths, it's quite clear that the denominator in the LTV % calaculation hasn't changed from H1 to Q3 despite Inglis saying that they are spending money on capex (a few £m per quarter on average). One reason I hadn't considered is that if the capex is recoverable from tenants then it wouldn't be treated as an investment property addition but as a trade debt instead, in which event the cash balance should be replenished in due course (if not already done so in the quarter).

I'm not angry but I do get irritated when you post decrease in cash, "slight" decrease in gross debt ("WTF!") etc. Your use of such inflamatory words would APPEAR to make it quite clear that you have no intention to be even handed.

Toad,

Cash and cash equivalents down £17.5m. Gross borrowings (slightly!) down £12.3. Could one be connected to the other? WTF! They also previously indicated at their H1 results that they've been undertaking some capex on their properties, some of which would be recoverable from tenants in due course.

The rent roll is down but will have since been bolstered by the additional letting at Norfolk House at the end of October. One would also assume that occupancy levels would likewise have improved because of the additional letting at Norfolk House (I'd estimate a c0.5% improvement).

0715,

I think the quoted increase in LTV in Q3 might be erroneous (the figures are unaudited). Net debt's increased from £390.5m to £395.9m and yet the fair value of their properties, for this purpose, appears to have remained at £752.2m (do the maths) despite part, or all, of the cash decline probably being related to capex on the properties. Ignoring any potential valuation changes between 30 June and 30 September, one would have assumed that capex would normally enhance the valuation of properties. The correct denominator to calculate the LTV % would therefore either be the FV at 30 June + capex in Q3 or the FV at 30 September, not the FV at 30 June. That said, the cash decline in the quarter may not be solely, or wholly, due to capex and may instead relate to other working capital movements (the timing of large receipts and payments can adversely impact cash balances from one day to the next - 30 September is just a snapshot in time and without additional information about working capital etc., i.e. a balance sheet, you can't draw any firm conclusions about the cash movement).

I appreciate that property valuations generally may still be falling but the sale of the Glasgow property for 26.3% above its June valuation does rather throw some doubt into your assertion/assumption that RGL's property valuations are overstated (and possibly lend some weight to Inglis's assertions that they've always used conservative property valuations). Obviously it goes without sayng that one swallow does not a summer make.

The cash position has not declined c£20m in 3 months. Please re-read the RNS! The comparitors are for December! Doh! If you can't get basics like that correct ...

Macminchus,

RGL is a REIT and, as such, is exempt from corporation tax on its EPRA income (essentially net rental income) provided it distributes at least 90% of its EPRA income. It's ability to cut its dividend is therefore limited if it wishes to avoid paying corporation tax.

GG, If you actually believed what you've been posting you'd have sold up and departed these shores long ago! Sure, you might be able to reduce your loss if more "fools" buy in to push the price up a bit before you sell but only an idiot would hang around when the share price could "collapse at any moment"!

Some (very) large sells late on today. Two trades at or around the close amounting to c3.2% of the issued share capital. Not clear whether they were the same seller but we might see an RNS (or two) in the next few working days, if not tomorrow.

Dark recesses? Two seconds on dividenddata.co.uk: https://www.dividenddata.co.uk/dividendyield.py?market=ftse100&sort=yield&order=1. I just picked the top yields (to disprove your generalisation) but always double-check before you buy; the yields quoted are based on historic dividends rather than prosepective future dividends e.g. the yield on RGL has not yet been fully amended for the reduction announced in mid-September, which would be expected to last for at least the next 12 months).

I'm never said that the yields on bonds were equivalent to the yield on DEC. UK gilts do however form the cornerstone of most, if not all, small to medium-sized UK pension shemes because of the capital protection they offer if held to maturity (the pension schemes know going in what capital return they'll get back on maturity, assuming the UK government does not default). Do please keep up! The whole point of LDIs is that it they enable holders to increase the income they generate from their UK gilts; using leverage holders can increase their income return from UK gilts.

For example, assuming a holder invests £1,000 in a gilt yielding 4% and then leverages that gilt 5x on an LTV of 60% each time then they could, in theory, increase the yield to c10% (excluding costs)! Increasing the LTV to 70%, the yield increases to c12% whilst decreasing the LTV to 50% the reduces to yield to c8%. It's certainly not chump change! On paper it's a great idea provided the UK gilt markets remain relatively stable and not subject to wild gyrations (which until last 12-18 months they generally have) and/or there aren't significant increases in the BofE base rate (as the base rate rises UK gilt prices tend to fall, which in turn increases margin calls on leveraged instruments). Increasing margin calls would not necessarily have been the death knell for leveraged instruments, provided the pension funds had other liquid assets they could sell to raise cash e.g. shares. However, Truss threw a spanner in the works and some pension schemes were on the verge of collapse if the BofE hadn't stepped in (the market gyrations following the mini-budget were massive and some pension schemes couldn't raise cash fast enough to meet their margin calls). I believe that some pensions schemes were leveraged 8x to 10x and have since been unwinding some of their positions.

One swallow does not make a summer but today's rise was (very) pleasing. Hopefully there will be more to come over the coming days/weeks - we need it; if nothing else to dispel some of the wilder, unsubstantiated conspiracy theories.

TPT is now in a far better financial position than it has ever been before/during previous recessions/downturns (it's debt free). Who else here still remembers the share buyback made using borrowed funds back in 2006? It proved to be a total disaster following the 2008 banking collapse; took TPT years to repay the debt, the dividend was cut to zero (and has only recently started to recover albeit still less than 50% of pre-2008 levels) and the share price still hasn't recovered!

I would suspect that TPT is in a far better financial position than many of its direct competitors and is therefore well placed to increase market share if some of those competitors go to the wall (as they inevitably do during recessions). So, although the cake may be smaller TPT's share of the UK market is likely to get bigger. TPT may not be totally immune but it might ride out a recession/downturn a lot better than some might otherwise give it credit for.

Terry, "Don’t be disingenuous". Check out BGLF, FAIR, TORO, HFEL & VSL. The only reason RGL is so much lower is because it reduced its dividend in mid-September. Allowing for the general demise in the market since the dividend cut, its yield would probably be closer to c20% without the cut. Of course, DEC could always cut its dividend if that would suit you better!

I disagree with the suggestion that the sharp fall is (primarily) due to ESG polices and general funds sell off. They may have been contributory factors but are unlikely to have been the main reasons for the sharp share price fall.

On the other hand, I think the link to the bond markets may ultimately provide a far better explanation. DEC shares and bonds appeal to a certain sector of the investment market (namely pension funds) and, if you follow the breadcrumbs, a case could be made for LDIs being at the root cause of DEC's precipitous share price fall.

Small and medium-sized pension funds in particular buy bonds to provide long-term income and, if they buy the bonds below par value, capital security and, as such, these pension funds would always be loathe to offload their bonds. However, following the Truss debacle back in September 2022 it became apparent that a number of these pension funds had been sold LDIs (essentially they'd leveraged their bond holdings multiple times to increase their bond income) and were facing significant cash margin calls that they were struggling to meet. Selling their LDIs would have crsytallised significant losses, losses that could be avoided as long as they could continue to hold their bonds to maturity. Therefore a lot of the pension funds would have instead opted to sell their other liquid assets to raise the cash they deperately needed e.g. shares in DEC.

The initial impact of the Truss debacle started to wain after Hunt became Chancellor but the problems have susbequently returned as the BofE base rate has continued to rise (causing bond prices to start falling once again and margin calls to rise correspondingly). Obviously the pension funds would also own other income generating shares too and would, no doubt, have been top-slicing those holdings at the same time to generate the cash they needed to meet their margin calls but the impact on DEC's share price may have been disproportionate because a) its relatively low capitalisation compared to some of the other income shares they might have held/sold e.g. BP, Shell, L&G, AV etc. and b) their % holdings in DEC, compared to their other income shares, may have been relatively higher to start with because of it's already generous yield.

TerryM1, I haven't lost shed loads of money. I may have lost shed loads of money on paper but I have no intention to sell; so my current protential losses are unrealised. The potential losses do make me uneasy but until anybody can find a specific, identifiable problem for DEC's share proce fall then I can only conclude that it's a mixed bag of cyclical factors.

"Not sure too many people are uneasy with hedging losses as these have disappeared". Watch this space. The World Bank is warning that the oil price could soar to $150 a barrel if the conflict between Israel and Hamas escalates to a full-scale Middle East conflict. If so, DEC's accounts will be awash with large non-cash hedging losses again and all those same PIs will start bleating again.

The higher hedging prices in the future cost DEC c$100m. Near term hedging gains, net of costs, will likely be marginal. The costs are already sunk so there will be a mismatch between when the income is received and the costs expensed but the net benefit won't be as much as some would have liked/expected.

Don't be obtuse. The fact that RGL is a property company (thanks for pointing out the obvious) is irrelevant. RGL, like DEC, has a lot of debt which is weighing down its share price at the moment. Debt is debt, regardless of what business line you are in, and excess debt can put you out of business if you can't afford to repay it. That's the only parallel I was making. There are actually several investment trusts currently trading on yields of c15% or more. As regards direct comparitors with DEC, please point out any other UK-listed oil and gas companies with a similar business model. There are none that I'm aware, so we'd probably have to look to the US or Canadian markets to see if there are any comparitors and how they are currently fairing.

Since you've scoffed at some of my suggestions, perhaps you'd like to enlighten us with some of your suggestions as to why the share price is in the doldrums (beyond simply blaming Jim because you've got no better ideas).

PS. It interesting that the share price appears to be (somewhat) rebounding today following better news from the bond markets. If (and it's a big if at the moment) the share price rebound continues then the potential link between DEC's recent share price travails and the concurrent bond market upheavals may be worth investigating further i.e. why the upheavals in the bond markets might have triggered a sell off of DEC and (if so) could it happen again. The only reason I can think is that institutional investors might have been top-slicing DEC to raise cash to cover margin calls on their bond protfolios but that's just a guess.