Category: Uncategorized (Page 209 of 310)

Fourth interim dividend

For the year ended 31 March 2024

Schroder Real Estate Investment Trust (the “Company”) announces that the directors of the Company have declared a fourth interim dividend of 0.853 pence per share for the year ended 31 March 2024 on the ordinary shares of the Company.

The dividend payment will be made on 28 June 2024 to shareholders on the register at the record date of 14 June 2024. The ex-dividend date will be 13 June 2024.

The dividend of 0.853 pps will be wholly designated as an interim property income distribution (‘PID’).

UK Market Context

Since the recent UK real estate market cycle high of June 2022, average UK real estate values have fallen 25%, with the Company’s underlying portfolio value falling by 18% over the same period. This is a significant correction and compares with a 44% average market decline during the 2007 to 2009 global financial crisis (‘GFC’), and a 27% decline during the recession of the early 1990s.

Falling values and weak sentiment translated into a dearth of investment activity, with transactions in the final quarter of calendar year 2023 the lowest since the GFC. Furthermore, although debt levels in the real estate sector are low compared with the GFC period, lending for new acquisitions is the lowest since 2007 (Source:  Bayes Business School). Low lending volumes also reflect the high cost of debt, with elevated interest rate swaps (five-year Sonia swap rate 4.1% as at 5 June) plus margin resulting in a total cost of approximately 6% for a good quality asset at a 40% loan to value ratio.

Given lower debt levels compared with past cycles, institutional investors are arguably more focused on the spread real estate offers over the risk-free rate, or the ten-year gilt. The MSCI Benchmark average net initial yield is now 5.2%, which compares with the net initial yield on the Company’s underlying portfolio of 6.1%. This is the highest MSCI Benchmark net initial yield since 2014 and represents a premium of 1.0% over the prevailing 10-year gilt rate of 4.2%.

This is below the long-term premium of approximately 1.5% to 2%, indicating a further increase in real estate yields, or a fall in gilt yields, might be required for the sector to represent ‘fair value’. However, this ignores the positive impact of rental growth on total returns, and in this respect the market is better placed now than in recent cyclical recoveries. For example, average nominal rents are now 6.6% higher than in June 2022, which compares with 3.4% lower over the equivalent 21-month period post-GFC. More materially, average industrial rents are now 12.9% higher than in June 2022, which compares with 0.1% post GFC. This performance illustrates both the structural factors that are driving demand for real estate in a market with relatively low levels of new supply, as well as the inflation-hedging quality of rental income.

Against this backdrop, market expectations that interest rates are peaking will be key to a recovery in sentiment towards real estate, together with increased availability of bank debt and reduced selling out of open-ended property funds.

The most significant and positive feature of the market is the above-average level of nominal rental growth, particularly for more structurally supported sectors such as industrial, retail warehousing, prime offices, and operational assets such as residential, self-storage and hotels. This rental growth, together with the potential for a future yield rerating, should going forward deliver total returns above the long run average, and lead to capital flows back to the sector. Our portfolio allocation and ongoing activity means we should be better placed to benefit from a recovery in sentiment.

SDCL Energy Efficiency Income Trust plc

(“SEEIT” or the “Company”)
Interim Dividend Declaration

SDCL Energy Efficiency Income Trust plc is pleased to announce the fourth quarterly interim dividend in respect of the year ended 31 March 2024 of 1.56 pence per Ordinary Share, covered by net operational cash received from investments.

The shares will go ex-dividend on 13 June 2024 and the dividend will be paid on 28 June 2024 to shareholders on the register as at the close of business on 14 June 2024.

Pursuant to the Managed Wind-Down announced on 14 December 2023, the Company proposes to conduct an orderly realisation of its assets in a manner that seeks to optimise the value of the Company’s investments whilst progressively returning cash to shareholders. In particular:

·  the Board expects that approximately £115 million would be returned to shareholders in the first half of 2024 at, or close to, NAV (subject to shareholder approval and the appropriate use of the Company’s distributable reserves) with further returns of cash to follow as value is realised from the Company’s private markets portfolio in a timely and efficient manner;

·  approximately £107.3 million of the Company’s private markets portfolio (valued as at 30 November 2023) is expected to mature between 2024 and 2027 (the “First Tranche”). It is intended that the proceeds from the First Tranche will be returned to shareholders in a timely manner as the investments mature;

·  the remaining £81.5 million of the private markets portfolio (valued as at 30 November 2023) is expected to mature between 2029 and 2033 (the “Second Tranche”). As market conditions improve, opportunistic secondary sales of Second Tranche assets would be considered by the Company in order to realise value from these assets in a timely manner;

10/01/24

££££££££££

How much, if any, will have dropped out of the expected return ?

Current share price 82p NAV 107p capital £245.5 million

No dividends expected until the end of the month, some results to watch out for.

Current cash for re-investment £415.36

Current dividends received £4,649.45

abrdn Equity Income
27 December 2023

Disclaimer
This is a non-independent marketing communication commissioned by abrdn. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
AEI is delivering a sector-leading yield, with low valuations offering strong capital growth potential…

Overview
Manager of abrdn Equity Income Trust (AEI), Thomas Moore, aims to deliver three key goals: provide a high income, provide an income that grows over time, and provide capital growth. To achieve these goals, Thomas has considerable flexibility, allowing him to invest across the UK market cap spectrum with an index-agnostic approach. This allows him to find the best opportunities, that often trade at attractive valuations as they are overlooked by other investors (see Portfolio).

The trust is one of the highest yielders in the sector at 7.5%, and the dividends are fully covered by revenue. The manager believes this yield is solidly supported, and its future growth is assured by the diversified portfolio, including the small- and medium-sized companies, and strong underlying revenue growth. Looking forward, Thomas believes a turnaround in macro factors should begin to support a market recovery, with low valuations offering a lot of potential (see Performance).

Gearing is typically a structural element of the trust and has been used to support the high dividend. The current level is approximately in line with the trust’s neutral level to allow the portfolio to capitalise on the low valuations and support outperformance should the market rebound.

The trust’s Discount narrowed sharply in the past 12 months. The trust traded close to NAV for much of the past year which has enabled the board to issue shares and increase the size of the trust.

Analyst’s View
Thomas has achieved his goal of delivering a very high yield, making AEI one of the best yielders in the sector and delivering a very competitive yield level from equities. He has also delivered another year of dividend growth, which the manager believes is well supported going forward by the underlying portfolio, including the benefits of a diversified portfolio such as holding small- and mid-caps (see Portfolio). We understand the dividend growth track record, currently 23 years, is likely to be a key focus of the manager and, in our view, the prospects for dividend growth are strong. We think for those seeking high-income generation from their equity holdings, AEI makes for a compelling offering .

In our opinion, the UK market is significantly undervalued, and this could lead to an improvement in capital returns from the trust. We understand this is now a focus for the manager with the income profile well supported. We believe the trust would benefit from a change in market sentiment, with one ‘bucket’ in the portfolio used specifically for identifying undervalued opportunities. We would expect the small and mid-cap bias to be supportive in any recovery as they typically perform better in rising markets. The differentiation these holdings provide could also help with relative performance.

Furthermore, the high level of structural Gearing could support the trust on the upside should sentiment improve. As such, we believe AEI would be a significant beneficiary of a turnaround in market sentiment and would be well-placed to capture a market rally.

Bull
Very high covered yield that is delivering growth
Differentiated portfolio including a bias to small and mid-caps
Trust has recently reduced its charges

Bear
Gearing is high which can amplify losses as well as supporting upside potential
Value-tilted portfolio could struggle in a growth driven environment
Small and mid-cap bias would likely struggle should a recession take hold

631p if u re-invested the dividends elsewhere. U haven’t made any progress since 2018 except u own more shares and if u re-invested the dividends u therefore receive more dividends without investing any more of your hard earned.

Top 10 holdings

9 year dividend history

Can trade on a very wide spread, so caution needed if/when trading.

Continuing on from doing nothing, I’ve changed the chart.

505p is the price if u had re-invested the dividends elsewhere

722p is the equivalent price if u re-invested the dividends back into SCF without the benefit of hindsight.

The price spends as much time falling as rising, so sitting and sticking to your plan is all that matters, belt and braces, just in case u buy at the wrong time.

The Snowball portfolio. Any changes to the Snowball are normally reported the same day.

LBOW is a rump position waiting to be sold at a loss.

RGL the consensus is that they will trim their dividend again but to remain REIT status 90% of income property profits must be distributed.

Several Trusts are winding down and new Trusts will have to be found for the cash returned. The risk being yields may be lower than they are today.

The 2024 fcast for dividends received is 8k and the target 9k, the Snowball is currently ahead of the target.

Dear reader

NESF might not be everyone’s cup of tea but at the end of the day when all’s said and done, is it tidy?

Thanks for reading The Oak Bloke’s Substack.

It’s another FTSE250 company. The OB has covered far too many of these large caps recently; he’s in danger of needing a revised disclaimer and garnering a new reputation if this non-nano cap nonense carries on.

But I promised articles around renewables over several articles, so I picked out what I saw as my faves. This is my final fave.

My favouriting is that I picked out all the high yielders and those with the juiciest discounts and what I see as deep value. Those with a “meh” discount and/or “meh” yield I’ve overlooked and perhaps will come back to…. perhaps you, reader, can point out any that are obvious value and overlooked. I did look over several and I wanted to like JLEN with its fragrant bio-methane holdings. Besides just think of the dad joke OB titles I could use. For example: I’m just JLEN from the block, used to NAV a little – now I NAV a lot…..

But I didn’t think JLEN was very good value, so that article is on hold.

Next Energy Solar

NESF is a large solar investment trust. After years of trading at a premium to NAV, both its NAV and share price have fallen away, albeit its NAV has reverted to 2021 levels – do we see a clue there that “noise” both increased then decreased the assets. Let’s investigate that.

NESF has a large UK footprint, with 10% Italy, and 5% RoW. Its assets are long life, and 933MW capacity and 599GWh generated in 2023 tells us that the energy yield was 7.3% of capacity, while in 2022 the energy yield was 9.1% (599000/(933*365*24)).

The 2022 yield is spot on to the average based on our world in data (you can click on the chart below). It reveals that capacity and generation are fairly consistent between countries. I had wrongly assumed that yield for the UK was lower than say Italy or the Sahara Desert, but the data doesn’t show that. So 85% of solar being in the UK isn’t the disadvantage I’d first imagined it would be. At least not using today’s technology.

The answer to this apparent riddle/contradiction is a lower temperature offsets lower irradiance. While more irradiance means more power, more heat shortens the life of equipment and reduces the efficiency of solar too. That factoid has gobsmacked me.

NESF appears to have an impressive portfolio of assets, with low costs of debt (2/3 fixed and 1/3 floating but on very advantageous rates and with 10+ years repayment structures), while revenue has a degree of protection from price fluctuations through hedging, ROC (renewable obligation certificates) and subsidy. As at 31/3/23 NESF had agreed fixed UK pricing (hedged) covering 88% of budgeted generation for the 2023/24 financial year, 44% of budgeted generation for the 2024/25 financial year and 13% for the 2025/26 financial year.

Income in the September 2023 interim covers dividends 1.8X.

The forward yield is a very impressive 11.8%. (based on a 8.43p per share dividend)

Eagle-eyed readers will spot energy storage assets in the above map, and this is a growth area for NESF. These enable NESF to capitalise on existing infrastructure including existing grid connections and inverters, meaning OPEX is optimised, but also that solar generation can be sold at optimal times (i.e. early evening). The idea being that the 92 UK sites could be retrofitted over time with energy storage. Currently 1 site is nearly live, 1 has planning, and 4 applications are in progress.

Interestingly, the power price forecasts include a “solar capture” discount, which reflects the discount on pricing in daylight hours versus during baseload hours. With the introduction of storage such a discount disappears – so a positive reversion for the NAV that not only do you add the asset to the NAV but you also remove the solar capture discount too.

Forecast Prices & Discount Rates

NESF reveals substantial drops due to discount rates increasing to 8% and short term power prices falling also.

When you strip out that “noise” and focus on the real movements roughly inflation protections offsets power price forecast changes, income nearly covers dividends (and in the 25% higher irradiance in 2022 would have fully covered the dividend), while asset capital gains offset project losses and other losses.

The net NAV fall is the 5p/share discount rate change.

Looking forward it appears that Power Price forecasts will eventually return to a positive, as will the discount rate. It wasn’t clear to me that the forecasts are considering the subsidies, the ROCs and hedges that NESF employ. Much of current year is hedged and one and two years ahead also.

4Q24 (1st Jan 2024 to 31st March 2024) meanwhile, shows a further power price forecast decline only slightly offset by positive pricing inflation changes. Going forwards income should rise due to rising capacity which in the 4Q24 update a week or so ago surpassed 1GW.

So future NAV should revert and there’s even scope for some NAV growth, although the large dividend swallows up most of the income so this is predominantly an income stock.

Conclusion

The dividend looks far safer than one might suppose looking at the discount to NAV and recent share price falls. This share actually looks fairly boring and safe, underneath its racy yield and apparent losses through temporary factors which wax and wane. It was a fairly complicated share to understand and compared to SEIT and HEIT the reporting felt inferior. I found much less hidden value compared to the others, also.

Just the obvious value.

That long term the idea that power prices are going to be anything other than upwards based on growing demand and challenges with supply is ignoring the laws of physics. So falling forecasts will revert eventually.

That short term, those power price forecasts might even revert later this year. Today it was announced that El Nino has ended and La Nina has begun. This suggests a colder winter for Europe in 2024. That combined with complacency and our new government knifing Oil & Gas in a populist tax grab, isn’t going to help keep the lights on.

The one area of hidden value is its strategy of adding storage to existing grid connections which is a genius move. Without a connection there is a 5 year average wait for such connections – where those with existing connections have, err, the power. Boom boom.

Regards,

The Oak Bloke.

Disclaimers:

This is not advice

Thanks for reading The Oak Bloke’s Substack.

London Stock Exchange trading© PA Wire

Evening Standard

John D Rockefeller would have liked the UK stock market
Story by Simon English

The richest man in history was probably John D Rockefeller, founder of Standard Oil, later broken up into seven smaller companies, one of which is now Exxon Mobil.

At his death, he was worth $700 billion in today’s money.

Elon Musk or Jeff Bezos might top him, but neither plans to die so we may never get a final score.

Both have vainglorious plans for the future – Musk intends to save humanity from itself, Bezos just himself, it seems.

Rockefeller might have been less fun than today’s tycoons. Certainly by the end he was bored, and heard to say: “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.”

Rockefeller bought shares that paid dividends and sold the losers to offset capital gains tax. It worked.

That plan, enacted in the UK lately, might even have made Rockefeller break a smile. In the three months to March, London listed shares paid out £12 billion in hard cash to investors, the best for several years, and not bad for a period when the stock market itself was in the doldrums.

Elsewhere in Europe, dividend payments fell.

The flip side of big companies being cautious is that they have had cash they have rightly returned to investors in the form of higher divis and share buy backs

You don’t have to be an investor solely looking for income to find, as Rockefeller did, something awfully reassuring about the clunk of cash from shares into your bank account.

Now the market for flotations seems to be improving, finally, perhaps we can stop worrying about London’s status as a global financial centre.

Even when the stock market was gloomy, most of the rest of the City functioned fine, and the dividend payouts were a symbol of the inherent sturdiness of most of our big firms.

As someone once said about America, there is nothing much wrong with the City that can’t be fixed by what is right with it.