AXA Property Trust 44.76% Redemption

[hiriskpaul]

A letter has just come through my door from iWeb telling me about this corporate action that I had not looked at online:

http://www.londonstockexchange.com/exch ... 14834.html

iWeb could really do with something a bit more prominent when it comes to messages and corporate actions. Thankfully this one was a pleasant surprise.

I have not calculated accurately, but the discount to NAV seems to be down to about 10%. I am not at all familiar with the European property market, but one thing that always concerns me about winding up situations like this is that as assets are disposed of, diversification reduces and I am always suspicious that the remaining assets may be of the difficult, hard to shift variety. So even if there looks like 10% easy money to be made here, that 10% may carry a lot of risk.

I am way out of date with APT and wonder what other holders think. Is now a good time to buy more? Or sell? I would be very interested to hear the thoughts of other holders.

I think it may have been SKYSHIP who first alerted me to these. If so, a very big thank you to him.

[greygymsock]

yes, it's been a good result so far.

after this redemption, it's down to 1 property, a multiplex cinema in italy. with no debt. IIRC, a few months ago the board was expressing confidence of selling this property within about a year (admitting there was some difficulty shifting it).

so it's certainly concentrated now. i think the board have mostly met their targets for disposals, so their confidence about making a final sale has some credibility.

the c. 10% discount is before the record date for the redemption. i'd expect the discount to widen a bit afterwards. which might offer some value, but it is concentrated risk. i'll probably just hold remainder of my shares.

[hiriskpaul]

yes, it's been a good result so far.

after this redemption, it's down to 1 property, a multiplex cinema in italy. with no debt. IIRC, a few months ago the board was expressing confidence of selling this property within about a year (admitting there was some difficulty shifting it).

so it's certainly concentrated now. i think the board have mostly met their targets for disposals, so their confidence about making a final sale has some credibility.

the c. 10% discount is before the record date for the redemption. i'd expect the discount to widen a bit afterwards. which might offer some value, but it is concentrated risk. i'll probably just hold remainder of my shares.

Market price seems to have dropped back a bit, but assuming 64p, that implies an arbitrage free post redemption price of 58.0p, for a discount of 18.8%. Given the size of the cushion and the fact that the final asset sale cannot be too far away, I think this may be worth an additional punt. I am wary however, as I know absolutely nothing about the market for Italian Multiplex cinemas!

[nk104]

I've been trying to work out whether it's worth buying a bit more too. It's just the fact that we're left with one property in Italy. The temptation is there to buy some more, get the extra 6-7p on offer and then hope. Maybe it's just the fact that it's in Italy, but it's usually the last ones to be sold which are the 'difficult' units.

[hiriskpaul]

Has anyone been credited yet?

[hiriskpaul]

I have re-read the RNS and just noticed that proceeds for the buyback will not be credited until 1 March. I will decide whether to reinvest once I get the proceeds. I was quoted 62.1p this morning for 10k shares, 4p higher than I was expecting purely from an arbitrage point of view. At that price a smarter move would have been to buy ahead of the buy-back. Even so, at 62.1p, the discount to NAV, based on the 30 Sep NAV of 71.4p, is still 13%.

[hiriskpaul]

The price has dropped back a bit and the RNS indicates a lower NAV per share of 68.93p, down from 71.40p:

http://www.londonstockexchange.com/exch ... 42236.html

I bought a few more this morning at 60.8429. The discount of about 12% should be sufficient cushion to deliver a decent short term profit, hopefully with in the next 6 months.

[hiriskpaul]

Another 25% is being bought back at at 70.26p:

http://www.londonstockexchange.com/exch ... 56263.html

[hiriskpaul]

Being quoted sell/buy prices of 61.18/63.25 for a 10k lot, so buy back currently at 11% premium to offer price.