On sale now - High yielder Standard Life Property Income to raise £100m


#1

Originally published at: http://whichinvestmenttrust.com/on-sale-now-hi-to-raise-100m/
With the property sector booming the manager is taking the opportunity to grow and acquire more assets in a sector benefiting from enduring investor demand for income. Standard Life Investments Property Income Trust (LON:SLI), is looking to raise £100 million to acquire an existing property portfolio. The move presents an opportunity to buy in to…


#2

It’s attractive for the dividend but I think property prices have risen so much that we’re not at the stage of investing in it for the income which is probably the right reason to be investing in this type of thing.


#3

It does seem like a bit of an opportunity though I’m not sure yet if property premiums will continue to come down. I also quite like TR property, which is a fund or funds investor.

I might be tempted by this.


#4

I like TR property as well @mikemoore but I think this is a well run fund too and very different because they actually own physical property whereas TR invest in the shares of other property companies.

I don’t invest though because I am looking for more growth and I think the best growth is behind commercial property now.

I think this would be a good choice for people who have retired and need a good dividend to live on.


#5

Standard Life Property is well diversified and with a good yield and a reasonably low level of gearing for a direct property company. It’s also less exposed to the overpriced central London sector than F&C Commercial Property Trust.
Another possibility for those seeking diversified direct property exposure is UK Commercial Property Trust (UKCM) offering a lower yield but with lower borrowings.


#6

UK Commercial Property Trust is on a discount @dunkuring, I expected it to be on a premium, I wonder why that is?

They used to be part of an insurance company, I’m wondering if they’re selling shares in it now that Standard Life owns it.


#7

Re: the UKCM discount @sandradore it may be because the stats show a 5 year dividend growth of -9.8% which is deterring investors. This is because the level of dividends set at launch in 2006 proved to be too high when the recession hit in 2008 and they were cut by 30% in early 2014.

The dividends are now sustainable and the company has a good portfolio and modest borrowings.


#8

Thanks for the tip @dunkuring UKCM wasn’t on my radar, it is now!


#9

Several of these property company ITs have had to reduce their dividends due to them being set too high initially, and further compounded by the need of some of them to reduce or restructure their gearing when loan covenants were breached.

One thing that I have noticed on the AIC web-site is that the 5-year divdend growth field can be wrong. An example in this sector is Picton Property Income, which paid a higher dividend in 2012 as it does now. Longer dividend histories can be seen on the Overview tab of an IT’s AIC factsheet - there is a link named View dividend history just below the Dividends table and above the Trading Information table.

Some of these ITs have been on hefty premiums until recently. The elimination of these might be down to thinking that property might look less attractive in the event of rising interest rates; plus, those investors interested in total return and not income have taken the opportunity to cash in at a premium; and perhaps some of these have been disappointed at recent total returns when compared with those that have been available from equities.

Something that UKCM has going for it compared to its peers is a relatively low level of gearing - this might be a good thing once rates have risen and refinancing becomes necessary. Just my opinion, of course,