(SBD) Songbird Estates

Songbird have a lot of good projects underway. Forget £34 - that will never happen, but I think the stock has legs to see some modest upside over the next 12 months (maybe to £1.60-£1.70 level) and is still undervalued long term ( although I would not buy more right now as the FTSE is pretty overbought right now and is due a retrace in the next 2-3 months)

Baker,
I'm a fairly recent holder of SBD. I notice you first posted on Songbird a few years ago. Wonder what it will take to get back, if at all, to those heady days of £34.As you say, more Qatari interest or Russian interest such as Abramovitch with Zoltav.
YB

the historic chart since 2004 is quite an eye opener . To think it once traded at £34.
It has pretty much flat lined since its dramtic fall post 2009. You never know , the Qatari's might get interested in upign their stake further at some point, although the share ownership by CIC makes any takeover difficult.

The 28 November 2012 completion of the Share Buyback Programme appears to have had a beneficial affect on the share price.

24,509,820 Ordinary Shares were purchased at a weighted average price of 122.14 pence per ordinary share.

Well done, directors.

I know Im talking to myself but I'll just congratulate myself and sell half now

any reason? or a buying opportunity?

I hold. I always wanted to hold sbd as love canary warf.

Yes, a Director of this company has enough faith in it to invest over £600,000 of his own cash !
Promising times ahead...that's one hell of a big spend...and comes on the back of other, albeit much smaller, Director deals.

Good luck to all holders.

OceanD

I've been scouting for some info on SBD, because nothing seems to be happening here. There was talk of interested investors over a year ago and not much since.

Will any of the recent infastructure investments have an effect on the share price sometime soon?

Cheers

Wednesday, January 18, 2012
Wednesday's most followed: Mouchel Group, Zoltav, JD Wetherspoon, Greene King, Findel, Songbird Estates
http://bit.ly/yqUpu9

http://www.constructionenquirer.com/2012/01/03/funding-deal-to-start-23-storey-canary-wharf-tower/

http://www.constructionenquirer.com/2012/01/03/funding-deal-to-start-23-storey-canary-wharf-tower/

Songbird Estates HOLD
23/09/2011 Ben Jaglom
http://www.growthcompany.co.uk/recommendations/1657073/songbird-estates.thtml


Canary wharf landlord Songbird Estates (SBD) has reported an 8.1% increase in net assets to £1.89bn, noting that it has pre-let half of 25 Churchill Place.

The AIM 50 constituent, the third largest company on the junior market by market cap declared a 3.7% increase in its NAV per share to 194p over the six months to June. The market value of its property portfolio stood at £5bn (2010: £4.9bn) while the weighted averaged equivalent yield of its office portfolio was 5.3% (2010: 5.2%.) Rental income fell from £153.5m to £124.6m. Cash stood at £945.3m.

Chairman David Pritchard argued that its new development 25 Churchill Place had demonstrated 'confidence in the market at Canary Wharf' having pre-let half of the 500,000 square feet to the European Medicines Agency. However he warned that in the 'face of turbulent macro economic conditions' and 'concerns on the levels of sovereign debt in Europe and the US' the outlook for the second half is 'less certain'.

Analysts at Evolution Securities are forecasting an adjusted NAV per share of 203.7p with EPS of 1.96p a share for the year to December 2011. In 2012 a NAV of 221.9p a share with EPS of 3.52p are expected.

With a non-executive board including various representatives of the Qatar Investment Authority Songbird is unlikely to run out of cash for the foreseeable future. Nonetheless downward pressure amidst the current financial crisis may put pressure on rents. At the current price, shares in the AIM behemoth look fairly valued. Hold.

Tags: AIM 50, Middle Eastern Investors, Qatar Investment Authority

Sector: Real Estate

Companies: Songbird Estates

Market cap: £875.8mPE Forecast: 58.4
Share price: 114.5p

Something funny is happening when the chairman suddenly resigns and the CEO breaks all the governance rules and takes on the duel role.Maybe it suits them not to have an independent heading the board when a bid comes?

There is also the potential for dividends one day in the future, but i think that is still some way off.

MIG

I hope we are! This share has gone nowhere much since i bought a copule of years ago. A 4% profit is what i am on at the moment.

Very disappointing as rents are rising in central London for quality office space and really Songbird should be, in my opinion, further north than where we find ourselves.

I am tempted to sell up and go elsewhere, but the beauty of Songbird is that there is always, in my opinion, a takeover possibility as i beleive there are sovereign wealth funds and investment vehicles out there looking for "glamorous" real estate assets.

Are we seeing a step improvement in this share - is there any particular news causing the trend upwards?

The Times today, a city source suggested that Qatar and Glick were just taking unwanted shares from a hedge fund in a negotiated deal, so probably no exciting takeover/stakebuilding. I shall hold for the medium to long, any recovery in the Propert market should see this sp improve greatly.
Sj

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Songbird Estates, the biggest shareholder in Canary Wharf, rose 2.4 per cent to 149p after Qatar Holdings said it had acquired a further 28.5m shares, increasing its holding to 27.7 per cent. In addition, Simon Glick, the New York-based private investor, announced a raised stake of 25.1 per cent.

Nope. However, I bet something's gonna happen.

Some very large trades well above the ask price gone through in late trading today.... Anyone heard anything? Someone building up a massive stake???

15:33 155.00p 15,558,677 £24,115,949 Buy O
15:32 155.00p 12,153,323 £18,837,651 Buy O
15:34 154.95p 12,153,323 £18,831,999 Buy O
15:35 155.00p 8,783,785 £13,614,867 Buy O

Created: 28 March 2011 Written by: Stephen Wilmot

It was an eventful year for Songbird Estates, which owns roughly half the property in Canary Wharf through its subsidiary Canary Wharf Group. The clear highlight was the sale of 25 Bank Street - the old London headquarters of Lehmans Brothers - to JPMorgan for £495m.

Not only was that sale completed at £145m above book value, but the group received a further £145m in cash from AIG to settle its insurance claim on the property after Lehmans' bankruptcy. That compensated for a 9.7 per cent decline in the group's rental income, as Lehmans' administrator stopped paying for 25 Bank Street in the first quarter of 2010 and the Docklands rental market flat-lined.
However, a 9.7 per cent revaluation of the property portfolio gave profits and net asset value a crucial boost. The fall in earnings per share reflects the sharp increase in the average number of shares in issue following a £836m equity issue backed by the Chinese and Qatari sovereign wealth funds in the autumn of 2009, and a £140m open offer last October to pay off a shareholder loan, which have put the group on a sounder financial footing.

Broker Liberum Capital expects a year-end adjusted NAV of 196p.


SONGBIRD ESTATES (SBD)
ORD PRICE: 145p MARKET VALUE: £1.11bn
TOUCH: 144.5-145p 12-MONTH HIGH: 170p LOW: 130p
DIVIDEND YIELD: nil TRADING STOCK: nil
DISCOUNT TO NAV: 22%
INVESTMENT PROPERTIES: £4.45bn NET DEBT: 147%
Year to 31 Dec Net asset value (p)** Pre-tax profit (£m) Earnings per share (p) Dividend per share (p)
2009 168 335 58 nil
2010 187 464 41 nil
% change +11 +39 -28 -
**Adjusted for deferred tax, derivatives and non-controlling interests


TIP UPDATE:

Buy
The Canary Wharf property market tends to lag the City, where rents have begun to rise, and that, combined with the upswing in prime London-office values, should give Songbird something to sing about this year. Frustratingly, the shares have hardly budged since our buy tip (166p, 16 Apr 2010), yet the rationale for buying looks stronger than ever. Buy.
Last IC view: Buy, 149p, 23 Sep 2010

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By Daniel Thomas and Adam Jones

Published: March 25 2011 09:58 | Last updated: March 25 2011 17:40

Songbird Estates, the biggest shareholder in Canary Wharf, will expand its property holdings across London after resurgent demand among financial service occupiers helped fill its estate beyond pre-crash levels.

Songbird generated a pre-tax profit of £463.8m during 2010, up from £334.6m a year earlier, reflecting in part an increase in property valuations of 9.7 per cent during the year as well as gains from property disposals.

Adjusted net asset value per share rose 10 per cent to 187p in the second half of the year.

The company said it expected to be increasingly involved in property development across London in 2011 – in addition to starting a Canary Wharf development pipeline that comprises more than 5m sq ft in total, with its first scheme since the recession to begin this year.

The company’s 6.9m sq ft investment portfolio was 97.1 per cent let at December 2010, with a weighted average unexpired lease term of about 16 years.

George Iacobescu, chief executive of Canary Wharf, said: “Three years ago we thought that the world was coming to an end but we have emerged with a lower vacancy rate than then.

We are looking at projects across London and hopefully we will see some good news this year.”

The company is seen as a frontrunner to develop the £300m site of Shell’s London headquarters in a joint bid with Qatar.

There are plans for more than 1.5m sq ft of new offices at the site.

Shell, which agreed last year to occupy space on Canary Wharf while the buildings were redeveloped, has a shortlist of bidders.

Songbird, an Aim-quoted company that owns 69 per cent of Canary Wharf Group, also agreed a lease renewal to Barclays Capital during the year as well as the sale of the former Lehman Brothers headquarters at 25 Bank Street to JPMorgan for almost £500m and Drapers Gardens for £242.5m.

It also agreed a joint venture with Land Securities to build a tower at 20 Fenchurch Street.

Mr Iacobescu warned there had been a slowdown in the amount of space that was being let since the year end owing to the economy and the global political situation, but added that the company saw the effect as temporary.

Songbird said the working population of Canary Wharf would increase from 95,000 to a little more than 105,000 over the next year, with the arrival of staff from JPMorgan, the investment bank, and Shell.

It played down the effect that this would have on existing problems with overcrowding on the Jubilee line tube service into Canary Wharf, arguing that these primarily stemmed from signalling work that it expected to conclude in 2011.

John Garwood, Songbird company secretary, said: “We have been frustrated with the length of time taken to do these improvements.”

The signalling upgrade would lead to an increase of about 50 per cent in the number of Jubilee line trains serving Canary Wharf each hour, he added.

Shares in Songbird rose 3p to 144p.

For a wavering moment Canary Wharf looked unfashionable. But I believe it was just a moment. The JPM deal was taken as a huge loss, but actually step back a moment and what JPM have done is make a huge commitment to the estate. The Riverside South site isn't even dead either. Occupancy is very high overall, there is some development in retail above the under construction Crossrail box, plans for residential towers around the estate are being dusted down by a myriad of other developers and should more demand materialise planning permission for more office is in place at Heron Quays. I think the future is rosy for this quarter of London as a place to both live and work.

Would anyone agree with met that the downward trend appears to have reversed? It doesn't appear overbought.

http://www.ft.com/cms/s/0/1ea7d896-201e-11e0-a6fb-00144feab49a.html#axzz1B5XdPxMm

Things are looking up for London property especially (MNR) as some of the cash rich Big players are being tempted to get their wallets out whilst values are historically cheap. Although Minerva is on a smaller scale than SBD, hopefully this sort of thing presages positive direction for 2011.

Maybe even Qataris or Chinese sovereign wealth interest will resurface. Last year was very boring for SBD I would be surprised if it stays moribund for long. Under-supply in London office space, buyer interest returns, recovering values, world recovery continues, walkie-talkie etc, etc.
John.

i couldn´t agree more. We need to know what their plans are. The share price over the last nine months seems to have drifted down pretty badly.

Let´s hope for some positive news with some concrete plans!

If you're right, pot-plant, I wonder why JPM paid £640 million for an asset valued at £550 million for balance sheet purposes. Obviously there's some variation, but £90 million seems quite an uplift.

This must have the approval of the major shareholders, who seemed to like the prestige of owning the "iconic" Canary Wharf building. It doesn't look like the start of a break up but all Songbird seem to be saying is "we have plans to have plans". It would be nice to know those plans pretty soon...

From the interim report;
"Adjusted NAV also includes the uplift in value of 25-30 Bank Street attributable to the arrangement with AIG which provides for the payment of the shortfall for 4 years of contracted rent from first draw down following a dfault by Lehman (see 'Business Review - Lehman'). The market value of the building at 30 June 2010 for balance sheet purposes was £350.0m (31 December 2009 - £360.0m, 30 June 2009 - £375.0m) whereas the market value adjusted for the arrangement with AIG was £550.0 (31 December 2009 - £550.0m, 30 June 2009 - £550.0m) reflecting the fact that the arrangement cannot be transferred to a purchases of the property. A fee of approximately £3.6m per annum is payable in relation to this artrangement which is charged to the Consolidated Income Statement as a financing cost."

According to the FT - http://www.ft.com/cms/s/0/a1178978-0c2f-11e0-b1a3-00144feabdc0.html#axzz18kfRtHpo

"....
The estate is owned by Canary Wharf Group, which will be paid £495m for the building from JPMorgan in addition to £144.5m from the termination of a rental cover facility in place with AIG that insured lost rent from Lehman for four years. In total, Canary Wharf will recoup about £640m from the sale of the site and the end of the rental guarantee.
......"

So realised value is £639m (495+144) ? Am I reading that wrong or will this translate to a slight uplift in asset value?

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/8214999/JP-Morgans-Canary-Wharf-deal-is-not-everything-the-City-hoped-it-would-be.html

J.P. Morgan Buys Two London Buildings

LONDON—J.P. Morgan Chase & Co. said Monday that it has bought two buildings in London as it continues to expand internationally, indicating the U.S. firm isn't fazed by new rules that make it more expensive to operate in the U.K.

JPMorgan said it is buying 25 Bank Street in Canary Wharf from Songbird Estates PLC for £495 million ($768.24 million) to house its European investment banking headquarters from 2012.

It is also buying 60 Victoria Embankment from Carlyle Group from an undisclosed amount. The bank has been leasing the London building since 1991. It currently houses J.P. Morgan's Treasury and Securities Services division.

"Even during the recession, we have continued to invest and grow our businesses internationally," J.P. Morgan Chairman and Chief Executive Jamie Dimon said. "This acquisition is a long-term investment and represents part of our continued commitment to London as one of the world's most important financial centres," he added.

http://online.wsj.com/article/SB10001424052748703886904576030910963368144.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Land Securities Group PLC (LAND.LN), the U.K.'s largest landlord, and Canary Wharf Group PLC, the main subsidiary of Songbird Estates PLC (SBD.LN) and developer of London's second financial district, Tuesday confirmed they have formed a joint venture to build the skyscraper dubbed the Walkie Talkie.
19 Oct 2010.

This looks a very good deal to me.

See link for more details:

http://www.londonstockexchange.com/exchange/news/dow-jones/news-detail.html?newsId=20101019DN002600

as im out you watch this share go up good luck all im pleased to be out it was longer than planned

Wasnt please when it happened again as its been a long drawn out thing i got my 1-28 shares yesterday as soon as im in profit im out. In time i think its good thing for the company but i also lost so many deals in the last year or so waiting for the buyout etc as my money was tied up i only hold 11000 plus the new ones at one time i was up to a 800000 before they got converted in 80000 any way good luck all im sure it will come good long term for you all

We all take a hit when the OpenOffer is announced, it's unavoidable, but sometimes it's overdone.

At this point since we can't auction our rights, we either have to eat the loss from the dilution, or stump up £1.28 each for extra shares and hope there will not be a lasting overhang depressing the sp when we want to cash it out. The sp rise Friday and today looks promising, so £1.28 looks a good deal.

There will be softness right after the new shares are admitted to Crest but that may not last. Surely the only short term decision you have to make is "will I be able to get back at least £1.28/share for my extra shares?".

I wouldn't count on getting a dividend in the short term, SIPID. It would be counter-intuitive to ask shareholders for money and then pay them a dividend soon after- not to mention tax inefficient.

Besides, you can 'manufacture dividends' by selling chunks of shares if the size of your holding justifies it.

Given the size of the stakes of the major parties involved now, however, they must be planning to return to paying dividends over the medium to long term as they won't be prepared to keep their capital tied up for so long without any cash return. The recent transaction in which the lenders voluntarily switched from guaranteed pref dividends onto unguaranteed ordinary shares suggests they expect a higher return from the latter over the long term.

Regarding whether or not you should take up your offer, this is a personal choice and you should DYOR. Personally, I believe in the Songbird concern and have taken up my rights - albeit reluctantly as I could do with the money for other things.

Nice to see the price holding up around all this uncertainty.

Should I take up the Offer my SP will drop from £2.75 to £2.54 pps which is not sufficiently worthwhile in my view but I would do so if there was a glimmer of a chance of a divi. soon.

Accept the offer if you can find the money in this rising market (IMO) .

The danger of investing in capital raising issues is that they sometimes create an overhang which depresses the sp for a few weeks afterwards and you would have been better off selling out and buying back in the overhang.

This sp already should stabilise quickly because the major shareholders are committed, and with luck our extra shares will be worth more than 1.28 when they start trading. But DYOR.

More shares are being put into circulation – is that right?, so songbird have offered to sell me 458 shares at a price of 128pence, a grand total of 581.00 pounds!
Now I am still learning and don’t really know if this would benefit me or not.
My question is would people recommend I buy what they have offered me? I have until October 4 to make the decision. I have the money.
Thank you

Essentially as I read it Songbird uses the CWG dividend (£51.9 million) to pay for part of the CWG 8.45% acquisition plus interest. If CWG pays future dividends it will have been a good deal. Meanwhile the rest of the deal has to be financed by the cash call.

Without prospect of dividend payments the sp is bound to languish. Profitability will help, increased NAV also, but for a property investment the best news would be a road-map back to resumption of dividends.

I get the impression from the wording that they always knew there was a possibility of another small capital raising. It would seem that the pref shares holders are exercising an option not to roll over the debt. Since they are committed also to taking up their open offer rights, this is effectively a debt/equity swap. They're getting a pretty good deal - accrued dividends and cheap shares - which is slightly annoying, but it is a strong vote of confidence in the company in my opinion, as they're prepared to forgo guaranteed pref dividends for possible future capital growth in the ordinary shares.

This won't be the end of the story. The lenders will be expecting future cashflows from the shares, so it could be a precursor to the resumption of dividends or the elusive acquisition we have been discussing.

As a side note, I always wonder why they don't use some of their £800m - odd cash balance to pay down some of these debts. The report says that most of the cash is held in subsidiaries such as CWG as collateral, but £800m seems a bit high just for that.