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QuotedData’s morning briefing 23 October 2020

QuotedData's Morning briefing

In QuotedData’s morning briefing 23 October 2020:

  • Associated Capital Group (AGC), the large Shareholder associated with the manager of Gabelli Value Plus+ Trust, that is also blocking the winding of said trust, has requisitioned GVP’s board to call a general meeting. A link to a copy of the letter is provided below, but the key takeaways are that AGC wants shareholders to vote on:
    • The reintroduction of a share buyback programme targeting 10% of the issued share capital of the company per annum.
    • The implementation of a distribution programme targeting distributions equivalent to 6% per annum paid semi annually.
    • The board to enter negotiations with Gabelli Funds LLC with the aim of reducing the investment management fee to 50 bps per annum.

Click here to see the full test of the letter from ACG.

[QD comment: given the closeness of AGC and Gabellii Funds, it seems to be a reasonable assumption that the latter has likely already given its nod of approval to the proposals, but will it be enough for the overwhelming majority of independent shareholders who want to see this poorly performing fund wound up and the cash returned? Watch this space. At face value, AGC and Gabelli funds do appear to bending in the face of pressure from other shareholders. However, the root cause of the problem is the poor performance of the trust, and nothing in these proposals appears to address that. We understand why most independent shareholders want to call time on the trust, but they might be inclined to give it one more chance if there was some mechanism, such as a large performance related tender (ideally 100% in say three-years time) that gives all shareholders the opportunity to exit at close to NAV, irrespective of their current allegiances.]

  • Empiric Student Property has published a trading update. It says:
    • All of its buildings remain open, staffed, maintained and operating strictly in line with Government guidance.
    • Most of its residents have now arrived and are settling into their accommodation.
    • Despite the challenging conditions, occupancy to date is 70% across its portfolio (2019/20: 94%), while bookings continue to be made, albeit at lower levels, than in prior years.
    • The Group has significant headroom and remains fully compliant with its banking covenants, which we continue to monitor.
    • The Group’s loan to value ratio is 36.8% and based on drawn facilities at 30 September 2020 and calculated on an average basis, the Group’s interest cover ratio (“ICR”) covenant is 185% compared to actual ICR of 349%.
    • Of ESP’s total drawn debt of £390 million, £277 million (71%) is at fixed interest rates and £113 million (29%) is at floating rates. The aggregate cost of debt is 2.9%, with a weighted average term to maturity of 6 years.
    • ESP has no refinancing requirements until November 2022 and £48 million of undrawn debt facilities and cash.
  • Mercantile has announced its interim results for the six months ended 31 July 2020. During the period, the Company produced a return on net assets of -22.1%, which it says compares with the return of -23.2% from its benchmark index. The return to shareholders was -28.5%, as the discount at which the Company’s shares trade widened from 1.4% to 8.1%.
  • BMO Commercial Property Trust has reported a 3.1% fall in NAV (from 120.7p to 116.9p) for the quarter ended 30 September and a negative 2.7% NAV total return. The group has so far collected 79.4% of rents billed for the fourth quarter of 2020, and has now received 84.2% of the rents due for quarter two and 83.1% for quarter three.
  • Greencoat Renewables has acquired the An Cnoc Wind Farm, in County Tipperary, Ireland and has agreed a new €200 million 5-year Term Loan with a syndicate of three banks (Commonwealth Bank of Australia, National Australia Bank and Natwest), which will used to pay down the existing RCF. An Cnoc consists of 5 Enercon E70 turbines that have been operational since March 2018. Its revenues are contracted under the REFIT 2 scheme, providing a long-term guaranteed minimum floor price for the electricity generated until 2032. The acquisition is being funded by the Company’s existing credit facility and, following completion, total borrowings will represent 45% of Gross Asset Value.

We also have final results for Infrastructure India (another fall in NAV), final results from BlackRock Greater Europe (another strong year of outperformance), a trading update from Stenprop and Secure Income REIT, a new acquisition by CEIBA Investments and a sale by CLS Holdings in Germany.

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