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McKay Secs. (MCKS) the next to look anomalously cheap

SKYSHIP
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McKay Secs. (MCKS) the next to look anomalously cheap

#378615

Postby SKYSHIP » January 19th, 2021, 3:43 pm

We've seen some good rises across the board in the REITs space. Accordingly the commonplace discounts of c35%+ have been substantially reduced.

SREI have risen to 40.5p, so the discount reduced to 30.2%

SLI have risen to 61.3p, so the discount reduced to 22.2%

EPIC have risen to 67.5p, so the discount reduced to 21.5%

etcetcetc

Two now offering standout value could be the office specialists CLI & MCKS.

MCKS on offer at 202p remain on a 35.5% discount; whilst their portfolio has been substantially de-risked with last year's excellently timed sale of their Lombard Street property in The City. Their LTV has been reduced to 29.5%; their debt cost is 3.3% and they have cash for attractively priced assets as Covid works through.

The chart looks good too; so I've taken a few on board at 202p.

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Re: McKay Secs. (MCKS) the next to look anomalously cheap

#378780

Postby flyer61 » January 20th, 2021, 8:33 am

Thanks Skyship.....have had a look and joined you.

MDW1954
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Re: McKay Secs. (MCKS) the next to look anomalously cheap

#378993

Postby MDW1954 » January 20th, 2021, 4:38 pm

Skyship, for those of us seeing value and income in REITs, the last few years have been remarkable. The 2016 referendum, the soggy economy in 2018, Covid-19 in 2020 -- REITs have been beset on many fronts, and I have been stuffing them into my ISA-based HYP and SIPP. Your call on RGL and SREI was spot-on: well done.

MCKS is not a REIT that I'm familiar with, but I'll certainly be taking a look.

Glorious article in the FT yesterday. Not so long ago, the conventional wisdom was that BBOX, PHP, EBOX, ASLI, WHR, CREI, LXI etc were almost uninvestable -- now the so-called smart money is piling in.

MDW1954

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Re: McKay Secs. (MCKS) the next to look anomalously cheap

#379242

Postby SKYSHIP » January 21st, 2021, 10:05 am

Hi MDW - MCKS often overlooked . Used to be on account of their size; but now larger than many peers and the same size as SREI.

"Glorious article in the FT yesterday. Not so long ago, the conventional wisdom was that BBOX, PHP, EBOX, ASLI, WHR, CREI, LXI etc were almost uninvestable"

Hope the FT didn't say that as totally incorrect.

Personally I feel that on valuation grounds the logistics players are over-priced; and some of them uninvestable on that basis.

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Re: McKay Secs. (MCKS) the next to look anomalously cheap

#379297

Postby GrahamPlatt » January 21st, 2021, 12:10 pm

I’ll just throw this into the mix for consideration: SERE – Schroder European Real Estate Investment Trust
It’s a slightly smaller outfit, presently has a woefully low dividend (though wishes to target 5.5%), and isn’t trading as low against book value as MCKS, but it’s more profitable and has much lower gearing. Certainly has better “numbers” than BOXE.

Moderator Message:
For those who didn't know (me included), BOXE is the euro-denominated version EBOX, which I hold. Clarification in this mod box posted at the suggestion of the OP. --MDW1954

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Re: McKay Secs. (MCKS) the next to look anomalously cheap

#379344

Postby MDW1954 » January 21st, 2021, 1:37 pm

SKYSHIP wrote:Hi MDW - MCKS often overlooked . Used to be on account of their size; but now larger than many peers and the same size as SREI.

"Glorious article in the FT yesterday. Not so long ago, the conventional wisdom was that BBOX, PHP, EBOX, ASLI, WHR, CREI, LXI etc were almost uninvestable"

Hope the FT didn't say that as totally incorrect.

Personally I feel that on valuation grounds the logistics players are over-priced; and some of them uninvestable on that basis.


No: the FT was saying that investors were piling into BBOX etc. The uninvestable comment was mine, going back several years. And until quite recently on the HYP board, every time I suggested BBOX and similar. The mood there has changed now, to be sure, given the strong rent collection that the majors have been seeing.

I agree with your comment about over-priced: I'm up 35% on BBOX. The fundamentals haven't changed that much.

MDW1954

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Re: McKay Secs. (MCKS) the next to look anomalously cheap

#393597

Postby SKYSHIP » March 8th, 2021, 12:11 pm

MCKS make a very welcome announcement today; and the sp rises 6% accordingly. We've seen over recent months how an oversold, undervalued REIT trading at a large NAV discount can respond to share buyback activity - RLE, SLI & SREI have all done well on the news.

MCKS at the improved 210p still trade on a 32.9% discount to the Sept'20 NAV of 313p; so I would expect further gains...

======================

Share buy-back programme

McKay Securities Plc ("McKay" or "the Company"), the only UK REIT specialising entirely in the South East and London office, industrial and logistics markets, today announces the launch of a share buy-back programme (the "Programme").

As set out in the Company's interim results for the six-month period to 30 September 2020, the successful disposal of 30 Lombard Street, EC3 contributed to the reduction of the Company's LTV to 30.3%. Since then, the Board has maintained a strong balance sheet position in response to the economic and market uncertainty resulting from the Covid-19 crisis, covered in more detail in a separate Trading Update also issued today.

However, with improving visibility of market conditions and business progress, the Company's current substantial discount to net asset value means that the Programme offers the potential to make market purchases at a price or prices that the Company believes will be value enhancing.

Taking these factors into account, the Board has set the total size of the Programme at up to GBP10.0 million, or approximately 5% of the Company's issued ordinary share capital. The Company has appointed Stifel Nicolaus Europe Limited ("Stifel") to execute purchases of shares under the Programme under its instructions.

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Re: McKay Secs. (MCKS) the next to look anomalously cheap

#398445

Postby brightncheerful » March 23rd, 2021, 9:18 pm

MCKS currently yields 3.56% whereas TRY yields 3.66%. MCKS trades at 32.9% discount whereas TRY at 8%.

Amongst the differences are that MCKS's discount is to its own portfolio whereas TRY's discount is to the numerous prop cos in which TRY owns shares which themselves are at a discount.

It will be interesting to see or experience which of the two performs better as yields harden again and 100% of the rent roll is received.

Moderator Message:
In the second para, "MCKS's dissent" corrected to "MCKS's discount" -- MDW1954

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Re: McKay Secs. (MCKS) the next to look anomalously cheap

#398952

Postby SKYSHIP » March 25th, 2021, 4:11 pm

Shouldn't really seek to compare MCKS with TRY for the simple reason that MCKS is 100% UK-invested; whereas, as I'm sure you must know, TRY is 66% invested in continental Europe.

Further strength in the £ would be a concern for TRY, which incidentally, does not hedge the currency.

A second incidentally, 19% of the TRY UK portfolio is held in direct property, not in listed stocks.

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Re: McKay Secs. (MCKS) the next to look anomalously cheap

#399020

Postby MDW1954 » March 25th, 2021, 8:16 pm

SKYSHIP wrote:Shouldn't really seek to compare MCKS with TRY for the simple reason that MCKS is 100% UK-invested; whereas, as I'm sure you must know, TRY is 66% invested in continental Europe.

Further strength in the £ would be a concern for TRY, which incidentally, does not hedge the currency.

A second incidentally, 19% of the TRY UK portfolio is held in direct property, not in listed stocks.


Agreed. Really not comparable.

MDW1954


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