Today's STel features City of London Investment T (first IT to get to 50 years of uninterrupted dividend increases) and its long time manager says his biggest current bet is REITS and LAND is his biggest holding in that sector, citing the size of the discount to underlying assets of one third.
Seems he agrees with some of the posters on this board.
I hold BLND and not LAND but it seems to me the case for both is much the same, a good yield and a stonking one third discount to NAV so one can afford to wait for the gap to close.
On the basis that a profitable (through the cycle) business should be worth more than book value, stocks valued at less than net worth are worth a look. I think Benjamin Graham's rule was less than net cash, in his time there were stocks meeting that criterion but not much chance of that now or in the future. Commercial property is an illiquid asset but a discount of a third should be more than enough to compensate for illiquidity and the possibility of some valuation decline. I am slightly concerned this argument is a bit pat, but as Nick Train says investment isn't always difficult.
Looks like you sold out at a good time per the chart below. I've watched as I've seen the price drop with the release of their lacklustre 2017 results. Brexit economic plus political uncertainty has driven LAND's asset values into reverse. Gone are the days of 10% asset value increases plus 4% dividends. We're on low or nil asset value rise but at least the dividend is OK for now.
"UK stockmarkets have proven hard to stop this year and the rally in both the FTSE 100 and FTSE 250 indices continue unabated. Both are currently near record highs, and we heard this week from chartist Alistair Strang that a massive 7,720 is not ..."
Well, the reason for that is that there hasn't been a Btexit. Likely to happen in March when we can expect a 10% fall. However, it won't take long to realise that without open borders we will lose hundreds of thousands of jobs and then the price will collapse another 30%.
Brexit is OK, but a hard Brexit will set the stock market back ten years,
Responding to my own blurb of a few months back, we now DO know LAND's updated valuation and behold, it didn't drop following Brexit :-)
In the six monthly report net asset value was 1,408p which means at today's price of 1,050p we are sitting on a 25% discount to net asset value. That is high by historic standards, although slightly better than BLND's 30% discount to net asset value.
I am more than happy to continue holding these excellent shares. They won't surprise on the upside, but I think it is reasonable to expect steadily rising dividends from their excellent building portfolio and development programme for many years to come.
I think (hope) we can trust these guys to develop new assets only when it is profitable to do so, and otherwise to return the excess capital to shareholders by way of continuing dividends.
This article is worth a read as a reasonable assessment of the current uncertainties of UK commercial property.
Although the Land Securities website shows current net asset value at around 14 pounds, which makes the current share price of 11 pounds appear far too cheap, that net asset value is based on the Mar 2016 annual report. So the valuation that supports that NAV was done at a time when we thought Brexit would probably not happen. Now that we know Brexit DID happen, what is the impact on LAND's net asset value? I cannot see anything on LAND's website that answers that question.
As pointed out in the article:
"In our view, it is still too early to assess the impact of Brexit on property prices, particularly as we have yet to see the impact on transaction activity following the referendum result."
The 2007/8 period was disastrous for commercial property values so I hope that is not what we are going to see again as I remain heavily invested in this sector. We really need LAND and others in this sector to come out and tell us how Brexit impacts on the last reported portfolio valuation based on recent transaction activity. With six monthly valuations, the next one is due around Oct or Nov with respect to the valuation at 30 Sep 2016. So there is still some time to wait.
"UK commercial property companies have been hit by renewed selling pressure this week on concerns around Brexit and its impact on underlying investment activity. Investor sentiment deteriorated in response to the UK construction outlook survey ..."
Hey Numberbiter, The nightmare scenario we hypothesized about in March has now occurred despite LAND having since issued its annual report recently. We can pat ourselves on the back for getting our analysis right. But I am sure licking my wounds in light of the price drop as a result of the perception that future prospects for lettings and the tenant market are now dimmer than they were a week ago.
This petition was stalled in parliament since 12th Aug 15; finally green lit on 12th feb 2016.
The FCA have finally replied, saying its nothing to do with them as they only deal with market abuse & insider dealing, now is your chance to have your say.
If you hate seeing buys reported as sells etc!!!!!!
Has already been sent to Martin Lewis, Daily Mail, Moneyweek & Watchdog.
My local MP supported this petition by writing to the petitions committee to help un-stall it.
Theres 650 MPs in Westminster, So have you written to your MP? 649 to go!
If this petition doesnt reach 10,000; then imo we might as well have not bothered as it will almost certainly be filed B1N; @ 10,000 the government should respond. ONLY 8 weeks to go !!!
So If you havent yet signed or indeed have but havent passed it on to others, then nows the time to do so.
Numberbiter, I guess it is true that property values would plummet if UK exited Europe as major commercial occupiers would possibly see Paris or other major European city as a better option, which is probably why there is fear overhanging these LAND shares. Possibly exacerbated by the fact that LAND specialises in UK, not European, property. Our unique currency might also play to our disadvantage. I guess that fear will remain and will fluctuate in line with the likelihood of Brexit.
I have just received an email from Robert Noel, the CEO of Land Securities, His view is that if we voted to leave Europe property prices in London would plummet because of the uncertainty. So it would appear that this share will only hold its current value if we vote to stay in the EU,
These appear to have become a bit pricey now having closed at £12.84. According to my calcs that puts them on a PE of 9.2 and pretty miserly dividend of 1.7%. Compared to last reported net asset value of £11.29 per their website home page (presumably from the 3Q statement issued in Jan 2015) the current share price is on a slight premium. All this makes them look pretty fully valued in my opinion. I am happy to hold but certainly would not add at this share price.
LAND... LAND SECURITIES excelent trading update tues saw stock move to a 6 year high and breakout, VOL is heavy having broken out from a long term horizontal range. Momentum behind these at the moment.
Yesterday I decided to take advantage of recent weakness to add a few of these to the existing holding in my ISA at £10.24, taking it up to a tad over 1.2% of my portfolio, with an average buy price of £7.04. 3% divi ain't bad, and the prospect of capital gains.
"Demand for space continues to outstrip supply in London's office market, LSE:LAND:Land Securities said today, but the UK's biggest real estate investment trust said it was unlikely to be involved in new developments unless they were pre-let.The ..."
Land Securities Group PLC ("Land Securities" / "the Group" / "the Company")
THIRD QUARTER INTERIM MANAGEMENT STATEMENT
Land Securities reports continued high levels of activity across its business, and announces two new central London development starts.
Good progress on developments
· £7.3m of development lettings signed since 1 October 2013 with a further £7.9m in solicitors' hands
· 123 Victoria Street, SW1, 93% let
· 62 Buckingham Gate, SW1, 57% let with a further 10% in solicitors' hands
· 20 Fenchurch Street, EC3, 64% pre-let with a further 23% in solicitors' hands
· Successful launch of Trinity Kitchen and Primark at Trinity Leeds
· Completion of pre-let retail development at Crawley
· Construction commenced at Taplow, 79% pre-let with a further 12% in solicitors' hands
· £243m of new developments commenced at 1 New Street Square, EC4 and 20 Eastbourne Terrace, W2
· Positive planning decisions at Ealing Filmworks and White Rose, Leeds
Land Securities ' chief executive Robert Noel yesterday argued that developers will not be building enough space to cope with demand over the next three years. Choice is evaporating, and potential tenants are expressing an interest earlier. This is even true in the West End market, which traditionally does not see many pre-lets.
The argument is a compelling one. For now, Land Securities' portfolio is showing good resilience. The proportion of void space within its London office portfolio rose from 2.5 per cent to 2.9 per cent in the first financial quarter to end-June, but this was a one-off blip, reflecting the floor of one building in Victoria that was relinquished by an existing tenant for redevelopment. Though various retail collapses are still working their way through, the level of voids at the retail portfolio was unchanged at 3.6 per cent. The company is working on the only significant new retail development under construction, Trinity Leeds, to open by March next year, which is 80 per cent full or under contract.
The market shares some of this optimism. The shares have appreciated by 17 per cent since the start of the year and the discount to net asset value has halved to 9 per cent. This takes a lot on trust; high enough for now, The Times' Tempus column writes (Last IC rating: Hold, 16 May)."
Good news re Tishman purchase today. Despite the adverse news of late re clients re-thinking their properrty strategies e.g. CMS decision to bail out of the Principal Place deal. It is good to know that Victoria is still regarded as the place to be.
i know Morgan Stanley reduced their 2012 NAV forecasts by 13% and their price targets by 30% for both LAND (980 to 680) and BLND (730 to 480) at the end of august so that may be a factor especially if others have also followed suit.
There is an article in the Wall Street Journal which states that Land Secutities expects "occupational demand from large corporate tenants to remain steady in 2011, despite the challenging outlook for the U.K. economy."
One way of appraising LAND is as a clearing house for a high yield. The prevailing sp indicates a divi yield of about 4.2% which is not far short of the the yield on its portfolio and the interest LAND pays on its borrowing. In other words, LAND is working hard (or if you prefer, the only reason LAND exists is) to provide shareholders with a yield of about 4.2%.
The further attraction is prospect of capital growth but I suspect many of their developments are unsaleable because the number of buyers outright are few. More likely marketing of the schmes would involve jvs or securitasion such as a hiving off into different companies as in a unit trust.
I have a target buying price of just under £6. I see no point in paying close to NAV just to get 4% or so; that is too risky all round.
Highly unlikely! The children working in the city investment market are trying their hardest to talk the market up whilst the grown-ups are quietly looking over their glasses at them! Landsec are however the best of a bad bunch and, if you must, then there is probably no safer place to be in the sector...
"Panmure Gordon reiterated its 'buy' stance for Land Securities (LAND) ahead of a 'busy week' for the REIT.
The broker believes the central London office market remains one of the most attractive market segments for rental growth opportunities - "Land Securities has significant exposure here and looks well placed to benefit from rising rents in our view."
It added that the "companys shares look good value in our view, trading on a 0.77x PNAV multiple and offering a 4.9% dividend yield based on respective March 2011 forecasts. We remain buyers with a target price of 656p." Land Securities finished 4.5p firmer at 577.5p"
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