UKCM - the next to look anomalously cheap

[richfool]

..But doesn't BREI represent a better proposition? Yield: 3.85%. Disc: -24.31%. (Versus UKCM: Yield; 2.79%. Disc: -10.65%).

I am already full of: EPIC, SLI, PHP, SUPR and WHR.

[SKYSHIP]

Gerry557 - further to your posts of 21st January & again today. IMO and made from many years of experience at this game - one is far better off anticipating - better to travel than to arrive - buy the rumour, sell the fact etcetcetc.

UKCM has done as suspected; and I sold too soon. But the big opportunity was 2-3weeks ago, perhaps not now.

I agree with richfool; better value now elsewhere:

# BREI still on a 23.6% discount & 4.33% yield

# SREI on a 16% discount & 5.26% yield; but that discount will extend to above 20% when they report their Dec'21 NAV in c10days time.

Of course I would also have said HCFT (see the thread); but they've jumped 6% today...so perhaps hold off for the time-being, unless you can get stock c975p.

[Gerry557]

Thanks for the advice @skyship

I was already thinking along the same lines. It meet my initial reasons for investing and I was looking for the next step.

The flat dividend and lowish yield put me off investing prior. I also didnt like the shareholder comms. Difficult to access the meeting and their own website still doesnt have the latest results. I wanted to ask a couple of questions but they closed the meeting after 1 question whilst I was still typing mine. Was that because of the difficulties so hardly anyone there. This has put me off quite a bit although I will still ask the questions even though Im not longer invested here.

I had a toss up between Town and SREI or a mix of both. Town has a large spread at times and is already held in two brokers so a third made no sense. So I added more SREI as I already know this well.

I cant remember why I didnt pick BREI, I added it to a watch list previously probably on one of your recommendations previously. Maybe I need to revisit again. I was pushed for time and wanted to do the sale and repurchase at the same moment.

Anyway thanks for keeping us on the ball. The upshot is I have averaged up in SREI which had a bigger divi, better divi growth. not to mention the things you have also highlighted. The srei buy is slightly underwater so takes a bit of an edge off the profit from UKCM although it dropped less on Friday than UKCM so small mercies.

Maybe I might have been better to do the swap slightly earlier but I dont have a time machine but still gained overall so no point crying over spilt milk.

One more point about SREI, why have they changed the dividend dates so they pay out Jul and Aug?

[SKYSHIP]

Hi Gerry

Actually those two summer pay-dates were 25/06 & 13/08. The June payment usually May; so perhaps there was some reason explained in the RNS as to why slightly later than usual.

Looking firmer today - 55.5p bid as I type...

[Gerry557]

Hi and thanks by the way Skyship

I don't remember seeing anything in past RNS's. In fact I thought it was mistake having the dates so close together.

The ex divi dates tie up with the change too though.

I suppose they could still be changed if it was a mistake or has there been a new accounting year/firm etc that's forced the move

[Gerry557]

The near £1bn MCap UKCM is basically an institutional stock, which in pre-Covid days always traded in the fairly narrow band of 0%-10% NAV discount. In spite of the fact that, aided by its 63% weighting to Industrials, its NAV is now higher than pre-Covid days; nevertheless its rating has markedly slipped so that it now stands at a 20.8% discount to today’s 74.8p sp.

This de-rating may partly be down to the fact that throughout the post-Covid property recovery, management rather dumbly failed to raise the LTV from a lowly 10%; this at a time when medium/long-term debt was freely available down to 2.2%; and that debt could then fund quality property yielding 2-3x as much!

With their latest acquisition just last month; seems as though they have finally woken up:

===================================
UKCM acquires industrial/business park with life sciences & tech focus for c. GBP94 million

-- This purchase takes the Company's total committed investment for the year to almost GBP233 million, 80% of which was transacted in the last three months.
-- The acquisition forms part of strategy to maintain a portfolio with a solid bedrock of assets, with strong real estate fundamentals and durable income streams, supplemented by assets with tactical risk to drive enhanced performance.
-- It is expected that the Company's gearing will increase to 15% as a result of the transaction.
-- UKCM's industrial and logistics portfolio represents 63% of the Company's portfolio and delivered a total return of 28.3% for the 12 months to 30 September 2021
-- With the purchase of this industrial and business park, as well as the recent other acquisitions and given normalised rent collection, the Board confirms that it expects to be in a position to announce an increase in the dividend in relation to Q4 2021.
==================================

I would expect UKCM to re-rate again if Markets remain benign. A move back to a 15% discount would provide a 7.3% gain to 80.3p; though the upcoming NAV declaration for Dec’21 (4th Feb. last year) might well provide an NAV uplift from the current 94.5p, so gains might well be nearer 10% for a 1month play.

Skyship, this probably rings true again at this moment in time, hence an acknowledgement.

OK the Russians might be coming this time which is probably why its fallen back again, as have most shares.

No advice just worth a re-look if it floats your boat

[pje16]

Does anyone know why the "divdend" paid on 25 Feb was split into 2 amounts?
Well I'm sure someone does, but I'm not one of them !

[richfool]

Does anyone know why the "divdend" paid on 25 Feb was split into 2 amounts?
Well I'm sure someone does, but I'm not one of them !

Is your investment held within an ISA (or tax exempt vehicle)? It's probably just the tax being credited/shown separately.

With REIT's they usually pay the dividend net of tax and then where the REIT is held within an ISA the tax is in effect reclaimed and credited by the investment manager as a separate item.

[pje16]

Thank you for the reply
It's in an ISA
and it's not a tax credit
both descriptions are identical
Div 2000 UK COMMERCIAL PROPERTY REIT LTD ORD GBP0.25
one paid @0.00284
and the other @0.00466
to make the correct total of 0.0075

[richfool]

Thank you for the reply
It's in an ISA
and it's not a tax credit
both descriptions are identical
Div 2000 UK COMMERCIAL PROPERTY REIT LTD ORD GBP0.25
one paid @0.00284
and the other @0.00466
to make the correct total of 0.0075

I think you will find it's the tax credit being shown separately.

I receive two amounts from my SLI dividend.

[pje16]

I tried expressing the figures as percentages
and they do not come out to being anything recognisable

[mc2fool]

Thank you for the reply
It's in an ISA
and it's not a tax credit
both descriptions are identical
Div 2000 UK COMMERCIAL PROPERTY REIT LTD ORD GBP0.25
one paid @0.00284
and the other @0.00466
to make the correct total of 0.0075

0.284p ordinary, 0.466p PID.

https://www.investegate.co.uk/uk-commercial-property-reit-lt--ukcm-/prn/dividend-declaration/20220203070000P7523/

[pje16]

Thank you @mc2fool
it all makes sense now
i just knew it couldn't be tax
Everyday is a school day

[MDW1954]

Full year results out today:

https://markets.ft.com/data/announce/detail?dockey=600-202204140200PR_NEWS_PRUKDSCL_0011-1

SKYSHIP was correct about the dividend policy, too:

Dividends

The Board remains cognisant that the payment of an attractive, sustainable dividend is of primary importance to many shareholders. In our 2020 Annual Report, we stated that there was the potential for progressive dividend growth as we deployed our available resources and the impact of COVID-19 began to stabilise.

We have increased the dividend from the 0.46p per share paid in February 2021 to 0.644p per share from Q1 2021, before announcing a further increase to 0.75p per paid in February 2022, representing a 63% increase over the period. Additionally, we paid out a top-up dividend in respect of 2020 of £6.9 million. This increase is against a backdrop of 111% dividend cover, 91% when including the impact of the top-up dividend.

The Board considers the new dividend level of 0.75p per share to be sustainable but with the aim to grow as earnings increase as the Company deploys its remaining capital and we start to see the completion of ongoing developments within the portfolio.

MDW1954

[Gerry557]

Yes the policy has improved but from some low lows. Even now the yield is not that high although the SP has risen off lows too.

Checking my figures, it looks like a double dip would have worked out nicely had I proceeded with it. The SP is now 10% more than I sold. Id have to offset that against the other REITs profits and dividends but there doesn't look like much it.

Im bagging dividends at the moment waiting for the next opportunity but most Reits look look like to be recovering well, some pushing new highs

[BullDog]

Yes the policy has improved but from some low lows. Even now the yield is not that high although the SP has risen off lows too.

Checking my figures, it looks like a double dip would have worked out nicely had I proceeded with it. The SP is now 10% more than I sold. Id have to offset that against the other REITs profits and dividends but there doesn't look like much it.

Im bagging dividends at the moment waiting for the next opportunity but most Reits look look like to be recovering well, some pushing new highs

Except for Regional REIT, still struggling and nowhere within sight of the pre covid ~120p share price. If you're looking for REIT yield with some chance of share price appreciation, RGL could be worth a look.

[Gerry557]

I hold RGL too. They did a placing at 106.5 from memory that I took part in which is dragging at the moment. I expect them to return in time. The dips have provided some good opportunities to lower my overall average.

TOWN is currently a much lower yielder but on big discount. I think it suffered a bit more during covid so might take longer to recover. The cons are the wide spread and small market cap.

I expect both to recover some more and almost topped up RGL recently but hesitated as the market was doing well added to the tax year, thinking monies might temporarily boost stocks for a bit.

I don't see much improvement in the yield of RGL other than the usual increases expected but I suspect you will be correct on the SP. I expect the yield on town to double in the next year or two and the SP should then recipicat. It's mainly family controlled so they seem to be more longer term looking. 160p was the price during the financial crash a tad lower during the covid closure but it hit close to £3 so lots to go.

Hopefully skyship will be back shortly with more recommendations maybe after the sell in May.

[SKYSHIP]

Well, the Summer of '22 proved a rather tortuous period for the REIT sector; and none more so than UKCM which hurtled down in an ungraceful path from 93p to 66p - a fall of 29%!

This former institutional favourite now offers a 41.5% discount and a basic yield of 5.15%, increasing to 8.05% if you add in the 1.92p Special Dividend.

It is crassly oversold; and a reasonable bounce seems in order. Whilst waiting for that recovery, go try figure just quite how they elected the figure of 1.92p for the Special. Seems to me that they've allocated £25m - nice enough in itself; but that sum bears very little relation to the substantial portfolio re-rating we've seen recently.

[BullDog]

Well, the Summer of '22 proved a rather tortuous period for the REIT sector; and none more so than UKCM which hurtled down in an ungraceful path from 93p to 66p - a fall of 29%!

This former institutional favourite now offers a 41.5% discount and a basic yield of 5.15%, increasing to 8.05% if you add in the 1.92p Special Dividend.

It is crassly oversold; and a reasonable bounce seems in order. Whilst waiting for that recovery, go try figure just quite how they elected the figure of 1.92p for the Special. Seems to me that they've allocated £25m - nice enough in itself; but that sum bears very little relation to the substantial portfolio re-rating we've seen recently.

I perceive the entire REIT sector as deeply unfashionable. It feels hard to buy. Probably the best time in a quite a while to enter the sector, selectively. If you have say three years to wait for the property market to turn upwards again.

Unfortunately, anyone buying UKCM today has missed the special dividend.

[richfool]

You might be interested in this post/investment, about Target Healthcare REIT (THRL):
viewtopic.php?p=530104#p530104

(I am being tempted by Target Healthcare REIT (THRL). It has an appetising yield of 6.35%, whereas my existing holding of PHP is only yielding:4.76%. The SP of both have been falling over recent months, but PHP more so.)