Lloyds (LLOY)

[Breelander]

Lloyds Banking Group
Acquisition of Embark Group

Lloyds Banking Group (Lloyds, or the Group) today announces that it intends to acquire the Embark Group (Embark), a fast growing investment and retirement platform business. Embark enhances the Group's capabilities to address the attractive mass market and self-directed Wealth segment, completing its Wealth proposition. Embark will also enable the Group to re-platform its pensions and retirement proposition, delivering a market-leading platform for intermediaries and significantly strengthening its offering in Retirement, an important growth market.

https://www.investegate.co.uk/lloyds-ba ... 00128360G/

[Alaric]

Acquisition of Embark Group

Has anyone heard of them or used them?

https://embarkgroup.co.uk/

Embark Group is a fast growing, diversified, financial services business and one of the largest retirement solutions providers in the UK. We operate successfully in both the advised and institutional areas of the retirement market through our leading range of pension, wrap platform, research and consultancy services.

[gnawsome]

Acquisition of Embark Group

Has anyone heard of them or used them?

https://embarkgroup.co.uk/

Embark Group is a fast growing, diversified, financial services business and one of the largest retirement solutions providers in the UK. We operate successfully in both the advised and institutional areas of the retirement market through our leading range of pension, wrap platform, research and consultancy services.

Do not be surprised if you find yourself being contacted by them in future by all/any means and multiple times -- as they will have a whole harvest of contacts from shareholder and client lists

[murraypaul]

This is the story today:

https://www.bbc.co.uk/news/articles/cjkdyy9xgn3o

Lloyds is planning to become one of the UK's biggest landlords as it aims to buy 50,000 homes in the next decade, the banking group has confirmed.

The banking giant is to charge tenants rent as a private landlord under its recently launched Citra Living brand.

The Financial Times, which first reported the story, said the bank was aiming to buy 10,000 homes by the end of 2025.

Lloyds is currently the largest mortgage lender in the UK, providing nearly one in four home loans.

Citra Living will initially start small and test its plans in the rental market, with a focus on buying and renting newly-built properties. Its first cohort of homes for rent will begin with 45 new apartments at Fletton Quays in Peterborough.

...

The Financial Times reported that if Lloyd hit its 2025 target, it would make Citra larger than the current size of Grainger, the UK's current largest private residential landlord, which owns about 9,100 properties and has a market capitalisation of £2.1bn.

Based on current property prices and rental estimates, this would create a portfolio worth £4 billion, generating pre-tax profits of around £300 million, the paper said.

[monabri]

https://www.bbc.co.uk/news/articles/cjkdyy9xgn3o

"Lloyds is planning to become one of the UK's biggest landlords as it aims to buy 50,000 homes in the next decade."

What are they thinking?

[Dod101]

https://www.bbc.co.uk/news/articles/cjkdyy9xgn3o

"Lloyds is planning to become one of the UK's biggest landlords as it aims to buy 50,000 homes in the next decade."

What are they thinking?

As I said on another thread, presumably this is just using some of their reserves to buy hard assets, rather like Legal & General has done in buying a housebuilder or two.

Dod

[daveh]

https://www.bbc.co.uk/news/articles/cjkdyy9xgn3o

"Lloyds is planning to become one of the UK's biggest landlords as it aims to buy 50,000 homes in the next decade."

What are they thinking?

As I said on another thread, presumably this is just using some of their reserves to buy hard assets, rather like Legal & General has done in buying a housebuilder or two.

Dod

They may also be seeing a market that is being poorly served (the private rental market) with it becoming harder for private landlords due to increased regulation and the under supply of the council/public rental market. There could be good money to be made if they do it well and it could be good for the tenant too if done well.

[gnawsome]

https://www.bbc.co.uk/news/articles/cjkdyy9xgn3o

"Lloyds is planning to become one of the UK's biggest landlords as it aims to buy 50,000 homes in the next decade."

What are they thinking?

Maybe anticipating an interest rate rise and defaulters needing a buyer and provider of a home at the least inconvenience -- making for a good public image

[monabri]

50,000 homes at £200,000 each....£10 billion.

The concern that crossed my mind was, suppose that there are economic difficulties ahead and increased job losses, are Lloyds going to turf families out onto the street for non payment of rent? Then I see political pressure ( remember the recent Prudential Regulation Authority interference) stepping in and suddenly Lloyds is a landlord with a reduction in income...translation:no dividend payments!

I'm really getting cold feet over Lloyds, they're a bank not a landlord. Besides which, if interest rates do go up, what will happen to house prices which are already overheated.

Edit. £4bn portfolio.? They're obviously using different assumptions about housing prices .... and I'd be dubious about the 7.5% yield pre tax.

[Arborbridge]

50,000 homes at £200,000 each....£10 billion.

The concern that crossed my mind was, suppose that there are economic difficulties ahead and increased job losses, are Lloyds going to turf families out onto the street for non payment of rent? Then I see political pressure ( remember the recent Prudential Regulation Authority interference) stepping in and suddenly Lloyds is a landlord with a reduction in income...translation:no dividend payments!

I'm really getting cold feet over Lloyds, they're a bank not a landlord. Besides which, if interest rates do go up, what will happen to house prices which are already overheated.

Do your cold feet therefore extend to LGEN?

[monabri]

50,000 homes at £200,000 each....£10 billion.

The concern that crossed my mind was, suppose that there are economic difficulties ahead and increased job losses, are Lloyds going to turf families out onto the street for non payment of rent? Then I see political pressure ( remember the recent Prudential Regulation Authority interference) stepping in and suddenly Lloyds is a landlord with a reduction in income...translation:no dividend payments!

I'm really getting cold feet over Lloyds, they're a bank not a landlord. Besides which, if interest rates do go up, what will happen to house prices which are already overheated.

Do your cold feet therefore extend to LGEN?

The LGEN properties are a small percentage by value of their assets under management ( £1.3Tn). LGEN are involved in "housing" at a different level than what Lloyds appear to be proposing ( Lloyds are splashing the cash and buying houses whereas LGEN are involved in supplying funds to build and also have their own nascent modular system/ factory).

Edit...based on past track record...LGEN or Lloyds?

[Bouleversee]

50,000 homes at £200,000 each....£10 billion.

The concern that crossed my mind was, suppose that there are economic difficulties ahead and increased job losses, are Lloyds going to turf families out onto the street for non payment of rent? Then I see political pressure ( remember the recent Prudential Regulation Authority interference) stepping in and suddenly Lloyds is a landlord with a reduction in income...translation:no dividend payments!

I'm really getting cold feet over Lloyds, they're a bank not a landlord. Besides which, if interest rates do go up, what will happen to house prices which are already overheated.

Edit. £4bn portfolio.? They're obviously using different assumptions about housing prices .... and I'd be dubious about the 7.5% yield pre tax.

It will be a sad day if they do get a 7.5% return and doesn't make sense when savers don't even get 1% gross. Unless things have changed in the past few years, they will be lucky to get 3 % gross. I trust they will have to pay the same stamp duty rate and be taxed in the same way as private landlords who are increasingly finding it not worth the aggro. We seem to be moving further and further away from the ideal of people owning their own homes which for a while was facilitated by mortgage tax relief etc. and even though I am losing a lot on my Lloyds shareholding, I can't see how they can justify charging rents which would give them a return of 7.5% as well, presumably, as capital appreciation. Who is going to be able to afford that after tax? Certainly not youngsters starting jobs too far away from home to stay there so there will be an effect on career choices. I wonder what level of accommodation they have in mind. I think the youngsters will prefer a private landlord offering the sort of flat share I started out with in Hampstead, i.e. 3 girls sharing one large bedroom, with a nice, large living room and fairly basic kitchen and bedroom. We had a lot of fun. I think Lloyds may have miscalculated.

[scrumpyjack]

Is the 7.5% a gross return or after financing some of the cost of the properties with borrowings?

Also presumably Housing Benefit takes away some of the risks of tenants not being able to pay rent?

Perhaps the returns on money lending are so small they are going into this to diversify?

The banks still don't look like good long term investments to me, I really must bring myself to sell my shares in them, but like a mug I'm always waiting for them to recover!

[monabri]

Little bit of digging!

Fletton Quays
https://search.savills.com/property-det ... 0000099220

P.O.A from Savills.

The site forms part of the south bank re-development known as Fletton Quays, which will eventually provide:-
358 luxury apartments, currently under construction by Weston Homes.
160 bed Hilton Hotel with a 2 storey roof top bar and terrace, leisure facilities and restaurant.
166,000 sq ft of Grade A office space including the Peterborough City Council's new headquarters


https://www.knightfrank.com.my/resident ... tton-quays

Developer: Weston Homes Estimated completion date: Block F October 2018-June 2019, Block G June 2019-December 2019

Units: 229 in this phase; total 358

Pricing

1 beds from £172,000 - £200,000

2 beds from £205,000 - £270,000

3 beds from £287,500 - £310,000

Overview

Amenities: Hotel, shops and a restaurant on site.

Transport: Peterborough Station is a 12 minute walk (6 minute drive) from the site, with direct access to Central London (King’s Cross) in 50 minutes

Parking: 1 x space included with all units, 2 x spaces included with duplex units

Estimated service charge: £2.00 per sq ft

Ground rent:

1 bed £300 p/a

2 bed £350 p/a

3 bed £400 p/a

Lease: 999 years


Rental

https://www.rightmove.co.uk/properties/ ... el=RES_LET

(£1150 pm).

£1150x12 / £240k ( mid price - 2 bed appt).

I make that a gross yield of 5.7%.

I guess Lloyds would say " what's the price for 45 units?".

[Bouleversee]

Why isn't there a floor plan? Can't form any judgment without that. Is the kitchen in the living room and what are the bedrooms like? I wonder who they are aiming at.

[monabri]

Why isn't there a floor plan? Can't form any judgment without that. Is the kitchen in the living room and what are the bedrooms like? I wonder who they are aiming at.

2nd homes for folk working at the city council new HQ Monday to Friday? It does look like the kitchen and living area are open plan.

[Arborbridge]

Why isn't there a floor plan? Can't form any judgment without that. Is the kitchen in the living room and what are the bedrooms like? I wonder who they are aiming at.

2nd homes for folk working at the city council new HQ Monday to Friday? It does look like the kitchen and living area are open plan.

It does look like the kitchen and living area are open plan.

That would seem likely - it's a very popular way of living these days. The cooking as theatre when your friends come around, but it's also cheaper to make that way.

[murraypaul]

Edit. £4bn portfolio.? They're obviously using different assumptions about housing prices .... and I'd be dubious about the 7.5% yield pre tax.

For comparison, the current largest private landlord is Grainger.
Their 2020 results for their private rental market showed an average gross yield of 5.2%.
They aim at mid-market rather than luxury.

[idpickering]

2021 Q3 Interim Management Statement

HIGHLIGHTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2021

Continued business momentum and solid financial performance

• Strong progress on Strategic Review 2021 priorities, including an all channel net promoter score and mobile app net promoter score above 2021 targets, improved capabilities in Markets products and a 12 per cent increase in new clients using the Group's improved merchant services proposition

• Statutory profit before tax of £5.9 billion (£2.0 billion in the quarter) and underlying profit of £6.3 billion (£2.2 billion in the quarter), both up significantly compared to the first nine months of 2020

• Solid net income of £11.6 billion, up 8 per cent (up 20 per cent compared to the third quarter of 2020), benefiting from increased average interest-earning assets of £443.0 billion, a banking net interest margin of 2.52 per cent and other income of £3.8 billion, alongside a reduction in operating lease depreciation

• Sustained cost discipline with operating costs of £5.6 billion, up 1 per cent compared to the first nine months of 2020, including the impact of rebuilding variable pay. Remediation charge of £100 million in the third quarter

• Asset quality remains strong. Net impairment credit of £740 million, including a net credit of £84 million in the third quarter, based upon improvements to the macroeconomic outlook for the UK, combined with robust credit performance. Management judgements in respect of coronavirus of c.£1.2 billion retained

Balance sheet and capital strength further enhanced

• Loans and advances at £450.5 billion, up £10.3 billion (£2.8 billion in the third quarter), driven by strong growth of £15.3 billion in the open mortgage book (£2.7 billion in the third quarter)

• Customer deposits of £479.1 billion, up £28.4 billion (£4.7 billion in the quarter), with continued inflows to the Group's trusted brands, including Retail current accounts up £12.2 billion. Resulting loan to deposit ratio of 94 per cent provides a strong liquidity position and significant potential to lend into recovery

• Strong capital build of 159 basis points. CET1 ratio of 17.2 per cent after dividend accrual, significantly ahead of the ongoing target of c.12.5 per cent, plus a c.1 per cent management buffer and regulatory requirement of c.11 per cent

Outlook

• Given our solid financial performance and the improved UK macroeconomic outlook, the Group is enhancing its guidance for 2021. Based on the Group's current macroeconomic assumptions:

- Net interest margin now expected to be modestly above 250 basis points

- Operating costs expected to be c.£7.6 billion

- Impairment now expected to be a net credit for the year

- Return on tangible equity now expected to be over 10 per cent, excluding the c.2.5 percentage point benefit from tax rate changes

- Risk-weighted assets in 2021 expected to be below £200 billion

• The Group continues to target a return on tangible equity in excess of its cost of equity in the medium term

https://www.investegate.co.uk/lloyds-ba ... 00024985Q/

[Dod101]

Presumably at least partly as a result of the constraint on dividends the banks all seem to be awash with cash at the moment.

Dod