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SREI - the next to look anomalously cheap...

SKYSHIP
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SREI - the next to look anomalously cheap...

#334403

Postby SKYSHIP » August 19th, 2020, 2:33 pm

Forgot to post here on SLI a few days ago – sorry about that. Still, onwards and upwards to the next play:

SREI is once again beginning to look anomalously cheap. The chart suggests a triple bottom at 30p beckoning, with the sp below the 50day SMA, the MACD weakening and the RSI in negative territory.

https://uk.advfn.com/cmn/fbb/thread.php3?id=27211960

However, at 32.5p the NAV discount is a stand-out 43.7%, a level which surely discounts any further troubles in the sector. Also though the yield is an unknown, the recent restoration of a quarterly dividend is encouraging.

So too is the sector mix of 40% Office/29% Industrial/12% Retail Warehouse/12%Retail/7% Alternative. Look further and you find much of the retail is in the secure tenancies of M&S, Lidl, Matalan – though Sports Direct could be awkward.

The reason for the lowball opportunity would seem to be that perennial loser Investec is reducing their holding; that in itself may well denote time to BUY!

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Re: SREI - the next to look anomalously cheap...

#334679

Postby flyer61 » August 20th, 2020, 2:09 pm

As at 30 June 2020, the Company has cash of £85.4 million and unsecured property with a value of £38.7 million. This results in a loan to value ratio, net of cash, of approximately 24%.

This caught my eye as well Skyship, have topped up this morning.

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Re: SREI - the next to look anomalously cheap...

#334810

Postby SKYSHIP » August 21st, 2020, 7:40 am

Yes indeed, considerable fire-power in their closet; so in a good position in the current circumstances.

Extract from the June Prelims:

Lorraine Baldry, Chairman of the Board, commented:

"Whilst the outlook for the UK real estate market in light of the Covid-19
pandemic is uncertain, the Company has a strong balance sheet with a net Loan
to Value of 23.7%. We expect capital values and rental income to fall in 2020.
However, the quality of the portfolio, embedded asset management potential and
above average income return will mitigate this risk. Most importantly, the cash
realised from disposals means that the Company has both a significant buffer to
protect it in the event a portion of rental income is deferred for several
months, as well as the capacity to reinvest in the existing portfolio to
improve returns and actively seek to selectively capitalise on future
attractive lower prices in real estate investments.

The long-term strategic objectives therefore remain to maintain balance sheet
discipline, sustainably grow net income and reinstate the dividend with a
progressive policy. We are anticipating a challenging market environment during
the current financial year due to the Covid-19 pandemic, but one that should
also provide opportunities for well placed companies such as Schroder Real
Estate Investment Trust."

Duncan Owen, Global Head of Schroder Real Estate, added:

"The Covid-19 pandemic is the first time in living history that the world has
faced a Global Health Crisis and so we do not know what will be the outcome.
What we can see, however, is that the pandemic has led to horrendous economic
data and as a consequence valuation uncertainty across the sector. It is also
leading to rent deferrals and reductions in some instances. This has required
an immediate focus on rent collection, reducing risk and implementing new
property management procedures to ensure tenants can return safely to our
buildings.

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Re: SREI - the next to look anomalously cheap...

#335433

Postby flyer61 » August 24th, 2020, 10:21 am

Well I have decided to push on this one and bought another 25000 at just shy of 32p. Given the cash and discount to NAV think the margin of safety is quite reasonable.

I'm expecting the dividend to come back towards 2.4p per year (0.6p per quarter) fairly quickly giving a potential yield of 7.5% on purchase.

Simon Thompson is no doubt running his slide rule over these as I type! :lol:

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Re: SREI - the next to look anomalously cheap...

#336122

Postby Gerry557 » August 26th, 2020, 4:00 pm

I topped up yesterday as I'm hoping that rents collected will be ahead of the share price falls and hope that dividends will return to higher levels in the near future. This is of course depending on covid and the way UK plc responds.

I like they way they planned ahead for the downturn, we're they selling bat stew, even if covid wasn't on the time line. Low LTV compared to most REITs and cash on hand to upscale income in the future if its not needed.

I expect the NAV to fall but the discount is large so should offset most risk. The dividend has been cut again. It was done some years back too but then it didn't cover the divi. Hopefully they are being prudent again with this cut and it will allow improvements later. Still it's offered over 5% on the purchase price.

I wasn't really following invested selling up so thanks if you have given me the opportunity to buy more. I should really thank @skyship

The only fly in the ointment is my average is still north of the current share price but at least, temporarily, this purchase is in the green. I just need the dividends to catch up over time.

Over to RGL to see when to top that up next

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Re: SREI - the next to look anomalously cheap...

#336140

Postby SKYSHIP » August 26th, 2020, 5:20 pm

Bought more SREI since my last post; my lowest price being 30p in an investment a/c; but main holding in my SIPP at an average of 31.7p.

Elsewhere in the sector only holding SLI and some RGL1 - the RGL 4.5% loan stock which provides a secure Gross Redemption Yield of 6.4% for 4yrs.

Surely the smart thing for SREI to do would be to buy out the Invesco stake. Do that at 30p and they neuter the tap whilst increasing the NAV by 7.6% to 62.1p. A great thing for shareholders; but the investment managers may over-rule as it would lower their fees due to the downsizing of the company by 7.1%.

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Re: SREI - the next to look anomalously cheap...

#338866

Postby flyer61 » September 8th, 2020, 8:31 am

SHARE BUY-BACK PROGRAMME
Tue 08 Sep 2020 07:00
Schroder Real Estate Investment Trust Ltd - Share Buy-Back Programme
PR Newswire

London, September 7

For release 8 September 2020

Schroder Real Estate Investment Trust Limited

SHARE BUY-BACK PROGRAMME

Schroder Real Estate Investment Trust Limited (the 'Company'/ 'SREIT') intends to begin a share buyback programme to purchase shares in the Company.

The Board believes that investment in the SREIT's shares at the prevailing price and discount to net asset value offers attractive value for its shareholders. The Company's financial position remains strong. As at 30 June 2020, it had cash of £85.4 million and a loan to value ratio, net of cash, of approximately 24%. Alongside share buy-backs the focus continues to be on identifying attractive new acquisitions and delivering net income growth through new lettings and asset management.

The Company is amending its disclosure policy to include on a regulatory information services ('RIS') details of its share buyback powers which it renews annually. It is expected similar announcements will be made every time the share buyback authority is renewed.

The Company announces that it has authority to repurchase a maximum of 77,725,160 of its ordinary shares (being its outstanding shareholder authority). Such authority lasts until the next shareholder authority granted, or where expressly revoked by shareholders. The buyback would be funded from the Company's resources. No maximum consideration payable has been determined by the Company, but the Company is unable to pay a price for any shares pursuant to the buy-back which would equate to a premium on the net asset value.

The Company has appointed J.P. Morgan Securities plc to act as its broker in respect of the buy-back.

The buy-back will be undertaken pursuant the Company's discount management programme.

This arrangement is in accordance with Chapter 12 of the UKLA Listing Rules and the Company's general authority to repurchase shares.

-ENDS-

I wonder if Invesco have asked for this.....

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Re: SREI - the next to look anomalously cheap...

#338909

Postby SKYSHIP » September 8th, 2020, 10:15 am

Yes - great news from SREI this morning. That buyback scheme sure underwrites the current absurdly cheap level.

There is a nice "coincidence" in that the company has buyback authority for 77.7m shares; whilst the remaining Investec holding is 71.1m!

Whatever, I now expect these to be back up to the 35p level in relatively short order, so added a few @ 30p...

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Re: SREI - the next to look anomalously cheap...

#338985

Postby Gerry557 » September 8th, 2020, 1:34 pm

Many companies do buybacks that often don't achieve anything for actual shareholders. At the height of the share price and often earn bonus for management at the cost of longer term gains for everyone else.

This looks like a more surgical strike, they have cash, a willing seller possibly , undervalued and at a low share price with a discount to NAV. I suppose I can't criticise buying now when I did the same myself recently. Its when I wouldn't be buying and they decided to start a buyback that has me more worried.

Unfortunately the share price has risen on the news, some 7 percent ish. I was hoping it would stay lower a bit longer as I looked to add more. Still, this only looks good at the moment and things could change. Lock down II anyone??

Cash in the bank not earning nowt so this might be good all round. I won't smile too much until the divi starts to rise again.

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Re: SREI - the next to look anomalously cheap...

#340038

Postby SKYSHIP » September 13th, 2020, 2:46 pm

SREI beginning to get serious with the new BuyBack Scheme.

Friday saw them buy in 500k @ 31.54p.

IMO it is certainly not too late to take a position as even at 32p the NAV discount is a far too high 44.5%.

I reckon they will keep on buying and keep on bidding up.

At 35p they will still be on a 39.5% discount.


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