The Lemon Fool

monabri wrote:
I had a look through the last PHP annual report and it reports NAV figures applicable at the point when the report was compiled...the issue for me (and I stress, "for me") is making sense of what the report was saying as it stated basic NAV, adjusted NAV, diluted NAV... Hence, I'm no wiser.

However, for me, the attraction of investing in PHP might lie in the yield and the dividend growth rate. However, I didn't invest there because, when funds were available, I placed them instead in an Investment Trust (Law Deb) which had a similar (slightly higher) yield and I deemed was unlikely to undergo a Covid dividend cull/cut. At the time, LWDB was "on offer" in HYP P parlance (..it's usually on offer Mon-Fri 0800 to 4:30pm ).

Arborbridge wrote:ITs and REITs can have P/Es quoted too - usually the average of the companies they have invested in.


Not sure if that's relevant....

Arb.

Dod101 wrote:

Arborbridge wrote:ITs and REITs can have P/Es quoted too - usually the average of the companies they have invested in.


Not sure if that's relevant....

Arb.

Well they are often different beasts. ITs are invested in a collection of other companies whereas REITs are often simply a property company which conforms to certain requirements to become a REIT. See for instance B Land, Land Securities and PHP to name but three.

Dod

Arborbridge wrote:

Dod101 wrote:

Arborbridge wrote:ITs and REITs can have P/Es quoted too - usually the average of the companies they have invested in.


Not sure if that's relevant....

Arb.

Well they are often different beasts. ITs are invested in a collection of other companies whereas REITs are often simply a property company which conforms to certain requirements to become a REIT. See for instance B Land, Land Securities and PHP to name but three.

Dod

Well, it has often been pointed out that the IT part of "REIT" is really a misnomer. But, both types of company or fund, can quote a PE, I believe.

PoorPhil wrote:I've been watching PHP too, looking for an attractive entry point. I agree it's not as easy as some REITs to see the premium/discount, and agree it's still looking pricey although the forward dividend yield is now at ~4.7% on the current SP. It's not a risk free investment, and with inflation running at a similar level to the dividend, I think the SP has further to drop before the yield increases to the point it's compensating for the risks.
What dividend yield would you see as representing fair value for the investment risks?

BullDog wrote:

PoorPhil wrote:I've been watching PHP too, looking for an attractive entry point. I agree it's not as easy as some REITs to see the premium/discount, and agree it's still looking pricey although the forward dividend yield is now at ~4.7% on the current SP. It's not a risk free investment, and with inflation running at a similar level to the dividend, I think the SP has further to drop before the yield increases to the point it's compensating for the risks.
What dividend yield would you see as representing fair value for the investment risks?

Thanks. I would be pretty interested if at least another 10% comes off the premium to NAV. Given the quality of the income, I might break my rule of never paying a premium to NAV. So, if the NAV stays constant and the premium unwinds to the point where yield is >5% I might be clicking the buy button. But I would have to sell something first. Given I have recently sold out of Unilever, there's no obvious sell candidate in my portfolio. Possibly SDRC would be sold.

monabri wrote:

BullDog wrote:

PoorPhil wrote:I've been watching PHP too, looking for an attractive entry point. I agree it's not as easy as some REITs to see the premium/discount, and agree it's still looking pricey although the forward dividend yield is now at ~4.7% on the current SP. It's not a risk free investment, and with inflation running at a similar level to the dividend, I think the SP has further to drop before the yield increases to the point it's compensating for the risks.
What dividend yield would you see as representing fair value for the investment risks?

Thanks. I would be pretty interested if at least another 10% comes off the premium to NAV. Given the quality of the income, I might break my rule of never paying a premium to NAV. So, if the NAV stays constant and the premium unwinds to the point where yield is >5% I might be clicking the buy button. But I would have to sell something first. Given I have recently sold out of Unilever, there's no obvious sell candidate in my portfolio. Possibly SDRC would be sold.

Debt free SDRC with 43% of the shares family owned, 7% owned by Lindsell Train Ltd (we know N.Train's positive views on SDR) and another 5% held by the employee share scheme & Schroders Investment mgt Ltd. Hopefully they will be successful with their JV with BOCOM.

viewtopic.php?p=478499#p478499

Disclosure.."topped up" SDRC last week....but going off topic!.

BullDog wrote:

simoan wrote:Oh I forgot to mention, there's also £150m of convertible bonds due in 2025.

Hmmm. I think at a ~25% premium, those folks fishing for yield are going to increasingly find paying 125p for 100p of assets yielding ~4.5% quite a bit less attractive. Myself, I think the premium may well unwind here quite a bit more, even if NAV stays level. Of course, I may well be completely wrong about that. I won't pay a premium, that may be colouring my judgment.

Good call on the convertibles, that's going to cost a lot more to refinance in 2025 if it's not repaid. Having said that, how many folks look three years down the road?

simoan wrote:

BullDog wrote:

simoan wrote:Oh I forgot to mention, there's also £150m of convertible bonds due in 2025.

Hmmm. I think at a ~25% premium, those folks fishing for yield are going to increasingly find paying 125p for 100p of assets yielding ~4.5% quite a bit less attractive. Myself, I think the premium may well unwind here quite a bit more, even if NAV stays level. Of course, I may well be completely wrong about that. I won't pay a premium, that may be colouring my judgment.

Good call on the convertibles, that's going to cost a lot more to refinance in 2025 if it's not repaid. Having said that, how many folks look three years down the road?

The point I was making about the convertibles is that they ultimately convert into shares which will further dilute the NAV per share in the future. The bond conversion price is regularly being reduced to ensure the bond holders don't lose out. Here's the most recent announcement: https://www.investegate.co.uk/primary-h ... 00025517R/

Personally, I don't see the attraction of holding this company in an inflationary environment with rising interest rates, in the same way I have no interest in holding infrastructure funds or bonds. That is why the market is taking the share price down. I suspect the institutions selling know a lot more than I do about the forecast NAV. At least with bonds the underlying value of the bond is transparent. With REITs it is almost impossible to know what the NAV is at any point, particularly in the case of PHP with the regularity of their acquisitions and share issuance (number of shares in issue has doubled in the last 4 years). And now rising interest rates will also affect the discount rate used in the DCF calculation of NAV. I just can't invest in something which I can't value. Comparing it to other REITs holding very different types of property is a nonsense. I also don't like that PHP never disclose the Net Initial Yield of their acquisitions. That doesn't seem very transparent to me and makes me suspicious.

All the best, Si

12 September 2022
The FCA publishes disclosable short positions on UK stocks each day. A few closed-end funds appear on the list which makes for interesting reading.
The pound is sliding. This is hardly surprising given the state of the nation’s finances and the apparent sprouting of a magic money forest to fund tax cuts and energy price subsidies. Against this backdrop, I find it hard to be positive on the outlook for the UK market and it seems as though many investors agree as the UK is said to be the most shorted major market currently.

The FCA publishes a list of disclosable short positions on UK stocks each day and it makes for interesting reading. This article is based on the position at the close of business on 7 September.

The investment companies sector is not much affected by investors betting on a fall in target share prices, however a handful of names crop up.

Primary Health Properties (PHP ) seems a bit more unloved, with a 3.1% short position. It is trading on a sizable 12.6% premium to its 30 June adjusted net tangible assets per share. That alone might be the reason. However, investors may also be looking at the net initial yield on its portfolio of 4.57% and wondering whether this might start to rise (putting downward pressure on the NAV) in an environment of rising interest rates.

The company has a loan to value (LTV) ratio of 43%, equivalent to conventional gearing of 75%. At the end of June, the weighted average cost of PHP’s debt was 3%. Happily, 95% of that is on fixed or hedged terms for a period of just under eight years. A falling NAV would see the LTV ratio climb, but PHP says it is happy to operate with an LTV ratio of up to 50%.

Notification of dividend increase

Primary Health Properties PLC

("PHP" or the "Company")
Notice of Interim Dividend
and
Launch of Dividend Reinvestment Plan

The Company announces that the first quarterly interim dividend in 2023 of 1.675 pence per ordinary share of 12.5 pence each will be paid as to 1.34 pence by way of a Property Income Distribution ("PID") and the remainder as an ordinary dividend on 23 February 2023 to shareholders on the register on 13 January 2023. 

richfool wrote:As a existing holder of PHP, whose holding is well in the red, I took the opportunity to top up this week before the notification of the first (increased) dividend for the new year, - this morning/below. The SP has been creeping up. I now have to watch to see how the NAV changes.

Ex Dividend Date: 12/01/23
Paid: 23/02/23.

Notification of dividend increase

Primary Health Properties PLC

("PHP" or the "Company")
Notice of Interim Dividend
and
Launch of Dividend Reinvestment Plan

The Company announces that the first quarterly interim dividend in 2023 of 1.675 pence per ordinary share of 12.5 pence each will be paid as to 1.34 pence by way of a Property Income Distribution ("PID") and the remainder as an ordinary dividend on 23 February 2023 to shareholders on the register on 13 January 2023. 

https://www.investegate.co.uk/primary-h ... 00067235L/

richfool wrote:As a existing holder of PHP, whose holding is well in the red, I took the opportunity to top up this week before the notification of the first (increased) dividend for the new year, - this morning/below. The SP has been creeping up. I now have to watch to see how the NAV changes.