The Lemon Fool

Always remember an annuity has a terrible capital return.

HYP is about gathering the income, and ignoring the capital value. As you would with a private business. If you get it right and buy a share that behaves like an annuity you can forget about the capital value. That will be somebody else's problem after you are dead.

From what I can tell BLAND is doing the numbers on the income, and it is very unlikely that London is not going to deliver that rental income.

I buy on the dips whenever there is a scare story about London falling into the ocean or something.

IanTHughes wrote: Buying a yield of 3.64% when many better yields were available ….. no that is not HYP at all. Nothing wrong with using another strategy but don't kid yourself, you are fooling no-one here

As well as selecting high yielding stocks, doesn't HYP strategy also allow for (indeed recommend) diversification between different sectors? Surely one wouldn't continue to select stocks from one or two particular sectors simply because they were the highest yielders of the moment. I don't hold it, but maybe the OP selected BL for diversification.

richfool wrote:

IanTHughes wrote: Buying a yield of 3.64% when many better yields were available ….. no that is not HYP at all. Nothing wrong with using another strategy but don't kid yourself, you are fooling no-one here

As well as selecting high yielding stocks, doesn't HYP strategy also allow for (indeed recommend) diversification between different sectors? Surely one wouldn't continue to select stocks from one or two particular sectors simply because they were the highest yielders of the moment. I don't hold it, but maybe the OP selected BL for diversification.

That might be you interpretation, but not mine. The HYP method requires diversification, but picking shares from each sector only of they comply with the other criteria. If a share in a new sector does not comply - for example if the yield is too low - then you just don't buy it. It isn't compulsory to buy each sector: this is what Luni called "stamp collecting" I believe.

Arborbridge wrote:

richfool wrote:

IanTHughes wrote: Buying a yield of 3.64% when many better yields were available ….. no that is not HYP at all. Nothing wrong with using another strategy but don't kid yourself, you are fooling no-one here

As well as selecting high yielding stocks, doesn't HYP strategy also allow for (indeed recommend) diversification between different sectors? Surely one wouldn't continue to select stocks from one or two particular sectors simply because they were the highest yielders of the moment. I don't hold it, but maybe the OP selected BL for diversification.

That might be you interpretation, but not mine. The HYP method requires diversification, but picking shares from each sector only of they comply with the other criteria. If a share in a new sector does not comply - for example if the yield is too low - then you just don't buy it. It isn't compulsory to buy each sector: this is what Luni called "stamp collecting" I believe.

There is a difference between "stamp collecting" and buying (diversifying across) several sectors. I don't believe for a minute that anyone would buy all their stocks from the same one sector, simply because those sectors offered the highest yields. Diversification is sensible. We don't know how many other sectors the OP held at the time he bought BL. - My point was that diversification could have been a factor in his decision.

Dod101 wrote:All the talk about Unilever has set me thinking again about B Land. It is really a pretty hopeless share, however great its London portfolio is.

Its one merit is its yield, where it gives a respectable 4.6%. It is dearly bought income though. I bought it first only in September 2014 at £7.27. It peaked at around £8.70 in October 2015 since when it has drifted downwards and closed last evening at £6.385.

Compare that to other stalwarts of a HYP such as Shell yielding 4.9%. In October 2015 it was standing at £17.75 and is now £27.25, HSBC is yielding 5%. In October 2015 £5.32, now £7.20 or Unilever yielding 2.9%. In October 2015 £29, now £43.62.


Dod

When you bought BLND the net asset value of the share ie the value of the underlying property according to the end of year figures (14 May was 688p per share)
It was at the last report 967p per share, the underlying portfolio has increased in value and the dividends have increased , what has changed is investors attitudes to Property and they always fluctuate.
Do you think that buying property shares when the property is fully valued and selling them when it is discounted is a smart move? The income has increased the only thing that has fallen is the discount that investors require of property presumably due to the uncertainties of Brexit. Would you buy prime property with a 4.5% yield if it was for sale at 30% of its appraised value?

Of course I take your point and in fact have done nothing and probably will just leave as is. That I think is one benefit of these Boards, they allow the poster to muse and at the same time get some excellent advice from others. Thanks for your comments. I guess I ought to be looking at it more like an investment trust (which is a sort of)

Dod

Just been looking at the price of British Land. It is true that the dividend keeps on coming but as I have said many times, at a big cost in terms of capital loss. Not really what I am looking for. Still, maybe NeilW will be buying at the current price of £6.135 which is down about 10% on the end of June price. Wish I had sold when I was musing on it in mid July.

It may still be at a big discount to NAV, but it may be that the NAV is too high. It has never been much of an investment proposition in my book.

Dod

With a modest recovery in the British Land price, I have just sold my remaining holding at £6.203. It has been as disappointing an investment for me as it was last time round and I should have sold when I first mused on doing so. The funds released will go into the new Smithson. Not in the least comparable I know but I expect Smithson to be the better investment.

Dod

One has to concede that Elliott really have played a blinder with their big BLND/LAND shorts. Did anyone other than Elliott Advisors and of course Dod101 (Congrats Dod) really see this further leg down, falling 12% since 1st August?

Now one can understand the logic - with interest rates rising, the yields had fallen too low for the prime real estate in London and the South-East.

Buying smaller lots in the regions is a totally different matter, as there the tightening market suggests rents are secure and rising, yields are still too high, so valuations still too conservative at way below replacement costs - c35% below in the case of RGL!

But in London & the South-East there is no property shortage; more development stock is still coming through and many companies are still looking to exit an area where their employees cannot afford to live.

Reckon I'll continue to avoid the false value on offer here; and cling tight to my regional players. Bought back a few HCFT I top-sliced earlier. As far as I'm aware they are the only UK propco with ZERO voids. On the 30th June stats the discount = 22.5% and the yield = 5%, though Interim divi raised 17%, so possibly c5.7% prospective. A very conservatively managed minnow:

http://www.highcroftplc.com/

Re my comments above, here is a short extract taken from Gavin Lumsden’s Dec’17 interview with Richard Shepherd-Cross of Custodian REIT – which even now still trades at a 5%+ PREMIUM!

Well worth a 10minute listen:

https://tinyurl.com/ycyn8o3x
====================================================
GL: I’m interested in your perspective as an investor outside London, in the regions. What’s it been like? It’s very easy to have a London-centric view whether you’re in property or anything else.

RSC: I think that’s right and particularly for property where all the market data is heavily skewed by central London property stats. But in the regional markets I would say from an occupational perspective, this is not a capital markets comment, this is a comment on the underlying occupier market, we’re mid cycle: mid-cycle because at the bottom of the market you have vacancy rates, weak tenant demand, you have falling rents. We’ve now got growing rents, rents have now been growing in the regions for about two years. We’ve seen very low vacancy rate but what we don’t yet have is wholescale speculative development. So we’ve still got a market that’s being driven by lack of supply and that’s keeping pressure on rents to grow.

GL: So that’s good for property prices? Because I imagine theres a lot of interest in regional property markets, getting away from London which seems very exposed to Brexit. So if there isn’t new supply coming through does that mean it’s good for prices?

RSC: What it means is rents should continue to grow. What we have to be careful of in a market where rents are growing is that we don’t buy out next year’s performance by paying too much for property today. That’s an easy trap to fall into.
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As I said earlier in this thread, I am a modest investor in Mucklow, a regional REIT with a void of only 2.8% at Balance Sheet date at 30 June. Not sure how any property company can have a nil vacancy rate as they must always surely be redeveloping something. It is conservative with a strong family influence. I like that.

Dod