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Regional REIT.

puffster
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Re: Regional REIT.

#415767

Postby puffster » May 28th, 2021, 10:51 am

Gerry557 wrote:I have noticed a couple of 6 or 7 percent daily swings both up and down lately. Not really looked why, seems too big for ex divi and wouldn't be going up anyway.

Big sells and buys or maybe so dealers fat finger somewhere.

Haven't seen any news or noise either that would offer an explanation but my comment "not really looked" might explain why.

BMO Commercial Property IT (BCPT) has been doing the same in the last few days, again I can't see any obvious reason so I'm guessing that people think that the price of some types of commercial properties are about to stage a recovery.

Regards, Puffster

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Re: Regional REIT.

#416038

Postby Gerry557 » May 29th, 2021, 11:39 am

puffster wrote:
Gerry557 wrote:I have noticed a couple of 6 or 7 percent daily swings both up and down lately. Not really looked why, seems too big for ex divi and wouldn't be going up anyway.

Big sells and buys or maybe so dealers fat finger somewhere.

Haven't seen any news or noise either that would offer an explanation but my comment "not really looked" might explain why.

BMO Commercial Property IT (BCPT) has been doing the same in the last few days, again I can't see any obvious reason so I'm guessing that people think that the price of some types of commercial properties are about to stage a recovery.

Regards, Puffster


Hi Puffster.

That might explain a rise but not the drop! I too expect a recovery, more so for those with higher retail and or car parks, TOWN springs to mind. Still haven't looked any further other than just back here.

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Re: Regional REIT.

#416356

Postby murraypaul » May 31st, 2021, 12:02 pm

I'm not familiar with how REITs normally operate, and am trying to get a handle on RGLs debt.

Looking at the figures from the annual report, it looks like they are almost completely tapped out of their current facilities, and although their balance went up over the year, this was entirely down to increased borrowing.

Else where in the report are both:

"The borrowing facilities remained compliant with all loan covenants, with an LTV of c. 40.8%, based upon the value of the Group’s investment properties as at 31 December 2020. "

"At 31 December 2020, this gives the following figures:
Leverage Exposure
Gross Method Commitment Method
Maximum 400 400
Actual 203 219"

I'm not sure which numbers to focus as, and some of of them seem worrying, to someone not familiar with the industry. Is this level of debt considered normal?

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Re: Regional REIT.

#416366

Postby Dod101 » May 31st, 2021, 1:03 pm

murraypaul wrote:I'm not familiar with how REITs normally operate, and am trying to get a handle on RGLs debt.

Looking at the figures from the annual report, it looks like they are almost completely tapped out of their current facilities, and although their balance went up over the year, this was entirely down to increased borrowing.

Else where in the report are both:

"The borrowing facilities remained compliant with all loan covenants, with an LTV of c. 40.8%, based upon the value of the Group’s investment properties as at 31 December 2020. "

"At 31 December 2020, this gives the following figures:
Leverage Exposure
Gross Method Commitment Method
Maximum 400 400
Actual 203 219"

I'm not sure which numbers to focus as, and some of of them seem worrying, to someone not familiar with the industry. Is this level of debt considered normal?


Well if you look at British Land their LTV at 31 December was 34.1% and Primary Health Properties was 41%. I would suggest that Regional REIT's is on the high side but it depends I think on the quality of their assets about which I know nothing, and of course their ability to collect rents, both of which will affect valuations. PHP is about as cast iron as you are going to get so they can probably afford a relatively high LTV. B Land like other big property companies is suffering at the moment through shortfalls in rent collections and having to reduce the valuation of their assets. That of course increases the LTV without any more borrowing.

Regional REIT certainly cannot afford any slip ups as far as I can see. I suppose increased borrowing last year was not surprising given the disruption caused buy Covid but all the same.......

Dod

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Re: Regional REIT.

#416378

Postby MDW1954 » May 31st, 2021, 2:57 pm

murraypaul wrote:I'm not familiar with how REITs normally operate, and am trying to get a handle on RGLs debt.

Looking at the figures from the annual report, it looks like they are almost completely tapped out of their current facilities, and although their balance went up over the year, this was entirely down to increased borrowing.

I'm not sure which numbers to focus as, and some of of them seem worrying, to someone not familiar with the industry. Is this level of debt considered normal?


The long-term target LTV is 40%, which is towards the higher end of the REIT debt spectrum, but not, I would say, worryingly so.

If you look at the final paragraph of page 45, you'll see that maximum LTV is 50%.

The most worrying thing about RGL to my mind is its recent decision to focus entirely on offices. REITs such as CREI and MCKS hold similarly-sized regional offices, but also warehouses, industrial and logistics facilities, and retail.

MDW1954 (holds RGL, CREI, MCKS, WHR, BBOX, EBOX, PHP, BLND, ASLI, ESP, LXI, SREI, and SUPR)

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Re: Regional REIT.

#416382

Postby ReallyVeryFoolish » May 31st, 2021, 3:32 pm

MDW1954 wrote:
murraypaul wrote:I'm not familiar with how REITs normally operate, and am trying to get a handle on RGLs debt.

Looking at the figures from the annual report, it looks like they are almost completely tapped out of their current facilities, and although their balance went up over the year, this was entirely down to increased borrowing.

I'm not sure which numbers to focus as, and some of of them seem worrying, to someone not familiar with the industry. Is this level of debt considered normal?


The long-term target LTV is 40%, which is towards the higher end of the REIT debt spectrum, but not, I would say, worryingly so.

If you look at the final paragraph of page 45, you'll see that maximum LTV is 50%.

The most worrying thing about RGL to my mind is its recent decision to focus entirely on offices. REITs such as CREI and MCKS hold similarly-sized regional offices, but also warehouses, industrial and logistics facilities, and retail.

MDW1954 (holds RGL, CREI, MCKS, WHR, BBOX, EBOX, PHP, BLND, ASLI, ESP, LXI, SREI, and SUPR)

RGL is my only REIT holding. I have to hope the management are smart enough to pull it off. To date, their management has been top drawer in my opinion, in both the rental and the refurbishment and flip businesses. I remain hopeful of medium term out performance.

RVF

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Re: Regional REIT.

#416391

Postby Dod101 » May 31st, 2021, 4:37 pm

Holding that lot MDW should know something. Is that a heavy concentration or what?

Dod

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Re: Regional REIT.

#416409

Postby murraypaul » May 31st, 2021, 6:09 pm

MDW1954 wrote:
murraypaul wrote:I'm not familiar with how REITs normally operate, and am trying to get a handle on RGLs debt.

Looking at the figures from the annual report, it looks like they are almost completely tapped out of their current facilities, and although their balance went up over the year, this was entirely down to increased borrowing.

I'm not sure which numbers to focus as, and some of of them seem worrying, to someone not familiar with the industry. Is this level of debt considered normal?


The long-term target LTV is 40%, which is towards the higher end of the REIT debt spectrum, but not, I would say, worryingly so.

If you look at the final paragraph of page 45, you'll see that maximum LTV is 50%.


It was the exposure figures that really stood out, at 203/219% compared to say AEW in a broadly similar market at 128/135%.
I just don't know how to judge what they really mean, and how to relate them to the other financials.
Not all REITs publish this figure.

The most worrying thing about RGL to my mind is its recent decision to focus entirely on offices. REITs such as CREI and MCKS hold similarly-sized regional offices, but also warehouses, industrial and logistics facilities, and retail.


It was actually the (non-London) office focus that appealed in the first place with RGL, I'm happy with that, I'm just trying to get a grip on the numbers.

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Re: Regional REIT.

#416445

Postby MDW1954 » May 31st, 2021, 8:38 pm

murraypaul wrote:It was the exposure figures that really stood out, at 203/219% compared to say AEW in a broadly similar market at 128/135%.
I just don't know how to judge what they really mean, and how to relate them to the other financials.
Not all REITs publish this figure.



Happy to try and help, but you'll need to source those figures. Page numbers?

MDW1954

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Re: Regional REIT.

#416446

Postby MDW1954 » May 31st, 2021, 8:41 pm

Dod101 wrote:Holding that lot MDW should know something. Is that a heavy concentration or what?

Dod


Dod,

I probably missed a few out! And I didn't include UKW, BSIF, FSFL etc et al, because they're not "proper" REITs.

I'm an income investor (as you know full well). What else do you expect me to do?

MDW1954

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Re: Regional REIT.

#416448

Postby murraypaul » May 31st, 2021, 9:25 pm

MDW1954 wrote:
murraypaul wrote:It was the exposure figures that really stood out, at 203/219% compared to say AEW in a broadly similar market at 128/135%.
I just don't know how to judge what they really mean, and how to relate them to the other financials.
Not all REITs publish this figure.


Happy to try and help, but you'll need to source those figures. Page numbers?


https://www.regionalreit.com/~/media/Fi ... t-2020.pdf
Page 146 (slide 148)

https://www.aewukreit.com/~/media/Files ... 19_web.pdf
Page 28 (slide 30)

The AIFM leverage of 128/135 for AEW seems to be 100% + these figures (page 5)
Loan to NAV 34.83
Gross Loan to GAV 27.21


I think then that the difference is rather more fundamental, which is that RGL and AEW are giving different types of loan to value figures.

RGL is quoting 40.8% "net loan to value" (p45), which is net loan to gross property asset value. "(Borrowings – less cash)/(Investment Properties Value)" (p145)

AEW is quoting a 26.83% "Loan to NAV" (p1), which is gross loan to net total asset value. "The loan balance drawn expressed as a percentage of the Company’s Net Asset Value." (p50)

Calculating RGLs LTV in the same way that AEW does would give something like 87% Loan to NAV.
Calculating AEWs LTV in the same way that RGL does would give something like 24% net loan to value for just property assets, or 20% net loan to value for all assets.

I can get to 203% exposure for RGL using all liabilities not just loans. Can't quite get to 219%.

AEW page 6:
The Company has changed the measure of its Leverage KPI from ‘Loan to Gross Asset Value (‘GAV’)’ to ‘Loan to NAV’. This is in line with the measure used in its banking covenants and so is considered to be more relevant to the Company’s position. The target of 35% Loan to NAV, which is the gearing limit at drawdown under the RBSi facility, approximates to the previous target of 25% Loan to GAV, which is the measure used in the Company’s Investment Guidelines. Gearing will continue to be monitored using both measures.

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Re: Regional REIT.

#416456

Postby murraypaul » May 31st, 2021, 10:06 pm

On a quick scan of other REITs annual reports, AEW seems to be the odd one out reporting the way they do.

There do seem to be some (eg British Land) who report (debt-cash)/total assets and others (eg CREI) who report (debt-cash)/property assets. (Although with CREI they may not have had any investment assets to include anyway.)
Last edited by murraypaul on May 31st, 2021, 10:11 pm, edited 1 time in total.

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Re: Regional REIT.

#416457

Postby Dod101 » May 31st, 2021, 10:09 pm

MDW1954 wrote:
Dod101 wrote:Holding that lot MDW should know something. Is that a heavy concentration or what?

Dod


Dod,

I probably missed a few out! And I didn't include UKW, BSIF, FSFL etc et al, because they're not "proper" REITs.

I'm an income investor (as you know full well). What else do you expect me to do?

MDW1954


I too am mostly an income investor. I do not recognise all the EPICS but at least some, probably most, are REITs. What you invest in is entirely your business but I was just commenting that it seemed an awful lot of exposure to property.

Dod

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Re: Regional REIT.

#416688

Postby MDW1954 » June 1st, 2021, 9:42 pm

murraypaul wrote:
MDW1954 wrote:
murraypaul wrote:It was the exposure figures that really stood out, at 203/219% compared to say AEW in a broadly similar market at 128/135%.
I just don't know how to judge what they really mean, and how to relate them to the other financials.
Not all REITs publish this figure.


Happy to try and help, but you'll need to source those figures. Page numbers?


https://www.regionalreit.com/~/media/Fi ... t-2020.pdf
Page 146 (slide 148)

https://www.aewukreit.com/~/media/Files ... 19_web.pdf
Page 28 (slide 30)

The AIFM leverage of 128/135 for AEW seems to be 100% + these figures (page 5)
Loan to NAV 34.83
Gross Loan to GAV 27.21


I think then that the difference is rather more fundamental, which is that RGL and AEW are giving different types of loan to value figures.

RGL is quoting 40.8% "net loan to value" (p45), which is net loan to gross property asset value. "(Borrowings – less cash)/(Investment Properties Value)" (p145)

AEW is quoting a 26.83% "Loan to NAV" (p1), which is gross loan to net total asset value. "The loan balance drawn expressed as a percentage of the Company’s Net Asset Value." (p50)

Calculating RGLs LTV in the same way that AEW does would give something like 87% Loan to NAV.
Calculating AEWs LTV in the same way that RGL does would give something like 24% net loan to value for just property assets, or 20% net loan to value for all assets.

I can get to 203% exposure for RGL using all liabilities not just loans. Can't quite get to 219%.

AEW page 6:
The Company has changed the measure of its Leverage KPI from ‘Loan to Gross Asset Value (‘GAV’)’ to ‘Loan to NAV’. This is in line with the measure used in its banking covenants and so is considered to be more relevant to the Company’s position. The target of 35% Loan to NAV, which is the gearing limit at drawdown under the RBSi facility, approximates to the previous target of 25% Loan to GAV, which is the measure used in the Company’s Investment Guidelines. Gearing will continue to be monitored using both measures.


Having looked at the relevant pages, I can't add anything. Generally, I don't look at those pages anyway.

Have you tried emailing the FD? I generally get good results that way.

Sorry to be such a damp squib, but there really isn't much more that I can add.

MDW1954

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Re: Regional REIT.

#416738

Postby Dod101 » June 2nd, 2021, 7:04 am

Reading this entire thread, it seems to me that it remains the case that Regional REIT is or was at Balance Sheet date, quite highly geared but I suppose as long as it does not breach its loan/banking covenants all is well. I would not invest in it though.

Dod


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