Secure Income REIT

[Silverstar64]

This REIT is one of my core holdings and I was pleased to hear the encouraging half year to June conference call for investors. Here are my notes/key points:

Optionality was a word used a number of times referring to the £230m warchest following the sale of the 8 least attractive Ramsey hospitals to a US REIT for £347m post period end.
This transaction was at 16% above a 9 week old valuation demonstrating successful capital recycling and the strength of demand for long lease properties with top end covenants.
Average unexpired leases now 21.5 years
Tenant requested regear at Chiswell Street from 12 to 37 years.
£70m of hotels sold for 25% valuation uplift.
Net LTV from 42% to 33%.
Boring assets creating exciting returns.
7% accounting return over the 6 months.
Covered dividend.
Strong management stake in the business c£200m
A number of options for the hospital net proceeds depending on opportunities or cahos in the months ahead. Could return to shareholders or special dividend.

I'll be topping up as with 59% of leases now linked to RPI for me this is a very solid income choice in UK real estate space given the characteristics of this REIT. Lots more in the slides and announcement at the URL below. Obviously do your own research but hope this is helpful.

Presentation and other information on their website
https://secureincomereit.co.uk/investor-centre/

[SKYSHIP]

SilverStar - thnx for that - always good to remind one of stocks previously assessed and rejected. Something may have changed!

There are of course those who may seem ultra-long term benefits in holding a stock yielding c3.8% and standing at a 3.5% NAV premium.

Personally I am most certainly not one of those when there are many regional propcos on good discounts and yielding twice as much!

Even a small Market shake-out could take these back to a 10% discount and a still far from generous 4.4% yield. The corresponding sp would be 378p - 13% down from where we are now.

One to avoid I would suggest.

[Silverstar64]

SilverStar - thnx for that - always good to remind one of stocks previously assessed and rejected. Something may have changed!

There are of course those who may seem ultra-long term benefits in holding a stock yielding c3.8% and standing at a 3.5% NAV premium.

Personally I am most certainly not one of those when there are many regional propcos on good discounts and yielding twice as much!

Even a small Market shake-out could take these back to a 10% discount and a still far from generous 4.4% yield. The corresponding sp would be 378p - 13% down from where we are now.

One to avoid I would suggest.

Assuming rising interest rates accompany a return of some inflation it's good to know 58% of the portfolio is RPI linked and the returns rise materially in a few years as the portfolio evolves. There are good slides on their website which accompanied the conference call showing this impact.

I'm convinced, but we each have different views, that's why it's so interesting here.

[Spet0789]

Interesting presentation but concerned by lease concentration with just 3 tenants comprising the vast majority of the portfolio.

RGL far more diversified (IIRC largest tenant 4%). PHP far safer tenants (NHS basically).

For me, neither fish nor fowl. One to pass.

[Walkeia]

I’m a bit confused on costs vs. fees for this REIT.

The interim report which I feel is the best source states:

Fees:

◼ Management meets overhead costs and receives advisory fee on sliding scale relative to EPRA NAV: paid in cash quarterly 1.25% p.a. up to £500m, plus 1.0% p.a. between £500m to £1.0bn, plus 0.75% p.a. between £1.0bn and £1.5bn, plus 0.5% thereafter.

There’s a 20% performance fee for NAV returns above 10% with a high water mark. All seems fair enough.

However, the the Key Information documents linked below show 9% costs.

https://secureincomereit.co.uk/wp-conte ... 002128.pdf

Is it normal to break down financing costs etc in this way. Can’t remember seeing it done like this for other REITs.

Thanks,

Walkeia