The Lemon Fool

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:

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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.
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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.

Thanks. Would have liked to see a bit more on the income side from REIT but, it's interesting nonetheless. I might buy a small amount.

Bulldog - indeed, their low LTV resulted in a low dividend. Increase the gearing and the dividend increases. Obviously their statement (see Header) indicates a higher dividend coming soon...& not before time!

SKYSHIP wrote:Bulldog - indeed, their low LTV resulted in a low dividend. Increase the gearing and the dividend increases. Obviously their statement (see Header) indicates a higher dividend coming soon...& not before time!

Thanks again. Duly noted and I have bought a few shares here since I think you make a decent case for doing so. A small, but hopefully, useful addition to my REIT holdings.

Cheers.

On first glance it doesn't look that impressive. Even pre pandemic the divi was only 3.68 and was steady at that for 6 years. It then fell, as lots of the market did during the event.

So a rise in the dividend is to be expected but at what level. I would expect it to rise to at least pre pandemic levels. Im unsure what to use as a current level of divi. Assuming it wont go down then x4 0.644 = 2.576 but there was a special 0.531 when the level of divi was lower. So Im working on 3.2% yield although some sites show 3.4%

Even so with such low levels of debt, why couldn't they fund annual divi rises? REITs have to pay out 90% of profits. Did they recently convert to REIT? So something is not quite right. Are they overpaying or getting poor tenants or just bad at managing the voids? So what are they doing to earn their 1.51% management fee?

Still @Skyship seems to keep a close eye on REITS and put a compelling argument. Discount, divi rises, NAV, new properties and a possible re-rating etc and a short term time line.

My other REITs seem to be waking up. TOWN jumped 7% yesterday but not sure why possibly Mr Market and some buybacks kicking in. I also have some spare ISA cash in a broker that I dont want to use to top up holdings held in other broker accounts and I was looking for something new.

So as the dragons would say, "Im in"

Thanks Skyship

BullDog wrote:

SKYSHIP wrote:Bulldog - indeed, their low LTV resulted in a low dividend. Increase the gearing and the dividend increases. Obviously their statement (see Header) indicates a higher dividend coming soon...& not before time!

Thanks again. Duly noted and I have bought a few shares here since I think you make a decent case for doing so. A small, but hopefully, useful addition to my REIT holdings.

Cheers.

Likewise
Cheers @SKYSHIP

Thanks from myself as well - just bought some at 75.2

Woz

Q4 NAV & Performance Update scheduled for 3rd Feb - see link below.

In the meantime we've seen a nice breakout to 78.5p as I type.

https://uk.advfn.com/stock-market/londo ... A/87051208

Indeed... a nice enough rise in a few days
Thank you @SKYSHIP

pje16 wrote:Indeed... a nice enough rise in a few days
Thank you @SKYSHIP

And thanks from me too.

82p today, what a shame I only had spare pocket money to invest here. Thanks again Skyship that's a pretty swift 10% appreciation.

I think I'm going to wait for the update before deciding what to do.

There should be some movement on the dividend plus it should give an indication of future direction of travel.

REITs have been rising generally so not sure if this is an all boats rising thing or if there is more to come individually on good news

Wanted to increase liquidity - so happy to bank a good profit & watch from the side-lines with cash at 25%. GLA...

SKYSHIP wrote:Wanted to increase liquidity - so happy to bank a good profit & watch from the side-lines with cash at 25%. GLA...

Thanks for the original tip. I too have banked a profit, on the basis that it's the only thing in my portfolio to have increase in the last week and a bit more cash seems useful at the moment.

banked the gain today. thanks to Skyship for this one

I seem to have been caught in the general market malaise this morning. Quote to sell was 79p. Set a limit order which will hopefully trigger a sell at 82p in the next few days.

BullDog wrote:I seem to have been caught in the general market malaise this morning. Quote to sell was 79p. Set a limit order which will hopefully trigger a sell at 82p in the next few days.

Auto sell triggered this morning at 82p. It's only pocket money, but a crafty 10% uplift in a few days is nice. Thanks again Skyship.

In a similar vein, my limit of 86.6p was executed this morning giving a 10% gain.

Thanks very much Skyship

Woz

Good update this morning:

New NAV declared - 7.9% growth since 30/09/2021, giving a new NAV of 102p. (shares now at approx. 16.5% discount to NAV at 85p per share).

Industrials and retail warehouse now represent approx. 73% of portfolio.

Quarterly dividend increased by 16% to 0.75p per share (3.5% yield at 85p, easily covered, therefore scope for further increases)

https://www.londonstockexchange.com/new ... 1/15313734

Im glad the dividend was bumped but there is still room for another increase next year based on the pre pandemic levels. It was 3.6p so potential for another 0.6p more. In the longer term though, it was flat for many years, so how is that going to change