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They have until early into the new year to secure the deal no? So, in theory they could take it up until then to make sure they cover all of the bases I'm not worried, but don't want to put an early deadline on the deal as I am well aware: AIM loves to let me down
For context Have a look at how REIT funds have performed over the last few years. In particular look at the likes of Kames Capital, Dunedin, UBS to name a few. These are the guys I work with and some of the money made on deals is simply unreal and done so with very little effort
Yes it isn't AIM but still regarded as small fry in terms of Mcap etc. More regulation however so shouldn't be any worry of being bent over a barrel out of the blue. Need that second deal. As I said a few days ago (and was shot down for doing so) the first deal isn't going to move the earth and previous statements did allude to more than one deal being announced at the same time. The markets hate delays and punish them badly. Need that second deal to better assess direction, if its a big one, then theres nothing stopping this from re-rating in a very short time
buy if the second deal is a big one! I reiterate my point about the 5 million valuation (and I know it will go down like a lead balloon) But I've just completed a purchase of a care home: 93 rooms, 35 year lease, strong covenant, very LL friendly Lease, Rent 274,000 per annum and an institution is completing this week for 3,200,000 If I had a way of sharing the docs with you all I would. I'm not saying this is a poor company, i'm just trying to warn you that "10 bags" may no be as straight forward as you all wish/hope for For transparency I am awaiting confirmation of the second deal before investing. Nevertheless I do believe this is a buy
good post: wrong response I haven't said I don't like it. Ive said this deal is not worth 5 mill to an investor that's just my opinion. They may well find someone willing to pay 5 million for it, I just cant see it. That's all I am saying. I haven't said this is a bad company. ive not said the board are crooks, ive not said anyone should sell, ive in fact said if they get a good deal on the table the sale/leaseback strategy is amazingly lucrative How am I trying to de-ramp? Its quite healthy to have differing opinions in the group. If somebody posted evidence to suggest the deal is in fact worth 5 million or more I would listen to it. I am not trying to de-ramp anything. I just questioned the current deal. If somebody has evidence to show how they arrive at 5 million I would be more than happy to look at it. Seriously, just chill and accept that people don't always see eye to eye. My opinion doesn't mean I'm right or that you are wrong
I do indeed yes and will be extremely surprised if they get anywhere near 5 million for it I am currently working on a care home on the Wirral 93 bedrooms, new build, currently let on a long term fri and a decent covenant: the investing fund is purchasing it for 4.3 once the vendor has spent 900,000 on remedial works and maintenance issues. I'm not de-ramping. I am giving a view from a different perspective. 5 million is way off: 17 rooms and 2 shops. Come on
hahaha Boom I work with housing associations In fact, one in Liverpool is going into administration as we speak I don't need to research and please don't treat me like a troll The deal isn't as good as they are saying on the RNS. They will never get 5 million for it. That's a fact It is a buy at these levels because its down another 10% Only fool here is you. I've seen it all before. If they get a deal on a property in a decent area, bigger size and a stronger covenant then they will fly Simple
Mate seriously, I don't want to go around in circles again but the deal is not as good as it looks 5 million re-sale value? come on The problems I see with this deal are as follows: Location: Tuebrook, Liverpool. Not a great area for built asset value: FACT Covenant Strength: Larch Housing Association are not a strong covenant: FACT These factors are assessed when purchasing the leasehold interest in anything 3 million is a better valuation based on the above and the rental income. That's just my opinion.
Yeild will no doubt be effected by rental income, covenant strength, lease structure and more I'm a huge fan of these deals. All I'm saying is I need to know more about the deals before I get interested If the first deal brings 6.5% yeild then it's a strong buy
4.5% yield from an investment is 4.5% yield. Regardless of the size it's 4.5% relative yield If an institution pays 1,000,000 for the interest their return would be 40k If they spent 2,000,000 it would be 80k It's all relative to expenditure. I'm not bashing DKE I am trying to understand their strategy With the sale lease backs I work on the yeilds are much greater and Paul himself has said "these deals are too small for the top end" Have a look at the Tesco deals and look at their yeild ratio. Much greater For the record I am not invested yet but if the first deal looks good I shall consider All about opinions. I just have a few queries that's all As for Steffans comments: nowhere does it say that 4.5% will be realised in any case yet alone on several properties
4.5% yield is not as great as you lot clearly think. Secondly, this is "as high as" it could be. How can you assume the lease clauses will be in favour of DKE! Seriously I've dealt with these deals on behalf of household names and leasecauses are very rarely "in favour" of the landlord in such a scenario. DKE can't have everything their own way But a free hold, lease it out at a good yield, sell for a good return, lease it back for a old yield and then be assured the freehold at the end of the term "Christ"
completely agree and I appreciate what you say. However DKE's ultimate business plan is to sell/lease back thus relinquishing their ownership of said asset. So all they become is an incumbent tenant with a pot of cash in their pocket (yield differential) Paul Gazzard says the yield from each transaction could be as high as 4.5%..... that's not something an institution will even bother to look at. so who is he selling the yield to? He also says they then plan to re-purchase the free hold of the property once their 30 year lease comes to an end.... what???? is this a guaranteed framework? It just doesn't add up I need to speak to Paul
To see more detail on how the deals are to be put together. Without divulging too much information: this is my day job. I acquire, develop and manage built assets and land so I know what I am talking about. The sale/lease back transaction is particularly lucrative if the Lease agreement is set out in a particular way. This is one of the things that made Tesco a multi billion pound outfit. So in short, DKE will aim to acquire the freehold interest in a given asset. They will then draft a lease (30 years is the nominal figure given) and then sell said property to an institution..... and lease it back My problem is this: As a public company (with shareholders) it is a strength to have tangible assets that a value can be set against. Almost collateral or equity. We see many mining companies using their asset value to prop up their share price. Once DKE leases back their asset they no longer own it and so it cannot be used in any sort of valuation. My worry is that such a business strategy will make it exceptionally difficult to value the company. Unless DKE has 50-100 deals lined up from which they take some sort of kick back, their asset portfolio will be relatively small. (correct me if I am wrong here) Finally, theres no mention of what happens during or after the lease term: Are DKE subject to a guaranteed lease renewal at a set price? or are the lease agreements terminated leaving DKE subject to particularly large dilapidations claims? during the lease is there a break clause? is the rent set for a given period of time or are rent reviews open to market rate? A lot of questions to fathom before this is a strong investment IMO