The Lemon Fool

Let me know what you think. I thought things were fine ish and bought another batch yesterday. With typical RGL fashion they went underwater straight away.

I suppose I have a dividend to look forward to.

Gerry557 wrote:Let me know what you think. I thought things were fine ish and bought another batch yesterday. With typical RGL fashion they went underwater straight away.

I suppose I have a dividend to look forward to.

Very choppy short to medium term outlook for RGL. But I think there's money to be made here. Crazy high yield worries me somewhat. Disclosure, I'm well underwater with this stock.

This has been a bit of a disaster for me. I bought two tranches, one in late 2017 and one in mid 2018.

As I sit here today surveying my scorched investment I essentially see a 50% capital loss on each tranche, although 75% of that has been recouped through income. So approx 5.75 years invested and a 12% loss. A vanguard global tracker would have achieved approx 50% positive total return over the same period.

Apologies if the following points are laughable for others, but it's helpful for my own learning if I record the lessons I've learned in this case.

1. I thought I was being clever, investing in an unloved, but higher potential growth part of the property market. But what that translated into was a low quality set of assets that felt some of the worst effects of the following downturn once the froth came off property valuations at the quality end of the market. I would have been better off buying high quality assets even if the entry cost looked higher. Investment "bargains" are often cheap for a reason, including hidden risks when there's a flight to quality.

2. Don't get carried away with government initiatives such as the "northern powerhouse" and "leveling up." The UK government rarely delivers.

3. Buying a specialist REIT does not offer broad diversification. I should have invested in a generalist REIT to get diversification.

4. Do not chase yield

5. Before buying anything, seriously question why you're not buying a tracker.

I'm now not sure whether to accept my losses from this terrible foray, or whether to leave it be. Inertia and an aversion to realising losses means I will probably be doing the latter. Let's hope that sitting tight ends up right, rather than compounding my pain.

Good post Wanderer.

My benchmark is 'why am I buying this when I could buy more Microsoft'.

Quality in all things always rises to the top IMHO.

And yes, I have had some rubbish investments in the past.....

wanderer wrote:This has been a bit of a disaster for me. I bought two tranches, one in late 2017 and one in mid 2018.

As I sit here today surveying my scorched investment I essentially see a 50% capital loss on each tranche, although 75% of that has been recouped through income. So approx 5.75 years invested and a 12% loss. A vanguard global tracker would have achieved approx 50% positive total return over the same period.

Apologies if the following points are laughable for others, but it's helpful for my own learning if I record the lessons I've learned in this case.

1. I thought I was being clever, investing in an unloved, but higher potential growth part of the property market. But what that translated into was a low quality set of assets that felt some of the worst effects of the following downturn once the froth came off property valuations at the quality end of the market. I would have been better off buying high quality assets even if the entry cost looked higher. Investment "bargains" are often cheap for a reason, including hidden risks when there's a flight to quality.

2. Don't get carried away with government initiatives such as the "northern powerhouse" and "leveling up." The UK government rarely delivers.

3. Buying a specialist REIT does not offer broad diversification. I should have invested in a generalist REIT to get diversification.

4. Do not chase yield

5. Before buying anything, seriously question why you're not buying a tracker.

I'm now not sure whether to accept my losses from this terrible foray, or whether to leave it be. Inertia and an aversion to realising losses means I will probably be doing the latter. Let's hope that sitting tight ends up right, rather than compounding my pain.

We of a certain age have all been there. Your Regional REIT was my Cable & Wireless. However even the quality REITS have not done very well. See Segro.

It is good to be honest with yourself because you will probably always remember what went wrong. I agree with all you say except that tracker's are not always the answer either. They are however safer than buying what is a maverick REIT

Dod

IMHO It is too early to say how the REIT sector will look in a year or so. A massive amount of dust to settle. I don't see anything in RGL (which I hold) that is extra ordinally different to others, and all have had a bad run. Maybe @skyship has a view?

airbus330 wrote:IMHO It is too early to say how the REIT sector will look in a year or so. A massive amount of dust to settle. I don't see anything in RGL (which I hold) that is extra ordinally different to others, and all have had a bad run. Maybe @skyship has a view?

On the assumption it's the same person posting, I have been reading Skyship's comments on another forum. Maybe he/she might comment here too? I don't know, but he/she seems very knowledgeable regarding REITs for sure.

Commentary from Edison. Pretty much replicating what the company has been saying jn the media recently. Paid for "research" but they can't tell lies. I presume.

https://www.edisongroup.com/research/co ... eld/32198/

Lies, No but they can repeat what is said to them which might not be fully correct or the opinion turns out wrong.

Gerry557 wrote:Lies, No but they can repeat what is said to them which might not be fully correct or the opinion turns out wrong.

That is true. But is it not also true of any company statement or 3rd. party analysis? There is always a degree of forward looking tealeaf reading.
I've been following RGL for a number of years and the management have largely been praised, even if their business positioning has been questioned.
Anyway, up 2% today, so a brighter start to the week.

Well I'm into the story and added more recently.

Wasn't it plus 11% last week so still more to go

Worth a watch if you're interested in RGL -

https://www.edisongroup.com/edison-tv/r ... w-2/32271/

Those with an interest in Regional might care to take a read of a short update on office utilisation by RGL today. Gloom about work from home and UK out of London offices might be overdone, just as RGL have been saying all along. Link -

https://uk.advfn.com/stock-market/londo ... y/91285948

So a divi cut and property sales to reduce LTV.

The divi is going to be aligned on earnings which will reduce as property is sold. Unless they can fill/sell voids

Share price reaction as expected. At this rate you might be able to buy at the same divi % level by the end of the day.

Just have to hope that selling doesn't become a snowball effect throughout the sector

Gerry557 wrote:So a divi cut and property sales to reduce LTV.

The divi is going to be aligned on earnings which will reduce as property is sold. Unless they can fill/sell voids

Share price reaction as expected. At this rate you might be able to buy at the same divi % level by the end of the day.

Just have to hope that selling doesn't become a snowball effect throughout the sector

RGL Entering a death spiral? Further assets sales to pay down debt. Equals further drop in rental income followed by more dividend cuts. Upcoming lease breaks and expiries. More cuts. Further falling share price. Etc.....

Hard to see where Regional goes from here.

As per my post a page or so back, what a disaster this has been.

I'm out and will be putting the meagre proceeds into FCIT and Caledonia instead.

BullDog wrote:

Gerry557 wrote:So a divi cut and property sales to reduce LTV.

The divi is going to be aligned on earnings which will reduce as property is sold. Unless they can fill/sell voids

Share price reaction as expected. At this rate you might be able to buy at the same divi % level by the end of the day.

Just have to hope that selling doesn't become a snowball effect throughout the sector

RGL Entering a death spiral? Further assets sales to pay down debt. Equals further drop in rental income followed by more dividend cuts. Upcoming lease breaks and expiries. More cuts. Further falling share price. Etc.....

Hard to see where Regional goes from here.

RNS update today. Regional must be perilously close to breaking loan covenants? Smelly stuff will really hit the fan if that happens.

At what stage could this become a target?
NAV is around 76.74
Discount around 66%

Could continue downwards, but how far?
Covenents?

shaunm wrote:At what stage could this become a target?
NAV is around 76.74
Discount around 66%

Could continue downwards, but how far?
Covenents?

I'm afraid I think Regional is now irretrievable and in a slow death spiral. Hope I am wrong, but I can't see how this company can survive beyond the very short term.