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RDI REIT?

FredBloggs
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RDI REIT?

#113601

Postby FredBloggs » January 27th, 2018, 1:40 am

Continuing on something of a recent theme for me - Cash Cow investments to tuck away for the medium term -

I have been looking this morning at RDI REIT. A pretty diversified portfolio of property investments in the UK and Germany. NAV apparently around GBP 1.5 billion. The capitalisation is only around GBP 676 million. Is this really a > 50% discount to NAV? The forecast yield apparently is a stonking 7.32% on HL's website. The share price has gone nowhere in the lat ten years or so and is near to long term lows. Is this what it seems to me, a bargain income stream? Or is it a bear trap that I just can't see? Thanks for the input.

Image

Annual report -

http://www.fundslibrary.co.uk/FundsLibrary.DataRetrieval/Documents.aspx?type=sl.ra.full&id=2f04f05a-04bb-42b4-aaa7-fa0708ba3cac&user=hl_website_documents

SalvorHardin
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Re: RDI REIT?

#113621

Postby SalvorHardin » January 27th, 2018, 9:43 am

£1.5 billion is the approximate valuation of all its properties.

Net asset value (for the shareholders, I've removed the minority interests) as of 31st August 2017 was £740.2 million (accounts page 22)

NAV per share then was 41.4p (current share price is 35.4p)

http://www.rdireit.com/investors/results-centre.aspx

FredBloggs
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Re: RDI REIT?

#113627

Postby FredBloggs » January 27th, 2018, 10:01 am

SalvorHardin wrote:£1.5 billion is the approximate valuation of all its properties.

Net asset value (for the shareholders, I've removed the minority interests) as of 31st August 2017 was £740.2 million (accounts page 22)

NAV per share then was 41.4p (current share price is 35.4p)

http://www.rdireit.com/investors/results-centre.aspx

Thanks. So, value of portfolio minus borrowings then? I note that the last couple of years the dividend has fallen but the borrowing and the interest on the borrowing is falling and the dividend (as you'd expect in REIT) is covered. So, approx 6p discount to NAV, around 20%-ish. Still looks like cheap income to me. Though I am not exactly sure why the dividends have reduced the last couple of years, I guess that could be repeated. Which would mean, not so much of a bargain after all.

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Re: RDI REIT?

#113636

Postby Alaric » January 27th, 2018, 10:44 am

FredBloggs wrote:Though I am not exactly sure why the dividends have reduced the last couple of years, I guess that could be repeated. Which would mean, not so much of a bargain after all.


The Report and Accounts says something about aligning dividends to cash flow. With the experience of Carillion, that is presumably a good thing. Those investors who flee at the sight of a dividend cut may have depressed the share price. There again the collective wisdom of the market appears sceptical about the ability of the Company to maintain and increase its dividend.

The borrowings may be a cause for concern. If they hit a downturn in rents received, servicing the debt is going to be a first charge and the dividend payout could be hit by a geared effect. Like junk bonds then, the yield is high because of the potential risk of a cut, possibly forced by events outside the company's control.

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Re: RDI REIT?

#113638

Postby richfool » January 27th, 2018, 10:58 am

Fred, I know nothing of RDI.

Taking a quick look at the HL website, the most recent news item is about the disposal of a German retail property which reduced the REIT's leverage:

"RDI REIT completed the sale of its German retail property portfolio for €205m, which it will use to further reduce leverage and recycle proceeds into income-enhancing investments it has identified."

Their (HL's) brokers views consist of two. One says a "strong buy", the other "neutral".

http://www.hl.co.uk/shares/shares-searc ... rdinary-8p

I take the view that a higher yield represents a higher risk.

I hold: SLI, RGL & WHR in that sector (and have no plans to increase my holdings).

FredBloggs
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Re: RDI REIT?

#113642

Postby FredBloggs » January 27th, 2018, 11:27 am

Thanks for the commentary and feedback, much appreciated indeed. From the figures as I understand, the borrowings, the interest rate, the portfolio have all been under a realignment. The client base seems good, the leases long etc... I try to not look just at the positives, hence my posting here. On balance, it looks OK to me (but so did National Grid when it was 900p!). Thanks again.

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Re: RDI REIT?

#113859

Postby Mainwaring » January 28th, 2018, 6:42 pm

One of mine, bought in late last year anD topped up at 35p last week, averaging down! I think the weakness has something to do with the rebasing of dividends, ongoing tight dividend cover, and large South African shareholder/Johannesburg listing creates a little confusion [dspp edit: in case anyone is confused, note this share is also dual listed on JSEX exchange]. It’s a little different to simple landlord/fixed lease model as many of the hotel leases here are operating. I don’t know, but for example, I don’t think the Holiday Express leases are with Intercontinental, rather the franchisees, Gearing at 45/50% is quite aggressive here IMO, lumpy refinancing by 2021(?). However, I like the recent deals they are doing and they are accretive to NAV. The OSOT JV reported recently looks a good one and adds diversification in a growin* segment. The directors filmed a Jan 18 Webinar update available on their website* and ahead of End Feb YE, ....I was quite pleased with what they are doing. A couple of modest PDMR purchases tend to highlight insider confidence but don’t be persuaded by just one factoid, these buys are massively dwarfed by free share incentives on mysterious performance criteria. Not compelling, but I was happy to put some in my High Yield bucket. DYOR.

* http://www.rdireit.com/investors.aspx


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