brightncheerful wrote:"During the year sales were completed on a further 142 properties at a combined gross sale price of £19.29 million, which was 1.9% under the aggregate of the valuations at the time the properties went under offer. Transaction costs for the sales were 4.7% of the prices achieved, reflecting the higher frictional costs of selling smaller lots. As a result, the net loss on sales after transaction costs was 6.6%. "
With the remaining properties having to be sold piecemeal (as distinct from a single portfolio), I should think that a combination of the below valuation plus transaction costs is likely to result in a net loss. The sp is probably up with events?
I wouldn't have thought their properties of particular interest except in the context of having been over-worked and with nothing to go for! The auction market isn't short of the sort of stock for which there's little or no investor appetite. I'd expect the leading auctioneers to be only interested in taking on the task if the reserves are rock-bottom.
IIRC from their disposal roadmap, they have been piecemeal selling off the "2nd rate" properties that were not the best, untenanted, not in the best of locations etc, so getting 1.9% below market value doesn't seem so bad at all. They've kept the best for the end, intending to sell them all off in one go if they can get a buyer, or at auction over the rest of 2018 otherwise. I thought with all the REITs that have popped up over the last year all with lots of cash to burn, they have a fair chance of off-loading them all quite quickly.
Even with a 6.6% loss if they sold the lot in the same way, that's still only 2p, so the NAV would end up as 39p - still a 30% premium. I imagine the sp is sitting low because its selling everything off and so not attracting attention, and also selling properties off at a bit of a discount so doesn't look like a peach at all.