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Regional REIT.

Spet0789
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Re: Regional REIT.

#258770

Postby Spet0789 » October 18th, 2019, 1:34 pm

ReallyVeryFoolish wrote:
Spet0789 wrote:
SKYSHIP wrote:SB - The RGL article (27th Sept. MoneyWeek) is a far better researched article than the positive, but over-simplistic and inaccurate piece in The Mail a couple of days earlier.

A very brief extract & a key para IMO:

"The best opportunities, CEO Stephen Inglis believes, are in offices, where capital values of GBP129/sq ft compare with replacement cost of GBP185-200. Rental growth of 5.2% in H1'19 from 39 new lettings was most marked in the office portfolio, where RGL is seeing growth for the first time in 12yrs. Moreover, returns since 2016 have been higher in regional cities than in London; and Inglis expects that to continue. Supply of office space in the regions is at a 12yr low."


Is replacement cost all that relevant?

If RGL owned a skyscraper office block built in the Outer Hebrides, it would cost a fortune to rebuild but if none of the sheep farmers want to rent the office space, it’s not worth much.

Taking the above example, I think it's important to recognise that RGL don't have a sky scraper office block out there. Because it is a very well run property company. The day that RGL decide they are going to do something like that, then that's the day I sell my overweight holding of RGL shares. (I am confident they won't do that, so I'll hold).


Err.... obviously not. There are no skyscrapers in the Outer Hebrides.

My point (which you seem to have missed) is that it may not be relevant how much a given property would cost to replace if no one wants to rent it.

richfool
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Re: Regional REIT.

#258775

Postby richfool » October 18th, 2019, 1:48 pm

spiderbill wrote:
SKYSHIP wrote:Richfool, thnx for the Intro to Simply Wall Street – thanks but no thanks really as it proved to be one of the most useless and amateurish financial websites.


I've read a number of their articles over the last few months but I gradually noticed that there were a lot of what I suspect are auto-generated passages and figures that reminded me strongly of the sort of useless rubbish which is produced in the seedier end of my industry (search engine optimisation) by automated audit reports. I strongly suspect that they are untouched by human hand and no longer pay any attention to them.
In this case I also wonder if they even know there's a difference in definition of REITs between the US and UK.

Skyship, thanks for your thoughts and figures.

Skyship & spiderbill, yes, after having read a number of Simply Wall Street "reports" on various stocks, I noted that they tend to use identical wording, with key figures or summarising comments inserted into the text. A little too automatic for my liking.

SKYSHIP
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Re: Regional REIT.

#258831

Postby SKYSHIP » October 18th, 2019, 5:31 pm

Spet - you ask whether replacement cost is all that relevant?

Sure is....and one has to understand the implication - which is as follows:

As long as there are existing properties on marketable valuations below replacement cost, then developers will not be building new properties.

If there is already a bit of a squeeze on supply, then the result is rising rents and rising valuations. It is 100% relevant to read the surveyors reports under the ASSET AND INVESTMENT MANAGERS' REPORT in the recent Interim report:

https://uk.advfn.com/stock-market/londo ... t/80693739

In the case of RGL the valuation figures are a full 30% below replacement cost; rents are more than holding up and on current valuations we still have a net initial yield on the portfolio of 6.1%, an equivalent yield of 8.3% and a reversionary yield of 9.0%.

The outcome. A covered dividend and further NAV growth.

RECOMMENDATION: Go overweight!

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Re: Regional REIT.

#258906

Postby SKYSHIP » October 19th, 2019, 7:43 am

As an addendum to my previous post; of course there is still new development. New prime site approvals, demolition and rebuild etc.

The point is that too wide a discount down to second-hand valuations serves to curtail development - not stop entirely.

jonesa1
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Re: Regional REIT.

#262035

Postby jonesa1 » November 4th, 2019, 3:06 pm


SKYSHIP
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Re: Regional REIT.

#264591

Postby SKYSHIP » November 15th, 2019, 4:23 pm

There was nothing new in this week's Trading Update - just further confirmation that all is going to plan.

Also going to plan is the sp - looking to close out the week at 108.9p...I imagine all here will be pleased with that!

https://uk.advfn.com/stock-market/londo ... i/81141131

ReallyVeryFoolish
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Re: Regional REIT.

#264680

Postby ReallyVeryFoolish » November 16th, 2019, 8:31 am

SKYSHIP wrote:There was nothing new in this week's Trading Update - just further confirmation that all is going to plan.

Also going to plan is the sp - looking to close out the week at 108.9p...I imagine all here will be pleased with that!

https://uk.advfn.com/stock-market/londo ... i/81141131

Indeed, I am delighted to be holding way too many RGL shares in my SIPP.

BusyBumbleBee
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Re: Regional REIT.

#264741

Postby BusyBumbleBee » November 16th, 2019, 1:45 pm

SKYSHIP wrote:There was nothing new in this week's Trading Update - just further confirmation that all is going to plan.

Also going to plan is the sp - looking to close out the week at 108.9p...I imagine all here will be pleased with that!
True, Skyship but :

~~ The SP is within a whisker of an all time high and
~~ the usual platitude of the board being confident of meeting their target of 8.05 pence for the full year is missing.

So, having made a nice profit on these, do I sell now or await the slightly larger final dividend due to be announced on 27th February?

The upside here seems only to be a penny or two but the downside could be closer to 10p with just the normal random SP movements and if I sell I can hpefully buy back at a lower price because this does seem to be a very well run REIT.

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Re: Regional REIT.

#264760

Postby SKYSHIP » November 16th, 2019, 3:01 pm

BBB:

# The f/c dividend for the current year is 8.25p

# I frequently top-slice an overweight position; and have done so on a number of occasions with RGL.

For the time-being however I will not do so because even at an sp equating to NAV (c114p) the yield here would still be 7.24%.

In the current low interest rate environment, what's not to like about RGL, especially when you consider that their office investments are valued at just £130/sq ft versus a replacement cost of c£200/sq ft!

Also, we need to remember that similar propco CREI consistently trades at a 10% PREMIUM; and issues new equity at that level. They’re on a yield of only 5.1%, so bizarre but true.

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Re: Regional REIT.

#264871

Postby ReallyVeryFoolish » November 17th, 2019, 12:59 am

Totally agree, SS. RGL remains a cornerstone income investment for me.

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Re: Regional REIT.

#265575

Postby jonesa1 » November 19th, 2019, 8:16 pm

https://masterinvestor.co.uk/funds-and- ... ld-of-7-5/

A positive article about RGL. Let's hope the anticipated Brexit clarity doesn't get replaced by Marxists dismantling the economy.


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