TR Property Investment Trust (TRY) owns a large and liquid, £1.2bn portfolio made up mainly of the shares of property companies based around Europe, including the UK. It also holds up to 15% in UK physical property (currently 7% of NAV). TRY has consistently outperformed its FTSE EPRA/NAREIT Developed Europe benchmark in recent years, as discussed in the Performance section. It has also outperformed the direct property trusts in the AIC UK Commercial Property sector, which are arguably the first port of call for UK investors seeking property exposure. TRY is managed by Marcus Phayre-Mudge, who took over the portfolio in 2011 but has been involved in the management of it since 1997. Marcus manages a team of ten, overseeing £2.3bn of primarily pan-European real estate equities – of which TRY is the largest fund. He uses both top-down analysis of countries and sectors, and bottom-up analysis of valuations to guide his decisions. This approach has led to a portfolio biased towards industrial, logistics and residential and away from retail. TRY seems to be overweight in the UK, but the exposure to the UK economy is low (see Portfolio section). TRY pays dividends semi-annually and has not cut its payout following the impact of the pandemic, unlike many property trusts and funds. It has cash in reserve equal to last year’s full dividend, and yields 3.8% on a historic basis. Following the impact of the pandemic the discount has widened out to 10%, having traded on a slight premium at the turn of the year. We note, however, that the companies TRY buys are also trading on discounts to NAV.
Companies: TR Property Investment Trust
In January 2019 we unveiled our new quant rating system for investment trusts, identifying both the top 20 trusts for capital growth and the top 20 trusts for income by using a quant screening system. We believe this is the first quant rating system for closed-ended funds to be based on NAV returns, which reflects the performance of the manager much more purely than the share price, which is a far noisier signal. We aimed to reward consistent long-term outperformers within the metrics we chose and the five-year time period over which we assessed them. In the New Year we will be rerunning our screens and rebalancing our ratings, but for now we are pleased to be able to report that in the first ten months since we revealed our selection, subsequent performance has been strong across both lists.
Companies: FEV TRY THRG IPU
TR Property (TRY) aims to generate total returns from investing in the equity of UK and European listed property companies. It also owns a small portfolio of direct commercial property in the UK. Within the total return objective, the trust’s dividend is an important consideration for the board and managers. TRY’s management team is made up of commercial property specialists who invest in property securities across Europe. Underpinning the investment process is a desire to invest with management teams who have delivered successfully through cycles. Manager Marcus Phayre-Mudge also takes a top down view on economies and economic prospects believing this is the fundamental driver of property and rental values. The big top down (and successful) call that Marcus took after the Brexit referendum was that traditional UK property sectors would be ‘dead water’, and so he has re-allocated overseas, but also shifted focus in the UK to niches such as student property, medical property and long-lease properties. A unique feature of TRY is that it also owns a commercial property portfolio directly. In the managers’ view, this gives them a significant edge over peers, given the market intelligence that owning a direct property portfolio gives when evaluating listed property companies, and meeting with other managers. At 14%, gearing is broadly in line with the level employed over the last five years. It is worth noting that given the underlying gearing of the property companies that TRY owns, the ‘look-through’ gearing level (loan to total value), is in the order of 42% according to the managers, in-line with the benchmark. TRY has done well relative to the benchmark, having outperformed in ten out of the past 11 financial years. As we discuss in the Portfolio section, the company has exactly the same currency exposure as the benchmark, and so all of this outperformance has come through stock picking or asset allocation. Currently, the historic dividend yield on the shares is 3.2%. While not in the formal objective, we understand that the board sets a lot of store by the managers’ ability to continue to grow the dividend. Since the 2009 financial year the company has paid a covered dividend in all but two years and grown the dividend by a compound annual growth rate of 8.9%.
Today, we introduce our investment trust ratings. According to the quantitative screens we have selected in an attempt to highlight the best performers in the closed-ended universe, the trusts discussed here have been the best in their classes over the last five years. We have selected trusts using two different sets of criteria, aiming to identify the top performers for capital growth and for achieving a high and growing income. There are many rating systems for open-ended funds, but no quantitative-based system for investment trusts that is available to the average investor. While we cannot identify trusts which will perform well in the future – past outperformance is no guide to future out-performance – we hope these ratings will highlight the outstanding performers in the closed-ended universe and those managers who have best used the advantages of investment trusts to generate alpha. We are trying to reward consistent and long-term outperformance, and so we have decided to look over a five-year period. All data is as of the end of December 2018, sourced from Morningstar and JPMorgan Cazenove. We have looked at NAV total return performance and discount value has not been considered: the aim is to identify those trusts which have performed the best rather than highlight bargains.
Companies: IPU FAS ATR JEO FEV FGT THRG SEC PAC BRSC IAT HNE MIGO TRY JMG DIVI SLS BGS SDP JETI SOI BCI MRC TIGT EDIN JAGI BEE SDV BRIG AAIF HFEL SCF SIGT BRFI IVPG CTY HINT JCH NAIT
Research Tree provides access to ongoing research coverage, media content and regulatory news on TR Property Investment Trust. We currently have 21 research reports from 3 professional analysts.
In addition to highlighting the relatively attractive underlying conditions that prevailed in February, in this note we introduce our FY23 estimates. We believe that the latter helps to further highlight the attractive valuation and growth potential offered by the group, as well as the significant valuation discount that Plus500 trades on relative to its peers. We see the latter as inappropriate given the clear benefits of the group’s best-in-class platform, its scalable technology and agile marketing algorithms. We expect these factors to drive continued market share gains and superior financial returns, and as a result, we reiterate our BUY rating.
Companies: Plus500 Ltd.
Mercia has validated the model emphatically with the sale of Oxgene, the second-largest portfolio investment, for £30.7m. This is nearly double the carrying value and a £14.6m realised gain, equating to a 5x return/51% IRR. 3rd party funds also benefited. This underscores embedded value, prudent carrying values and the “Complete Connected Capital” model. An accompanying update points to strong underlying performance which drives a 56% FY21e adj. EBITDA upgrade and +13-15% in outer years. The shares trade at an unwarranted ~30% discount to our revised NAV (+12%) and a ~40% discount to our SOTP intrinsic value.
Companies: Mercia Asset Management PLC
Aviva released its 2020 figures, with an operating profit of £3,161m and an IFRS profit after tax at £2,910m up 9.2% yoy. The Board will propose a final dividend of 14p/share. The insurer announced new financial targets with at least $5bn of cumulative cash remittance, £300m of cost reduction and a debt leverage ratio <30%. This update was expected regarding the sale of many operations in 2020. Aviva plans also to become a net zero carbon emissions company by 2040.
Companies: Aviva plc
UK railway privatisation, which was launched in the mid-1990s, has finally turned full circle: the Department of Transport has recently confirmed that its controversial railway franchise system will be scrapped. In this month's feature article, Nigel Hawkins, the Infrastructure analyst at Hardman & Co, examines the 25-year history of railway privatisation and chronicles its ups and its downs. The successes of railway privatisation, such as new rolling stock, are addressed, along with the many shortcomings, which included minimal vertical integration. With the winding up of the franchise system, the UK railway sector is effectively reverting to its former status as a nationalised industry, a shift started with the renationalisation of the collapsed Railtrack – later re-badged as Network Rail – in 2001.
Companies: ARBB BBGI CLIG DNL FLTA ICGT OCI PCA PIN PXC RECI SCE TRX SHED VTA YEW
Regional REIT’s (RGL’s) Q420 DPS, in line with the company’s previous guidance, takes the aggregate FY20 DPS to 6.4p, and is supported by continuing strong rent collection. The company has previously indicated that it was targeting dividends to be fully covered by EPRA earnings and we expect this to be confirmed when detailed FY20 results are released on 25 March.
Companies: Regional REIT Ltd.
Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. Subject to EGM on 21st March. Rogue Baron plc have announced its application for admission to the AQSE growth market. Rogue Baron owns five subsidiaries, namely: Shinju Spirits, Inc., Shinju Whiskey LLC, Mazeray Corporation, STI Signature Spirits Group LLC and Legacy Retail Group LLC. The Company’s goal is to build each of its brands that makes them a buyout target. Deal size TBC an expected admission date 12th March 2021. Global review platform, Trustpilot has announced its intention to float on the premium list of the LSE. Trustpilot provides an open platform, which creates a place where businesses and consumers can gain actionable insights and collaborate. Consumers are able to share feedback, at any time, about any business with a website and review feedback left by other consumers. Total revenues were US$64.3 million, US$81.9 million and US$102.0 million for the years ended 31 December 2018, 2019 and 2020, respectively. The Offer would comprise new Shares to be issued by the Company (raising gross proceeds of approximately US$50 million to support Trustpilot's growth plans and repay indebtedness) and an offer of existing Shares to be sold by certain existing shareholders, directors and employees. Timing TBC. In The Style, the e-commerce womenswear fashion brand with an influencer collaboration model, announces their intention to float on AIM. In The Style is a pure-play e-commerce fashion brand with a l customer base of women predominantly aged between 16 and 35. Founded in 2013, the group has delivered £35.4 million net sales and £3.6 million Adjusted EBITDA in the nine months to 31 December 2020, with sales up 159% from £13.7 million for the nine months to 31 December 2019. Admission is expected to take place on or around 17 March 2021. Deal size TBC. Media reports video game firm, Catalis is mulling a London IPO, just over a year after being bought by a private equity firm. Catalis’s accounts are reportedly expected to show revenues increasing to £60m in 2020, up from £43m, with adjusted earnings of £15m. Deal details and timing TBC. tinyBuild— a leading video games publisher and developer with global operations. tinyBuild's strategic focus is in creating longlasting IP by partnering with video games developers, establishing a stable platform on which to build multi-game and multimedia franchises is to join AIM. Offer details TBC. Due mid-March. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5m. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo is expecting to release its IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
Companies: LND GDR GAMA SOLI SHED RLE CRU WRES SBI MNO
Today's news & views, plus announcements from MRW, BNZL, HICL, AGK, SEPL, SEIT, SDY, BGO, SHED
Companies: BGO SEIT SEPL
The £30.7m cash exit from Oxgene underlines management’s success in building a sustainably profitable specialist asset manager, delivering high levels of contracted revenue and providing a filtered pipeline of opportunities for Mercia’s direct investment portfolio. Based on progress to date, we believe Mercia will achieve its three-year strategic plan ahead of time (grow operating profitability, expand assets under management (AUM) to £1bn and ‘evergreen’ the balance sheet by end FY22). By the end of H121, AUM had risen to £872m (15% from FY22 target), with fee-earning funds under management (FUM) of £722m. Despite progress, Mercia’s shares continue to trade at a material 21% discount to net assets (0.79x) or a 30–35% discount when we include the third-party funds business (worth 4.9p at 3% of FUM). This is a substantial discount to its peers.
Exscientia has completed a $100m Series C financing, and Frontier IP has released a FY’21 trading update stating it remains “confident on the prospects” for FY’21 (June Y/E). Whilst, the pre-money valuation is undisclosed, Exscientia remains Frontier IP’s largest equity holding by value. Despite pressure for exits, the news clearly justifies Frontier IP’s strategy to maintain its holding in Exscientia, which has only been modestly diluted to 2.11% (from 2.27%). Fair value of Frontier IP’s portfolio last stood at £19.4m 30 June 2020, and today’s update is supportive of continued portfolio growth. We expect to see partial visibility of the financial impact of the fundraise, as with other recent fundraises PulsiV and Elute Intelligence, at interim results expected 24 March 2021. The Group currently trades on a NAV/share multiple of 1.2x. We think this multiple has room to expand with continued industry involvement, external funding and possible exit events. Shares continue to look compelling at this level.
Companies: Frontier IP Group Plc
SDLT Extension should support further sales at HQ
Companies: Palace Capital plc
tinyBuild— a leading video games publisher and developer with global operations. tinyBuild's strategic focus is in creating longlasting IP by partnering with video games developers, establishing a stable platform on which to build multi-game and multimedia franchises is to join AIM. Offer details TBC. Due mid-March. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5m. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo, are expecting to release their IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
Companies: ADME NFC CHAR WHR MKA IXI MOS D4T4 ALS TERN
The Renewables Infrastructure Group - Proposed share issuance programme*Triple Point Social Housing REIT - 5.9% NAV total return in 2020GCP Student Living - Vaccines boost recovery prospects
Companies: Renewables Infrastructure Group
NESF has acquired a 100MWp portfolio of new assets with a private PPA with AB InBev. This follows the private PPA agreed with Anglian Water and shows that NESF can secure deals with strong counterparties. We see private PPAs as a key opportunity to growth the asset base along with projects outwith the UK and energy storage opportunities.
Companies: Nextenergy Solar Fund
Today's news & views, plus announcements from SMDS, PSN, POLY, RIO, BIFF, SONG, HSX, PAGE, RLE, SHED
Companies: PSN RLE RIO
Urban Logistics REIT (“ULR”) has converted further pipeline with five new development assets across two sites in the Midlands secured for £23m GDC at 6.12% yield. Completion is not expected until late 2022/early 2023. This follows the acquisition of a distribution asset in Droitwich earlier this week (1/3) for £5.4m. This prompts no change to forecasts as we expect all capital to be deployed by Mar-21 year end. ULR trades at an attractive 3% discount to NAV with a 6% dividend yield – both FY22e, the first full year with all capital deployed.
Companies: Urban Logistics REIT plc
