Cheap REITs

[stevensfo]

Do you mean Tritax EuroBox (BOXE.L) ?

Steve

Tritax EuroBox has two listings: EBOX, quoted in pounds, and BOXE, quoted in euros.

Some brokers deal in one, some in the other, and some deal in both.

MDW1954

Thanks a lot for the explanation.

I could not find EBOX in Interactive Investor and assumed the EPIC was a mistake. Then I found BOXE.

So ii offers the euro version, but not the sterling. Strange.

Steve

[BullDog]

Tritax EuroBox has two listings: EBOX, quoted in pounds, and BOXE, quoted in euros.

Some brokers deal in one, some in the other, and some deal in both.

MDW1954

Thanks a lot for the explanation.

I could not find EBOX in Interactive Investor and assumed the EPIC was a mistake. Then I found BOXE.

So ii offers the euro version, but not the sterling. Strange.

Steve

Indeed. I have no idea why II is like that. I was going to message them and ask to have it added to their trading system. Just haven't got around to it. I really do not want to have foreign currency holdings or dividends in my II account. But I would be interested in EBOX were it available at II. They have been very helpful in the past when I've asked similar things.

[Dod101]

I have always specialised in the REIT sector. As I state in the Header to the CP+ thread, the commercial property thread over at ADVFN:

“The commercial property sector can provide rich pickings for VALUE investors prepared to spend a little time analysing the principal metrics of Yield, NAV discount and LTV; then delving into the detail of financing, tenant mix, lease lengths, sector spread, geographical spread.
The sector can be a profitable and to a degree a predictable sector to trawl – provided you can call the savage bear markets that can and do overtake the sector from time to time!
It is a sector relatively immune to the conventional trading company risks of competitor action, margin erosion, contract losses and all the other routine and unpredictable problems that so beset industrial companies.”

Well, since Q3’22 the sector has endured one of those savage bear markets, though on this occasion steep but mercifully short. The sharp increase in interest rates rapidly undermined valuations as surveyors found a sudden lack of transactional activity upon which to base their estimates. Due to the political and economic upheavals in H2’22, they valued in seemingly over-cautious mode.

The CPRE monthly stats and the Q1’23 NAV valuations so far revealed, suggest we have turned the corner and NAVs are improving, with sentiment suggesting more to come throughout ’23.

Personally I won’t touch the quasi residential sector suggested above; but I find plenty of value elsewhere:

# API – 55.5p – Discount 34.6% - Yield 7.21%
# EBOX – 64.9p – Discount 46.8% - Yield 6.81%
# SERE – 83.4p – Discount 29.3% - Yield 7.85%
# SREI – 46.65p – Discount 24.8% - Yield 7.02%

The two middle ones both have their portfolios in continental Europe. One has almost the highest discount in the sector; one almost the highest yield.

Mark88man - might I suggest you start your research with those two. There are excellent Presentations available on both - see the relevant ADVFN threads.

If you specialise in the REIT sector, I defer to your presumably better knowledge than I have but are surveyors not valuing most REITs on DCF?
If so then to a large extent valuations are almost dictated for them by the level of interest rates. Maybe you can clarify that?

Thanks

Dod

[SKYSHIP]

Dod - they use both; but transactional activity to confirm valuations based upon DCF. Hence the problem in Q4'22 with over-low valuations derived in the main from DCF during an interest rate spike.

[Dod101]

Dod - they use both; but transactional activity to confirm valuations based upon DCF. Hence the problem in Q4'22 with over-low valuations derived in the main from DCF during an interest rate spike.

Thanks. At least DCF produces a sort of consistency. Basing valuations on transactional activity can simply produce a spiral in either direction. These days what bothers me slightly is the cost of debt for some REITs and of course with much of it at a fixed cost for a term, we need to take a view on the cost when the REIT comes to renew it (because unless selling something many do not have the opportunity to accumulate much capital to pay it off)

Dod

[airbus330]

If it's high yielding ( a consequence of sp) you're looking for, then the following might be of interest:

Target Healthcare REIT
Civitas Social Housing REIT
Triple Point Social Housing REIT

Each specialises in asset categories such as care homes, social housing and such like.

Because the roroperties are out of the ordinary they tend to be ignored by most buyrers but actually they have a lot more going for them, For example, long leases which compares very favourably with standard commercial property leases which nowadays is on short / shorter leases. Mostly if not all the rents are index-linked (some with cap and collar) or fixed uplifts.

Currently, the three I've mentioned sps are at 40-50% of the NAV.

DYOR

Positive update from Target today
https://www.voxmarkets.co.uk/rns/announ ... 4e3eb8041/

[airbus330]

Civitas CSH up 42% this morning after a positive TU. Sadly I read it to late too take advantage

[BullDog]

Civitas CSH up 42% this morning after a positive TU. Sadly I read it to late too take advantage

It was only a matter of time before the bottom trawling started. A shame it's foreign money but all the same the bottom has been called now for social housing portfolios. SOHO up in response.

[airbus330]

Civitas CSH up 42% this morning after a positive TU. Sadly I read it to late too take advantage

It was only a matter of time before the bottom trawling started. A shame it's foreign money but all the same the bottom has been called now for social housing portfolios. SOHO up in response.

TBH with the bid and the next divi I'll be happy to walk away from this sector with a small profit. Easier and safer ways to make income atm. Be nice if a competing bidder enter the fray

I bet people are looking closely at SOHO now.

[brightncheerful]

Best wishes to anyone that agreed with me

[SalvorHardin]

The regional REITs are going to run into a big problem as the laws regarding energy performance certificates (EPC) come into force in 2030. Buildings taking on new tenants after 2030 must be in categories A or B (the top two of six categories), which will require a lot of work with older buildings suh as installing new boilers, improved insulation, triple glazing, etc.

This point was raised by Marcus Phayre-Mudge, manager of TR Property Investment Trust, on the Money Matters podcast of last 15th April (link below). The cost of improving many buildings to obtain an EPC will dramatically cut the profitability of many buildings in secondary and tertiary locations.

The building where the interview was conducted was in London's West End where the rent was about £65 per square foot, compared to Hartlepool at around £8 to £12 per square foot. The cost of improvements isn't much higher in London than Hartlepool, so the costs of complying with the EPC will be far worse for secondary and tertiary buildings ("the landlord's gonna have to spend the money but isn't going to be able to push the rent up"). This part of the discussion starts at 31 minutes 20 seconds.

https://money-makers.co/2023/04/15/money-makers-podcast-15-apr-2023/

https://en.wikipedia.org/wiki/Energy_Performance_Certificate_(United_Kingdom)

[Gerry557]

It might not be cost effective but that then leads to different problems. I read recently about a landlord evicting his tenant. She was in her eighties and had lived there 60 odd years. She wanted to stay, the landlord wanted her to stay but the new rules said no!

I think they spend thousands trying to comply before finally throwing in the towel. So in this case it looks like everyone is a looser.

Multiply this out and I can see why there will be more shortages. This might push up prices and rents. Enough to knock down and rebuild???

Another reit I own say that the situation is being managed by recycling and or capital spending. The former just passes on the problem. Holding centers for economic migration types maybe? Cheaper than real houses and hotels. Well for the summer anyway. Will have to chuck em on the street in winter as the property will be too cold and difficult to heat.

[flyer61]

I would add that many of these super long term tenants (Regulated tenancies) do not like change. When you mention we may want to do work on the house invariably they don't want anything doing. Families also making it clear they don't want mum disturbed.

The new regs are going to cause all sorts of unforeseen problems.

[airbus330]

After hours RNS announced a bid on another bombed out REIT this evening. HOME reit has rejected the offer apparently.

[BullDog]

It was only a matter of time before the bottom trawling started. A shame it's foreign money but all the same the bottom has been called now for social housing portfolios. SOHO up in response.

TBH with the bid and the next divi I'll be happy to walk away from this sector with a small profit. Easier and safer ways to make income atm. Be nice if a competing bidder enter the fray

I bet people are looking closely at SOHO now.

Hmmm. How's the crystal ball? A couple of very good days for SOHO share price. No news from the company. Someone out there knows something?

[airbus330]

TBH with the bid and the next divi I'll be happy to walk away from this sector with a small profit. Easier and safer ways to make income atm. Be nice if a competing bidder enter the fray

I bet people are looking closely at SOHO now.

Hmmm. How's the crystal ball? A couple of very good days for SOHO share price. No news from the company. Someone out there knows something?

Nowt happening that I can see, but TBH, I'm out of this area of REIT now. Should have known not to get involved in trying to profit from social housing, which should be the governments responsibility.

[SKYSHIP]

I see that back in April I fancied these as cheap REITs. They seemed good value then; but now oversold, much cheaper & great value. The dividends in the 3 still recommended are totally secure.

APRIL:
# API – 55.5p – Discount 34.6% - Yield 7.21%
# EBOX – 64.9p – Discount 46.8% - Yield 6.81%
# SERE – 83.4p – Discount 29.3% - Yield 7.85%
# SREI – 46.65p – Discount 24.8% - Yield 7.02%

JULY:
# API – 48.3p – Discount 41.4% - Yield 8.28%
# EBOX – 51.5p – Discount 43.6% - Yield 8.43%
# SERE – 80.0p – Discount 29.4% - Yield 6.36%...no longer recommended
# SREI – 40.25p – Discount 34.6% - Yield 8.31%

[BullDog]

I see that back in April I fancied these as cheap REITs. They seemed good value then; but now oversold, much cheaper & great value. The dividends in the 3 still recommended are totally secure.

APRIL:
# API – 55.5p – Discount 34.6% - Yield 7.21%
# EBOX – 64.9p – Discount 46.8% - Yield 6.81%
# SERE – 83.4p – Discount 29.3% - Yield 7.85%
# SREI – 46.65p – Discount 24.8% - Yield 7.02%

JULY:
# API – 48.3p – Discount 41.4% - Yield 8.28%
# EBOX – 51.5p – Discount 43.6% - Yield 8.43%
# SERE – 80.0p – Discount 29.4% - Yield 6.36%...no longer recommended
# SREI – 40.25p – Discount 34.6% - Yield 8.31%

Thanks SKYSHIP. Appreciated.

[Gerry557]

The worry is the next table might show bigger discounts and lower share prices.

I suppose shares often over swing both up and down. It may take a while before the constant high dividends flowing, many of which are upward rated because of rent reviews, kick in and cause a re-rating.

Anyway I added another tranche of SREI last week. Compounding that 8% over time will hopefully do the trick.

Eventually the ship will steady. Property prices will stabilise. Reading about some of the recent sales elsewhere it seems they are holding up and management at SREI seem to have read the ground ahead well.

I was interested to here their comments on Epic and potentially some sort of deals. Maybe we won't have to wait too long to find out the fate of EPIC.

[richfool]

I can't say I see any upside to property REIT's until interest rates have reached the top and rate cuts are visible.

In the meantime I have hung on to my holdings of: API, EPIC (!), PHP and WHR., all in significant negative territory.

I have stayed away from social housing and offices where possible. A few months back, I topped up PHP and WHR, though they have still continued to fall, no doubt due to the continued rise in interest rates..