Member Info for TheTrotsky

We went ex-dividend today; so, a 1.2p was to be expected

The problem you appear to have overlooked is that loans are secured against specific assets. You can't just sell a property to repay the bonds if the bonds aren't secured on the property (you'd have to repay the loan on the property first). RGL may want to keep the properties on which the bonds are secured. It would seem that they will be obliged to repay part of the bonds (they do have some excess cash over and above that needed for normall day to day activities) and refinance the remainder.

I have no doubt that commerical property prices will start to rise again (there is still demand for office space) if, as expected, base rates begin to subside next year. It's really just a question of whether net asset values have now reached their nadir; I suspect that we are close (assuming base rates don't continue to materially rise from here onwards).

There is always a risk that DEC might not be able to make its production quota but, unlike manufacturing, once a well is tapped it should continue to produce at a fairly predictable (declining) rate. So it's highly unlikely, in normal circumstances, that DEC would be unable to deliver its production quota. There may be some planned maintenance which might disrupt a well's production but one would expect such events to be factored in to their hedging calculations. Other forms of potential business disruption, including transportation, should be covered by insurance. Also, DEC does not usually hedge 100% of its expected production (if my recollection serves it's normally c90%); so that does leave some additional headroom for some unforeseen events. Personally, I'd consider DEC missing its production quotas as being fairly low risk.

The dividend has been cut because H1 rental income has fallen by c£2.7m YoY whilst property and administration costs have remained more or less static and finance expenses have fallen by c£0.5m. In addition, the EPRA Occupancy rate has actually FALLEN by to 82.5% (from 83.4%) despite c£14m of asset sales. For the last 12-18 months management have been repeatedly saying that they "... are wholly committed to ... improving occupancy... " but the evidence suggests otherwise.

This dividend cut isn't out of choice. This dividend cut is out of necessity. They've been underperforming operationally. This dividend cut doesn't conserve cash per se. They've simply realigned dividends paid with EPRA earnings.

Also, the rental income disclosures are somewhat wanting. Stephen Inglis reports that rental income was impacted by "... lower income from lease surrender, dilapidations payments and other income ...". It's now clear that there is recurring and non-recurring income and that part of the previous EPRA dividend was being funded from non-recurring (irregular) rental income. RGL could make better disclosure in their rental income breakdown.

Porsche is just another one of the disaffected who has been seduced by the supposedly superior return on the S&P and NASDAQ without understanding the the underlying reason, the FAANGs and their ilk, and fully appreciating the potential risk that creates. One can never say with absolute certainty if and when the FAANGs and their ilk will suffer their Icarian demise but I for one don't believe in Goldilocks and their current valuations (together with BTC) are simply defying gravity. You know there's a bubble about to burst when VinFast's closing valuation on its first day of IPO is almost the same as Ford and GM combined! The asset prices of the FAANGs et al have been driven up by a wall of cheap money since 2008 and we are overdue a large correction (there are too many "bell boys" in the market). The wider market may suffer too but they will ultimately be sustained by their dividends.

SAM is good but it's only ever going to be of marginal benefit to DEC's bottom line (in H1 it generated $2m of net uplift); it means DEC can increase its unhedged production when prices move higher and vice versa. Most of DEC's production is usually hedged and, as such, SAM won't have a material impact on DEC's net income.

I guess the real question is whether, over time (given the long-term nature of DEC's forward hedging), SAM might enable DEC to reduce its overall hedged production. DEC's funding model necessitates a significant amount of hedged production to meet costs, debt repayments, dividends etc. but SAM might enable it to reduce its hedging from (say) 90%+ to (say) 80%+

It's a bit odd but, if my recollection serves me correctly, there's quite often a surge in the sp the day or so before it goes ex-div. Thus far, anybody who bought in on Tuesday or early doors yesterday appears to be quids in.

RGL values its property portfolio at fair value (its deemed market value). The 2022 loss arose because of a c£113m provision for the reduction in fair value of its property portfolio. There will, in all likelihood, be a further loss in 2023 as the fair value of its property portfolio has continued to fall but, as and when the property market starts to recover, its likely that RGL will (hopefully) report large revaluation gains. These revaluations are non-cash adjustments.

Last year the half year results were released on 15 September, so this year's results (which are expected on 12 September) aren't late. The quarter dividend was due to be announced yesterday (in advance of the results as per normal) so that has been delayed.

CT, There's a difference between reducing the dividend pre-emptively to conserve cash and reducing the dividend because of a reduction in EPRA income. I think most posters have been talking about the former rather than the latter. As regards a further reduction in LTV, 15% is (I think) a very big drop because it would likely take the price of the properties below their replacement cost (regional properties haven't tended to be valued at a multi-multiple of replacement cost; it's a different market to London and the Home Counties). This scenario might become more likely if there was a glut of office space in excess of demand but all the indicators are that businesses are now beginning to realise that excessive WFH is actually damaging their long-term business and there does appear to be a growing trend of RTO.

Cutting the dividend is fraught with problems for REITs. REITs have to pay out at least 90% of their EPRA earnings to retain their favourable corporation tax status (they pay no corporation tax on their EPRA earnings). Cutting the dividend below 90% of EPRA earnings could result in the REIT being liable to corporation tax on its unsdistributed EPRA earnings.

E.g. if RGL's EPRA earnings continue to be 6.6pps then cutting the dividend to 5.95pps would not breach the 90%-rule but cutting the dividend to 5pps would breach the 90%-rule and RGL might therefore be liable to pay 0.4pps corporation tax on its undistributed EPRA income (1.6pps @ 25%). I.e. cutting its dividend from 5.95pps to 5pps would only save an additional 0.55pps.

Upomega, People love to quote the DOW/FTSE comparison as evidence that the FTSE is its death throws but the reality is that if you strip out the FAANGs and their ilk the other DOW constituents haven't been performing that well either. IMHO there is a massive tech bubble building (last week VinFast, a loss making Vietnamese EV manufacturer, was valued on its first day of trading at almost the combined values of Ford and GM - investors have lost their heads and have absolutely no sense of value) and if the US Treasury keeps raising interest rates then the wall of cheap, new money that has been flooding the US markets and propping up the values of the FAANGs will (eventually) stop.

Michael Burry (of The Big Short fame) is currently betting on a big fall in the DOW and NASDAQ indexes before Xmas. Now, Burry doesn't always get his timing right and the markets don't always react as he expects (sometimes because they're rigged by the large investment banks) but he's always thorough in his research and I think he sees the FAANGs and their ilk (large constiuents of the DOW and NASDAQ indexes), in particular, as being significantly overvalued (they're not being priced on fundamentals; instead their prices are being propped up by cheap, new money). Obviously if the FAANGs and their ilk do crash the rest of the market will undoubtedly be impacted to but I'm hopeful that we will (finally) see a reset like we did after the 1990s tech boom and investors seeking out value over unsustainable growth. Burry was recently quoted as saying to Bloomberg “... the theatre keeps getting more crowded but the exit door is the same as it always was ...”

IEnergiser was de-listed

No 2022 final dividend was paid due to DLG's policy mispricing issues in 2022 and there is an expectation that the 2023 interim dividend may also be foregone to conserve cash and rebuild the balance sheet. It remains to be seen whether the dividend, when reinstated, will be at previous levels; probably not, at least initially.

Back in April I predicted that the quarterly dividend could increase to 2.25p from Q2 onwards if rates stayed at the same elevated level. Given the increase in interest rates since that's looking more than likely a shoe-in now (a profiorma annual dividend of 9p)

Not sure whether they'd increase the proforma annual dividend to 10p (2.5p per quarter) unless interest rates continue to rise or stay at the current level for a prolonged period; working on the basis that they'd not want to increase the proforma dividend one quarter just to reduce it the next if rates peaked and started to fall. That said, not sure whether interest rates will start to fall much before the start of next year now.

Sharebel, the AML regulations were brought in to stop banks and finacial institutions (unintentionally) aiding and abetting criminal enterprises. Unfortunately the rules are such that even innocent enterprises are caught up by the regulations and banks are simply not permitted to apply their discretion. You'd think that if HSBC had, for instance, been unable to perform adequate AML checks on the director living in France it could simply have told the company but, abiding by the letter of the regulations, doing so could have been interpreted as "warning off". They are legally required to stay schtum otherwise they will be fined or worse. There are currently no exceptions to the rules.

The personal affairs of individual signatories can cause problems with business accounts, rightly or wrongly, and the AML and DP regulations don't (generally) permit banks to divulge information. AML checks can be a real nightmare and, if you abide by the rules to the letter, for some individuals, just by virtue of having a common name, are almost impossible to complete. Common names will often flag offences, whether here in the UK or abroad, but you are not permitted to ask the individual any questions that might "warn them off" to determine whether they are in fact the individual who committed the offences! What is one supposed to do?

In reality it's often easier for banks and financial institutions just to turn some customers away than try to go the extra mile; they can't be penalised by the FCA for being prudent. There's no reason why banks can't, in principle, do AML checks on individuals who live abroad (even in the EU) but the additional processing costs can be prohibitive (and are therefore only worth incurring on large clients). It may seem perverse (it is) but due to the AML regulations I suspect that HSBC wouldn't tell you that it was because of the overseas signatory (if indeed that was their problem) because that could be interpreted as "warning off".

The AML regulations were, unfortunately, drafted by lawyers for the enrichment of lawyers without any thought being given to their commercial practicability!

No, I'm saying that Nigel should go to another bank and/or leave the country. I really couldn't care less. NWG should not feel obligated to keep him as client following this kerfuffle. The relationship has broken down and is now uttenable because of NWG's actions. NWG, like all of the other UK banks, was wrong to deny him a bank account but both sides now need a clean slate.

I don't like the guy and I rather like the fact that he's received a bit of his own medicine for once (intolerance). I also resent the fact that I have to support his rights (but support them I do) when he would deny others; he's a hypocrite.

Time for Nigel to go and find another UK bank methinks (they should all be falling over themselves to offer him an account now; in all the kerfuffle people seem to have forgotten that none of the other UK banks were willing to offer him an account either). Better still, he can go and live in the US. Goodbye and good riddance.

Schwee, Step back a minute. Lloyds in the largest mortgage lender in the UK. Now consider the current economic backdrop. Are you seriously suggesting that Lloyds should be expadning its loan look at this point in time? As regards falling deposits, Lloyds currently has a 96% loan to deposits ratio; it doesn't need to attract more deposits!

Since 2008 Lloyds has set about re-positioning itself as a low-risk, UK-centric, retail bank and, at this juncture, expanding its lending would not be prudent.

You're getting ahead of yourselves. DPP is currently valued at c£56m. Those fund raisings came with a lot of dilution; it had a lot fewer shares in issue when it was valued at 50pps.

DPP's made c£21-£22m of sales in H1 and a good chunk of that LfL sales increase is down to inflation. The current inflation rate in Poland is c12.5% and was higher earlier in H1. Inflation-adjusted, the LFL sales increase is a lot more modest c5-7%. Also, the cash at bank is 40% less than at 31 December.

Any sales increase is to be applauded but Poland is (definitely) not like the UK market. It's population is c45% less than the UK's and the scope for DPP expansion outside the larger cities is a lot less than in the UK. Also, here in the UK, most of DP's sales are generated from delivery/collection (meaning smaller outlets and lower operating costs) whereas in Poland close to a third of DPP's sales, and the fastest growing side of the business, are generated from eat-in (meaning larger outlets and higher operating costs). DPP is not, unfortunately, another mini-DP. It's an entirely different beast and its scope for growth is, I suspect, more limited. Unlike the UK, it's growth is not going to be driven by a rapid franchise expansion.