BLND price to NAV <=0.8

lse:blnd

#1

The following link is to an article by respected analyst Phil Oakley on stock picking based on NAV and variations of. Worth reading IMO even if you do not have have the analytical, data and charting software SharePad or Sharescope. I myself have subscribed to ShareScope since 1999 and recently added SharePad for small extra cost. I think they are excellent value for money for any serious investor who want to do their own share picking.

https://www.sharescope.co.uk/philoakley_article117.jsp

Big REITs such as BLND SPs have suffered badly since referendum on EU. IMO they have been oversold. NAV valuations would support my view though NAV calculated on historic property valuations that may now look optimistic. I think SP of BLND will pick up when it is found that office rental prices do not fall as much as expected.


#2

Yes by historic standards net asset value looks good but it is unfortunate BLND updated and published their asset value just before the Brexit vote. So the NAV ratio is based on an out of date valuation of assets. We have not since had an update from BLND nor Land Securities nor TR Property Trust. Even if those companies wanted to give us an updated NAV they could not because of the unknown of how Brexit will impact on tenancy demand.


#3

Agree nobody knows the current NAV but one has to make a judgement on whether the share price is likely to have discounted whatever the reduction might be, talking my book but I will be surprised if the current 660p is not taking a too gloomy view so one should probably buy or at least hold, and there is a decent yield of over 4%.


#4

Isn’t it difficult to assess the NAV of any of these companies given the sentiment change that can happen quite quickly for corporate and residential property values. In the bad old days, corporate property dropped like a stone and the NAV became somewhat arbitrary.

I would have thought the biggest risk with REIT’s is the amount of leverage they have at ultra low interest rates. No one knows, and certainly Mark Carney doesn’t (he appears to be an eejit of the highest order and very politically motivated and manipulated), but if interest rates turn north, surely the loan costs will change as each role over date arrives.

Games


#5

“if interest rates turn north, surely the loan costs will change as each role over date arrives.”

I agree but am not overly worried about this. I used to work in this sector albeit not for British Land and these guys were clever when it came to long duration borrowing and swapping out the interest rates on their debt to ensure the longevity of their cost of finance. This should be reasonably well disclosed in their financial statements, although I have not checked due to the time constraints of still being in full time employment.

What still worries me more is the impact of Brexit on tenant demand where it is too early to tell as we do not yet know the extent to which foreign (European as well as non-European) businesses will maintain pressure on rents especially in London.

With the large drop in BLND and LAND share prices the market seems to be taking a dim view of the future. The September interims due out in November will be important to read.