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Regional REIT.
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- Lemon Half
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Re: Regional REIT.
I have two REITs, Segro SGRO and British Land BLND. They are two different animals, with SGRO concentrating on warehousing and BLND on offices and retail.
Two other distinct types are Primary Healthcare Properties PHP, which owns GP surgeries, and DIGS (can't remember the company name offhand) which is in student halls of residence.
They certainly behave differently from each other.
TJH
Two other distinct types are Primary Healthcare Properties PHP, which owns GP surgeries, and DIGS (can't remember the company name offhand) which is in student halls of residence.
They certainly behave differently from each other.
TJH
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- Lemon Slice
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Re: Regional REIT.
BrummieDave wrote:Thanks, and I'm just learning. I won't be buying until I understand a lot more.
There's nothing wrong with diversifying your investments with a REIT, but to put all your money into one.... Well I have done sorry high yield ZDP shares I can sell you...
The biggest problem with REITs is that you cannot get out of them if everyone else wants out too. This happened a while back, when property shares we dropping and investors panicked. As the shares are backed with property and not just made-up company valuations.
You are also at the vagaries of the property market. If all the East Europeans go home next year and the high street collapses under too high rents, too much shoplifting (as I hear the cops won't bother fur thefts under £200 now) and too much online purchases, then these REITs might find themselves falling and investors falling over themselves to get out.
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- Lemon Slice
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Re: Regional REIT.
BrummieDave
Investing into listed REITs/Propcos is a great asset-backed investment medium. Though a degree of skill/luck is required to miss the inevitable downturn, in the past usually associated with rising interest rates.
The key factors affecting valuations are:
# NAV
# Yield
# Geographical Distribution – London, SE, E. Anglia, SW etcetcetc
# Sector Allocation – Office, Retail, Warehouse or Industrial
# WAULT – Weighted Average Unexpired Lease Term
# Tenant profile
# LTV % - Gearing
The wonderful thing about this sector is that precise data is always available; and unlike Conventional Trading Companies (CTCs) you are unlikely to be affected by competitor action, regulatory change, margin erosion, technological change and all the other myriad trading aspects which can suddenly undermine the CTC’s profitability upon which valuations are based.
I hate paradigms; but for sure the current situation in the property sector is that all players without exception have been renegotiating their borrowings so as to lock in the current low interest rates for years to come. So a move to higher interest rates should not presage the type of cyclical falls we have seen historically. This was of course a major problem in 2007; aggravated in the example quoted by “thebarns” above, by weak tenancies in tertiary properties.
This Citywire interview with the CEO of CREI explains exactly why I believe the sector to be safe for income and growth – though personally I don’t own CREI as I will never buy a propco at an NAV premium! The margin twixt borrowing costs of 3.5% and regional yields of 8%+ has never been wider and more secure. RGL is a classic case; and a very good subject for your continued study:
https://tinyurl.com/ycyn8o3x
Investing into listed REITs/Propcos is a great asset-backed investment medium. Though a degree of skill/luck is required to miss the inevitable downturn, in the past usually associated with rising interest rates.
The key factors affecting valuations are:
# NAV
# Yield
# Geographical Distribution – London, SE, E. Anglia, SW etcetcetc
# Sector Allocation – Office, Retail, Warehouse or Industrial
# WAULT – Weighted Average Unexpired Lease Term
# Tenant profile
# LTV % - Gearing
The wonderful thing about this sector is that precise data is always available; and unlike Conventional Trading Companies (CTCs) you are unlikely to be affected by competitor action, regulatory change, margin erosion, technological change and all the other myriad trading aspects which can suddenly undermine the CTC’s profitability upon which valuations are based.
I hate paradigms; but for sure the current situation in the property sector is that all players without exception have been renegotiating their borrowings so as to lock in the current low interest rates for years to come. So a move to higher interest rates should not presage the type of cyclical falls we have seen historically. This was of course a major problem in 2007; aggravated in the example quoted by “thebarns” above, by weak tenancies in tertiary properties.
This Citywire interview with the CEO of CREI explains exactly why I believe the sector to be safe for income and growth – though personally I don’t own CREI as I will never buy a propco at an NAV premium! The margin twixt borrowing costs of 3.5% and regional yields of 8%+ has never been wider and more secure. RGL is a classic case; and a very good subject for your continued study:
https://tinyurl.com/ycyn8o3x
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- Lemon Slice
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Re: Regional REIT.
Thanks SKYSHIP - listened to that.
Also noticed your comment at the bottom of the printed transcript.
Also noticed your comment at the bottom of the printed transcript.
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- Lemon Quarter
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Re: Regional REIT.
I've noticed in a couple of articles I've read recently, that Prop Fund/IT Managers are talking about having reduced London exposure (significantly), are investing regionally (as with RGL) and investing in out of town warehousing as in local distribution centres (e.g WHR), and out of town retail.
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- Lemon Slice
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Re: Regional REIT.
Investors Chronicle have updated their opinion:-
With relatively low rents, Regional REIT’s portfolio offers significant reversionary value that will be crystallised over time as leases come up for renewal. The other attraction is the dividend, which yields over 7 per cent, and is fully covered by after-tax earnings. Trading at a discount to forecast net asset value, the shares are a must for income seekers. At 103p, buy.
With relatively low rents, Regional REIT’s portfolio offers significant reversionary value that will be crystallised over time as leases come up for renewal. The other attraction is the dividend, which yields over 7 per cent, and is fully covered by after-tax earnings. Trading at a discount to forecast net asset value, the shares are a must for income seekers. At 103p, buy.
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- Lemon Quarter
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Re: Regional REIT.
Thanks for that update Skyship. I did take advantage of the offer of additional shares at 101p. The dividend is certainly very healthy!
My holding of WHR is actually doing better (in terms of the SP) than my holding of RGL.
My holding of WHR is actually doing better (in terms of the SP) than my holding of RGL.
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- Lemon Pip
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Re: Regional REIT.
All makes good sense, folks.
The market doesn't appear to have awoken to the merits of the argument, however. By this I mean that the SP remains rangebound and has been for quite some time now, in spite of the good news story.
Any thoughts on why?
The market doesn't appear to have awoken to the merits of the argument, however. By this I mean that the SP remains rangebound and has been for quite some time now, in spite of the good news story.
Any thoughts on why?
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- The full Lemon
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Re: Regional REIT.
House of Fraser was on the news recently re: seeking to re-negotiate its rents (downwards).
Could this be a straw in the wind about retailers and hard times, that might feed through to their landlords having to revise projections?
Could this be a straw in the wind about retailers and hard times, that might feed through to their landlords having to revise projections?
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- Lemon Slice
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Re: Regional REIT.
Thnx to whitestone for posting this over on ADVFN:
============================================
The Daily Telegraph gave this a mention yesterday....
http://www.telegraph.co.uk/investing/sh ... tocks-buy/
"Update: Regional Reit
Quoted property trust Regional provides the portfolio’s exposure to commercial property in the South East but, crucially, outside the M25.
At the end of 2017 the company secured a £165m refinancing package (at a highly competitive fixed rate) that extended the term of average debt across the group. The deal gives Regional the flexibility it needs to continue its aggressive acquisition strategy.
One of the portfolio’s oldest holdings, we bought it at 103p in October 2016. The price has been either flat or slightly down in the months since but it is the income we’re interested in and Regional has not disappointed. It has paid out £1,085 on our £15,000 investment.
At today’s price the yield is 7.7pc. It is one of the few high-yielding trusts in its sector trading at a discount (3pc) to the value of its assets. Buy"
============================================
The Daily Telegraph gave this a mention yesterday....
http://www.telegraph.co.uk/investing/sh ... tocks-buy/
"Update: Regional Reit
Quoted property trust Regional provides the portfolio’s exposure to commercial property in the South East but, crucially, outside the M25.
At the end of 2017 the company secured a £165m refinancing package (at a highly competitive fixed rate) that extended the term of average debt across the group. The deal gives Regional the flexibility it needs to continue its aggressive acquisition strategy.
One of the portfolio’s oldest holdings, we bought it at 103p in October 2016. The price has been either flat or slightly down in the months since but it is the income we’re interested in and Regional has not disappointed. It has paid out £1,085 on our £15,000 investment.
At today’s price the yield is 7.7pc. It is one of the few high-yielding trusts in its sector trading at a discount (3pc) to the value of its assets. Buy"
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- The full Lemon
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Re: Regional REIT.
As a regional REIT (as in out of London) I prefer Mucklow which is on a much lower yield of around 4.5% and where the family owns about 20% and with low borrowings. That and Primary Health Properties are I think about the most conservative around. In fact I think I will bail out of British Land and reinvest in Mucklow.
I would not be comfortable with Regional REIT with its high yield. It all looks too easy but maybe it is just because they are in secondary areas which are up and coming and not well known to the bigger property developers.
Dod
I would not be comfortable with Regional REIT with its high yield. It all looks too easy but maybe it is just because they are in secondary areas which are up and coming and not well known to the bigger property developers.
Dod
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- Lemon Slice
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Re: Regional REIT.
dod - Even with interest rates on an upward curve, no-one is suggesting rates moving back above 3%. UK inflation peaked @ 3.1% and is now trending
lower. So propcos are fixing long-term debt @ 3% and letting at 8%.
Outside the SE, in the regions where the economy is growing at a faster rate, many quality assets, with quality tenants and long leases STILL provide yields of 8%+.
Hence a company like RGL can provide a covered yield of 7.5%+; that yield should not be viewed as indicating higher risk.
Personally not a fan of MKLW as an investment prospect. Clearly it has been a great long-term investment; but has traded sideways for the past 4yrs as the stock suffered from over-valuation and an excessive premium to NAV. That premium now effectively liquidated; but no great reason for another premium to again build up...
lower. So propcos are fixing long-term debt @ 3% and letting at 8%.
Outside the SE, in the regions where the economy is growing at a faster rate, many quality assets, with quality tenants and long leases STILL provide yields of 8%+.
Hence a company like RGL can provide a covered yield of 7.5%+; that yield should not be viewed as indicating higher risk.
Personally not a fan of MKLW as an investment prospect. Clearly it has been a great long-term investment; but has traded sideways for the past 4yrs as the stock suffered from over-valuation and an excessive premium to NAV. That premium now effectively liquidated; but no great reason for another premium to again build up...
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- The full Lemon
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Re: Regional REIT.
I do not di
I do not disagree with the arguments put forward but the question is for how long this anomaly (because that is what I see it as) will continue. For instance that sort of property yield is almost certainly to attract other developers and bring it down over time. Not saying it is not an attractive proposition in t6he meantime.
Mucklow is just the sort of company that I like. Big family holding, conservatively managed and with a good sustainable yield. The dividend has increased comfortably for many years. REITS as such should be mainly income plays and that is certainly how I view them and just the way Fred seems to as well. I suspect that now is a good time to get in to Mucklow for the long term.
Dod
SKYSHIP wrote:dod - Even with interest rates on an upward curve, no-one is suggesting rates moving back above 3%. UK inflation peaked @ 3.1% and is now trending
lower. So propcos are fixing long-term debt @ 3% and letting at 8%.
Personally not a fan of MKLW as an investment prospect. Clearly it has been a great long-term investment; but has traded sideways for the past 4yrs as the stock suffered from over-valuation and an excessive premium to NAV. That premium now effectively liquidated; but no great reason for another premium to again build up...
I do not disagree with the arguments put forward but the question is for how long this anomaly (because that is what I see it as) will continue. For instance that sort of property yield is almost certainly to attract other developers and bring it down over time. Not saying it is not an attractive proposition in t6he meantime.
Mucklow is just the sort of company that I like. Big family holding, conservatively managed and with a good sustainable yield. The dividend has increased comfortably for many years. REITS as such should be mainly income plays and that is certainly how I view them and just the way Fred seems to as well. I suspect that now is a good time to get in to Mucklow for the long term.
Dod
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- Lemon Slice
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Re: Regional REIT.
RGL went XD 2.45p dividend yesterday; so today's close at 99.40p-99.50p equivalent to 101.85p-101.95p.
Pretty good performance versus a sharply lower Market.
Pretty good performance versus a sharply lower Market.
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- 2 Lemon pips
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Re: Regional REIT.
As not everyone can use an ISA, eg non-residents, according to the Regional website the upcoming dividend due on 12 April of 2.45p per share compises a PID element of 2.205p and a non-PID element of 0.245p.
http://www.regionalreit.com/investors/investors-dividend
http://www.regionalreit.com/~/media/Files/R/Regional-Reit/investor-docs/Dividend/regional-reit-dividend-payments-since-launch-22-02-18.pdf
http://www.regionalreit.com/investors/investors-dividend
http://www.regionalreit.com/~/media/Files/R/Regional-Reit/investor-docs/Dividend/regional-reit-dividend-payments-since-launch-22-02-18.pdf
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- Lemon Slice
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Re: Regional REIT.
Odd occurance yesterday. I have a modest holding in Regional with Interactive Investors, bought last November, and had decided to increase my holding now that the new ISA allowance is available, but when I tried to do so I got "this share cannot be traded online" from their system. No other explanation. (I bought Schroders and topped up Taylor Wimpey instead.) May try again later but wondered if anyone else had had a similar issue.
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- Lemon Slice
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Re: Regional REIT.
spiderbill - a glitch in your provider's system. Absolutely no reason for that response!
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- Lemon Slice
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Re: Regional REIT.
If it's a glitch it's an ongoing one - "Unfortunately we are unable to trade this stock on-line. Please call our Customer Services team on 0345 607 6001 for further assistance."
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- Lemon Quarter
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Re: Regional REIT.
If it's a glitch it's an ongoing one - "Unfortunately we are unable to trade this stock on-line. Please call our Customer Services team on 0345 607 6001 for further assistance."
As a happy user of iii for many years, I've noticed another worrying glitch.
For years, I've made sure to transfer the quarterly fee into the trading account well before the date, so that they take the fee from there and never from the ISA cash that builds up from dividends, which forms part of the ISA and I believe is ring-fenced.
This is especially important now since I'm using another ss ISA provider for this financial year and only use iii for reinvesting dividends.
A few weeks ago, despite there being more than enough in the trading account, they added 22.50 to it from the ISA cash.
No replies to my messages.
Steve
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