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API wind-down?
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- 2 Lemon pips
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API wind-down?
How will abrdn property (API) be wound down?
I assume that they'll have a meeting which will have a predictable outcome given the recent vote.
Do they then sell off their properties and eventually pay off the shareholders?
I assume that this will be a protracted process?
The last wind down I had was simply the HDIV to HHI conversion.
Many thanks in advance for enlightenment.
I assume that they'll have a meeting which will have a predictable outcome given the recent vote.
Do they then sell off their properties and eventually pay off the shareholders?
I assume that this will be a protracted process?
The last wind down I had was simply the HDIV to HHI conversion.
Many thanks in advance for enlightenment.
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- Lemon Slice
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Re: API wind-down?
I’m assuming a positive vote for a wind-down, which in my mind is pretty near certaint, especially as only a 50% vote required.
Accordingly been running some numbers:
# Q4'23 NAV = 78.5p
# Disc. by, say, 2% for Q1'24 NAV = 76.9p
# Disc by, say, 7% for portfolio liquidation = 71.5p
Add back reducing EPRA earnings over the liquidation timetable, say, 3.5p (pretty conservative figure that!)
# That would deliver 75p in, say 2yrs; and that would deliver a GRY from the current 49.3p of 23.33% pa
IMO the worst possible outcome might be 70p in 2.5yrs for a GRY of a still acceptable 15% pa
Now, one has to note what the BoD stated c1month ago when trying to persuade shareholders to accept the CREI bid:
"The API Board expects that the net disposal values that would be realised in a Managed Wind-Down would be lower than those achievable on carefully selected individual assets marketed by API in the ordinary course of business - such as API's current programme of disposals to reduce floating rate debt. The API Board's expectations have the benefit of input from API's investment manager and API's independent advisers."
But IMO that was a load of fluff. Perhaps some truth in it; but my 7% discount, ie c£20m write off from accelerated sales, should be quite enough for the highly competent investment manager Jason Baggaley to improve upon!
As to the effect of early pay-outs from likely compulsory redemptions; say:
# 35% 31/03/25
# 25% 30/09/25
# 37% 30/06/26
# 3% 30/09/26
That would deliver an average of cOct'25. EPS slightly less, so say total pay-out 74p rather than 75p. GRY would be a startling 29.2%!
All guesswork; but there is certainly considerable upside to play for; which makes a vote for a wind-down an obvious choice.
Makes API a very attractive proposition down at these levels.
Interested to read others' sliderule/back-of-envelope meanderings over the weekend...
Accordingly been running some numbers:
# Q4'23 NAV = 78.5p
# Disc. by, say, 2% for Q1'24 NAV = 76.9p
# Disc by, say, 7% for portfolio liquidation = 71.5p
Add back reducing EPRA earnings over the liquidation timetable, say, 3.5p (pretty conservative figure that!)
# That would deliver 75p in, say 2yrs; and that would deliver a GRY from the current 49.3p of 23.33% pa
IMO the worst possible outcome might be 70p in 2.5yrs for a GRY of a still acceptable 15% pa
Now, one has to note what the BoD stated c1month ago when trying to persuade shareholders to accept the CREI bid:
"The API Board expects that the net disposal values that would be realised in a Managed Wind-Down would be lower than those achievable on carefully selected individual assets marketed by API in the ordinary course of business - such as API's current programme of disposals to reduce floating rate debt. The API Board's expectations have the benefit of input from API's investment manager and API's independent advisers."
But IMO that was a load of fluff. Perhaps some truth in it; but my 7% discount, ie c£20m write off from accelerated sales, should be quite enough for the highly competent investment manager Jason Baggaley to improve upon!
As to the effect of early pay-outs from likely compulsory redemptions; say:
# 35% 31/03/25
# 25% 30/09/25
# 37% 30/06/26
# 3% 30/09/26
That would deliver an average of cOct'25. EPS slightly less, so say total pay-out 74p rather than 75p. GRY would be a startling 29.2%!
All guesswork; but there is certainly considerable upside to play for; which makes a vote for a wind-down an obvious choice.
Makes API a very attractive proposition down at these levels.
Interested to read others' sliderule/back-of-envelope meanderings over the weekend...
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- Lemon Slice
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Re: API wind-down?
SKYSHIP wrote:
Makes API a very attractive proposition down at these levels.
Interested to read others' sliderule/back-of-envelope meanderings over the weekend...
I simply went 'worse case scenario' and lopped 20% of 31 Dec NAV and still got a return of over 11% per annum plus rental income net of expenses. Given that the majority of API's property is industrial or retail warehouse, I think the return will be much better than that.
Therefore I have started to accumulate on the basis that the winding up vote will go through.
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- Lemon Slice
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Re: API wind-down?
Agreed - even worst case scenarios post a very rosy outcome. Also Jason Baggeley has been thinking in wind-down mode for quite some time; and the many recent disposals evidence a pretty convincing start to the process.
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- Lemon Slice
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Re: API wind-down?
It is possible of course that the wind down process goes quicker as both CREI and SHED saw assets they would like to get their sticky mits on. There will surely be others......
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Re: API wind-down?
Will the payouts happen as special dividends (i.e. piecemeal)?
Or will it happen at the end as a final payout per share (slow and drawn out)?
Many thanks for all the answers.
Or will it happen at the end as a final payout per share (slow and drawn out)?
Many thanks for all the answers.
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- Lemon Slice
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Re: API wind-down?
ukmtk wrote:Will the payouts happen as special dividends (i.e. piecemeal)?
Or will it happen at the end as a final payout per share (slow and drawn out)?
Many thanks for all the answers.
I assume it would comprise a combination of special dividends followed by a final payout. However, the first step is shareholder approval for a wind-down to begin and that may not happen.
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Re: API wind-down?
I suspect that the big investors will force the wind down.
Much as they did voting against the merger.
Much as they did voting against the merger.
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- Lemon Pip
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Re: API wind-down?
ukmtk wrote:Will the payouts happen as special dividends (i.e. piecemeal)?
Or will it happen at the end as a final payout per share (slow and drawn out)?
Many thanks for all the answers.
I hope they do not do special dividends. Perhaps they could take a leaf out of DNE's book and do B share schemes or tender offers (assuming REITS can do those sort of thing).
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- Lemon Slice
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Re: API wind-down?
Yes, wind-down will be piecemeal with periodic B share redemptions.
Fallen back slightly, so now on offer at 50.8p. GRY likely range return of 17%-25%pa but
likely higher if an early redemption within the first 12months.
Very good value; so added today.
Fallen back slightly, so now on offer at 50.8p. GRY likely range return of 17%-25%pa but
likely higher if an early redemption within the first 12months.
Very good value; so added today.
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- Lemon Slice
- Posts: 453
- Joined: December 31st, 2019, 9:10 am
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Re: API wind-down?
API RNS update
Some highlights
- NAV 76.4p, down 2.2% from 31 Dec (ie at 52.4p today, shares are trading at 31.5% discount). Some of this reduction is due to 'takeover' costs
- vacancies steady at 7.9%
- exposure to office sector down to 15%
- wind down (if agreed) expected to take 18-36 months
https://www.londonstockexchange.com/new ... 4/16451345
Some highlights
- NAV 76.4p, down 2.2% from 31 Dec (ie at 52.4p today, shares are trading at 31.5% discount). Some of this reduction is due to 'takeover' costs
- vacancies steady at 7.9%
- exposure to office sector down to 15%
- wind down (if agreed) expected to take 18-36 months
https://www.londonstockexchange.com/new ... 4/16451345
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