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A well-written ,informative report.Positive detail on MySpace in the next few months and a fully covered dividend should underpin a gradual share price rise.
Jonarian
Some good stuff in your comments and we all want it to turn out well for shareholders,and by default ,bondholders.
The difficulty for analysts is that RGL has traditionally been run by folks who do not seee corporate governance as very important and they have never had pressures from institutional shareholders to remove the conflicts that are obvious to shareholders.You see this sort of behaviour in the VCT world,less know than a few years back.It is totally nonsense to have anyone from the Managers on the board.It is a reflection of a feeble board that this happens.When a fund is initially set up ,usually by the Managers, they invite board members who they think will be compliant.What may change the game here is that ARA the recent owners of the Inglis business are professional and experienced and if you want to right to RGL and the Board then ask for your email to be forwarded to ARA compliance department.
More debt is not the solution.LTV is too high.Again, the real estate industry protects its own.In dependent valuers ha ha.Who pays their fees? These valuations are based on certain factors ( ask to see them ).I paraphrase but is based on an active market,willing buyers and sellers,etc.RGL is a distressed seller,no?So big discount.office values are not going up.Look at Derwent and CLS.RGL selling at Book value.ha ha.Look at what the purchase value was.Businesses write down values of properties they want to sell so they can then say they did not make a book loss against recent valuations.
It is highly likely that they have breached LTV covenants.But have waivers for the short term.
The 20% unoccupied is a killer.which other REIT has that? These boys have previously announced asset sales.We have heard nothing recently.
There may be a big asset package sale in the offing which will refi the bond and improve leverage.Can you see the flying pigs?
I would be delighted to see an equity raise.
Still nervousness about the ability to complete on the local housing stuff….and the lost income.
We assume that Edison has access to company info or at least an audience as RGL is paying them to promote RGL To their credit,my interpretation is that they think RGL needs a rescue ( my words) share raising.Of course it does.Been blatantly obvious for months.The Board has been effing useless listening to Inglis saying he can sort it.Left it far too late.New Board required.Sack Inglis and the other padding and particularly the chairman who has demonstrated no backbone or strategic skills.Best thing for shareholders is for ARA to step up and get cash into the company from serious investors.Sooner rather than later.
Let’s hope the new CEO at QSix concentrates on getting a serious disposal programme in place bearing in mind the huge fees shareholders have paid for feeble performance to date.Sale of the whole business would be preferable but that would cut off their annual income.Bit of a conflict.Board needs to grow a pair.
Excellent news.Repaying expensive debt.Sharebuy back programme should improve share price.Great long term hold for the divi.
If the Board had a deal in place to refi the bond by the divi day announcement,they would presumably have said so?
Good to see rises in bond and share prices.There are buyers for the bonds at current levels.
Cancelling the dividend would have sent the wrong message to potential new money providers?
Significant asset sales still required in the shorter term unless values increase,imho.
Paying the divi should signal there are no concerns about the ability to repay the bond in August.If the Board were more open with shareholders about why they are that confident ,then the price of the bonds and shares would undoubtedly rise.They have withheld how much free cash is currently available ,unlike in the Q3 update.With an LTV of 55%, surely most of the portfolio must now be pledged to the institutional lenders? Where will £50m come from? Let’s hope that on 26 March relevant information will be made available.In the meantime both the bond and share prices reflect the uncertainty brought about by the poor communication from RGL.
Chelmo’s analysis is feeble.There is something weird going on here.With a debt LTV of 55% there is bound to be a potential debt covenant default,probably temporarily waived.Or not.No Board with any brain would pay a dividend now if full payout for the bonds was in any doubt.Unfortunately,RGL board is ,in my opinion,not of that caliber.Insiders and fluff.Obviously holding back material information which distorts markets.Bonds are listed.Lets hope that ARA are not complicit in market distortion through lack of material disclosure despite the Inglis philosophy of accidentally omitting financial information which might assist bondholders/ shareholders from understanding the true financial position.Bonds would not trade at current levels if RGL disclosed professionally.Why are they not doing this? They need to be very careful.If bonds are not paid out in full in August, after paying a £6m divi, the capital markets will show no mercy to The Board and their advisers….
404
It is not RGL choice on the bonds.They have to be repaid in August,just like a loan,unless bondholders agree to extend.
A competent Board and Investment Manager ought to be able to sort this out within 6 months.I have no confidence in either,but I do believe that ARA ought to have the skills and motivation to get RGL stabilised.Preferably kicking out Inglis and the RGL chairman in the process.
117 properties sold for £5.6m.£50k each on average.Looks like they are being given away…..
Due on 22nd Feb.Results on 26 Mar.
Interesting info about Oakland.At June 23 it was RGL’s 12th largest investment valued at £12.9m.
Canetoad,good efforts at attempting to analyse the coverage for the bond.( If it is not fully covered,the equity is toast).There is not enough info to consider if RGL is close to breach of leverage covenants.Quite deliberately unhelpful imho.Importantly,it is quite likely that a a default on one set of debt would trigger cross default clauses in other lending agreements.Unless the institutional loans are in non- recourse SPVs.
Maybe ARA will get the message and force Inglis to a better standard of disclosure.He ain’t going to do it without being kicked.As for the chairman- ha ha.
The market makers are in the same position- their analysts will be going through the same thinking ie you cannot work out how much of a mess RGL is in or not.
Understandable they I would be marking down the bid price of the bond to cater for scared dumping bondholders and to discourage more sellers- until they find enough buyers of bonds so they can trade them on.
Inglis has a long history ( not alone in the sector) of providing information which ignores the negative trends in the business.The annual reports and company presentations do not mention the LTV covenants in financing structures or if they are ring- fenced from claims on the company if there is a shortfall ( unlike NRR or Capital and Regional).Most LTV covenants are normally in the 55- 60% range but can be varied or waived.
The update from 2 Feb is typical of the stance of ignoring the liquidity crisis caused by the failure to address the imminent maturity of the bond.
RGL is a distressed seller so achievable prices for sales will be under valuers figures which are based on a normal market scenario.That is why they have only sold £26m.Just look at the Canary Wharf office price drop.It is more about distressed sellers having to take big hits.
Divi announcement in two weeks.Prelim results on 26 March.What odds on tangible developments on the bond.It is to be hoped so.
Has the portfolio finally been marked to market? This board is always slow to get it.Finally,they have worked out that single condominium sales are more lucrative and easier than whole building disposals.And that ,after operational expense prudence,pay down of debt is the only route to go before even thinking about any distributions to shareholders.Still think they should take on proper investment bankers to sell the business as a whole before shareholder value is too drained by all the fees being taken out of the business by ineffective advisers and managers.
Yes.
When you buy the bond you pay the clean price quoted and for interest accrued to the purchase date.If RGL do not pay the interest ,you lose out.That is one reason why you will sales before a coupon date on risky bonds.
More of the usual from Inglis.Selective info.What about gross debt figures and cash available ( disclosed in 3Q report).? Occupancy down to 80%.Tenants down .They know what the NAV per share is.But chose not to tell us,rather let us try and calculate it.No mention of WAULT,so it must be declining.They have been talking about the bond refi for months.Are they deferring to wait for Interest rates to come down? Quite a tightrope.Bet ARA are very frustrated.
Decent results today.Optimistic outlook.Share price dropped 20% in January.Somebody know something we don’t?
I have traded in distressed/ stressed /high quality bonds for many years.If you buy the bond now,you will also pay for the accrued interest to date,so you do not have the bonus of the Feb coupon in full.
A bond trading at this price so close to maturity is very unusual for a good quality credit.RGL is far from that.The discount / high yield reflects the uncertainty of full repayment,based on no positive info from RGL,the high leverage and doubts about the solidity of asset values.If you have faith in the equity ,then you should think the equity is cheap.Bond holders are not just retail holders.Institutions have been buying in.You cannot find out which.RGL and connected parties are governed by the same insider trading rules as for equities.