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Olivier

Reading

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I don't share the pessimism about Reading and the surrounding areas. I've never especially fancied living in Central Reading but demand must be there for them to get away with charging those prices. Surrounding areas are lovely and they are building infrastructure which is a big deal compared to many other places... (cross rail, green park station, Wokingham, Winnersh and Earley distributor roads and the former having just had a total town centre rejuvenation and ongoing municipal development of more shops and leisure faculties. Despite the doom and gloom my mortgage provider added 2% to the desktop valuation of our place in Wokingham in the past 12 months (only relevant because we remortgage next year and I want to get to 75% LTV).

 

On 15/09/2018 at 10:36, spyguy said:

Lets say half that loss is cash - not unreasonable with all those leases rates and base salaries.

They are fuxed with that bank loan.

Re Romans - they are utter scum. Taking a look at their accounts they are making their big losses because they are overpaying for acquisitions. It is the amortisation that's kicking them. However, it also seems that they are paying for these in shares and loan notes to the former owners so has a limited cash impact. You will note from a review of the accounts that cash actually increased in the 9 month period to 31 Dec 2017 by circa £3.5m. 

One thing I liked about this though was that total pension contributions were approximately £362 per employee per year. Who says these cretins are short signed?

To your point - you can't simply slash half the wages bill and expect the same level of sales. Their strategy though of buying up the competition in order to ramp fees may work short term and generate positive cash flows while creating accounting losses (but note not tax losses in this period). 

It would be interesting to understand the portion of fees generated from tenants fees (admin, check in etc) that I've been fleeced by once in the past. I suspect their days are numbered but while they're generated cash and the shareholders hold the debt and the bank loan is rolling interest up until 2023 they might be able to tread water a little while. 

I'll crack a bottle of the expensive stuff when they blow up though, but do not put it past Countrywide to buy the Romans Group.

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I read the acconts lsightly differently.

Theyve a large lump of debt that needs paying within 2 years.

Cash of 3.5m of a compnay sizeof Romans is nothing.

 

Theyve took on a massive lump of debt to buy up rvials. That debt is due soon. Theyve not the money to pay for it. Or the cash flow to rescedule it.

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On 01/10/2018 at 13:42, spyguy said:

I read the acconts lsightly differently.

Theyve a large lump of debt that needs paying within 2 years.

Cash of 3.5m of a compnay sizeof Romans is nothing.

 

Theyve took on a massive lump of debt to buy up rvials. That debt is due soon. Theyve not the money to pay for it. Or the cash flow to rescedule it.

Interesting - just a few questions then if I may?

Do they need to repay the £120m or simply take out a new facility? Bearing in mind they are still profitable when amortisation is excluded (that's the slow writeoff of over payment for acquisitions tbh) they can still pay more than £7.2m (6%+libor) and generate positive cash flow do you think a bank might call that in or keep milking? 

How much cash should a company the size of Romans be generating? 

Who says they need to repay it in the time frame? There are further options like refinancing, or selling part or all of the group.

What sort of cash flow do they need to reschedule it? If they've fallen short of that already would they not have breached their covenants? 

Would the lender look for it to be cash flow positive (which it is) and have a positive EBITDA (which is has). 

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26 minutes ago, Unmoderated said:

Interesting - just a few questions then if I may?

Do they need to repay the £120m or simply take out a new facility? Bearing in mind they are still profitable when amortisation is excluded (that's the slow writeoff of over payment for acquisitions tbh) they can still pay more than £7.2m (6%+libor) and generate positive cash flow do you think a bank might call that in or keep milking? 

How much cash should a company the size of Romans be generating? 

Who says they need to repay it in the time frame? There are further options like refinancing, or selling part or all of the group.

What sort of cash flow do they need to reschedule it? If they've fallen short of that already would they not have breached their covenants? 

Would the lender look for it to be cash flow positive (which it is) and have a positive EBITDA (which is has). 

You are cofnusing an EA chain with a normal company.

At the moment, the entire sector iscremaing red profit warning alarms.

Banks know that EAs are bleeding cash. I doubt any EA will get any funds advvance/refinance, so they need to pay it back.

Just look at the state of Romans listed peers - Countrywide and Foxtons. Theyll give you a rought  assumption ofthe business - at the moment its sh1t, not worth a penny.

 

 

 

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Foxtons have dropped over 4% today already.  It would be fun to be a fly on the wall in any major Estate Agents board meeting these days.  I imagine its bit like a nest of vipers - lots of wiggling and everyone trying to find a way out.

Edited by dougless

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3 hours ago, spyguy said:

You are cofnusing an EA chain with a normal company.

At the moment, the entire sector iscremaing red profit warning alarms.

Banks know that EAs are bleeding cash. I doubt any EA will get any funds advvance/refinance, so they need to pay it back.

Just look at the state of Romans listed peers - Countrywide and Foxtons. Theyll give you a rought  assumption ofthe business - at the moment its sh1t, not worth a penny.

Is any company a normal company or is it just EAs?

As we have seen Romans are not bleeding cash. The opposite. They have 3.5m more in cash at the end of 2017 than they did at 31 March 2017. Maybe they did so this year... won't know yet. 

They are scum and they deserve bankruptcy but Unmoderated is correct in their view imho. 

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20 hours ago, adarmo said:

Is any company a normal company or is it just EAs?

As we have seen Romans are not bleeding cash. The opposite. They have 3.5m more in cash at the end of 2017 than they did at 31 March 2017. Maybe they did so this year... won't know yet. 

They are scum and they deserve bankruptcy but Unmoderated is correct in their view imho. 

OK, not normal. A company leveraged up as there is structural shift in its business.

My note from the accounts, comparing Mar 17 to Dec 17

Turnover droped from36m -> 26m, despite buying up new agents. Prfotis drop 8.5m -> 5.5 (there may be seasonal differences)

Residential new sales pipline - soemthign Id not trust - 5.1m -> 3.3m.

Letting properties undermanagement 8,500.

Business chuks off 4m of cash and has 23m of debt due in 12 months.

Assets i nhe business will be just commercial property, that noone wants these days, so will have a value far far below its book vlaue.

 

 

 

 

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2 hours ago, spyguy said:

OK, not normal. A company leveraged up as there is structural shift in its business.

My note from the accounts, comparing Mar 17 to Dec 17

Turnover droped from36m -> 26m, despite buying up new agents. Prfotis drop 8.5m -> 5.5 (there may be seasonal differences)

Residential new sales pipline - soemthign Id not trust - 5.1m -> 3.3m.

Letting properties undermanagement 8,500.

Business chuks off 4m of cash and has 23m of debt due in 12 months.

Assets i nhe business will be just commercial property, that noone wants these days, so will have a value far far below its book vlaue.

 

 

 

 

It's hard to make comparisons like that because the latest accounts have a 9 month period to 31 dec 17 and the comparable period is the 12 months to 31 mar 17.

 

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2 hours ago, adarmo said:

It's hard to make comparisons like that because the latest accounts have a 9 month period to 31 dec 17 and the comparable period is the 12 months to 31 mar 17.

 

Well theyve been running round buying out other EAs.

Id not try and draw much from their accounts. Too much noise.

 

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12 hours ago, spyguy said:

Well theyve been running round buying out other EAs.

Id not try and draw much from their accounts. Too much noise.

 

Well you can see what they bought in the year. Look at the intangible fixed asset additions disclosure. 

The point about accounts are they tell the position of the business and the story of how it got there. 

They are scum and if they do go belly up I'll be effing delighted. 

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39 minutes ago, adarmo said:

Well you can see what they bought in the year. Look at the intangible fixed asset additions disclosure. 

The point about accounts are they tell the position of the business and the story of how it got there. 

They are scum and if they do go belly up I'll be effing delighted. 

...and so say all of us.....

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https://www.inyourarea.co.uk/news/why-reading-prison-should-be-used-to-help-the-towns-homeless/

Reading property developer wants to put all homeless in prison. (Not quite, but I summarised it in a Daily Mail-style factual headline).

No doubt it will be eventually just converted to flats just like everything around here is.

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10 hours ago, Bear Hug said:

" Piers Knight, 26, who runs property developer The Knight Group in Reading, Berkshire, has started a petition urging the Ministry of Justice (MoJ) to allow the huge empty building to be used to help rough sleepers."

259 other stupid people agree with him.

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Piers' company is set up to convert an office building to flats.

See my earlier comments.

Bit like bracknell where the 3m builfing was knocked down for residential use.

Like all those big office blocks in bstoke.

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https://www.inyourarea.co.uk/news/house-prices-in-reading-falling-at-fastest-rate-in-nine-years/

Quote

House prices in Reading are falling at their fastest rate in nearly nine years.

In the year to August, house prices in the town fell by 3.6 per cent, dropping to £301,616 on average - the lowest average house price in Berkshire.

This was the worst annual growth rate seen in Reading, Berkshire, since prices fell by 6.5 per cent in the year to September 2009.

The headline is better than the rest of the article but it's nice to see sentiment finally changing.

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Thanks for that Bear Hug.  More Estate Agents signs are appearing in Reading and surrounding areas and these properties don't seem to be flying of the shelves.

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On 07/10/2018 at 13:25, Captain Kirk said:

" Piers Knight, 26, who runs property developer The Knight Group in Reading, Berkshire, has started a petition urging the Ministry of Justice (MoJ) to allow the huge empty building to be used to help rough sleepers."

259 other stupid people agree with him.

Perhaps building "affordable" housing would be a start?

Oh, wait..... "We forgot"!

https://www.inyourarea.co.uk/news/apologies-after-shocking-blunder-means-no-affordable-homes-in-reading-development/

Apologies after 'shocking' blunder means no affordable homes in Reading development
The council's planning team says it making changes after the error

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Found this gem:

From RM search description: EX RENTAL PROPERTY BEING SOLD BELOW MARKET PRICE TO ALLOW DEVELOPMENT EXTENSION TO RECONFIGURE PROPERTY TO HAVE 2 MORE BEDROOMS AND AN OPEN PLAN DOWNSTAIRS.

Everything in that description makes me kind of angry.  Are the agents committing a hate crime and where can I report it?

Key features are pretty good too:

Quote

Key features

  • EASY ACCESS TO ROYAL BERKS, M4, LOCAL SHOPS, SCHOOLS ETC.
  •  
  • GOOD LOCAL COMMUNITY SPIRIT
  • WELL BUILT, DOUBLE GLAZED, 2 BEDROOM VICTORIAN MID TERRACE
  •  
  • LOUNGE, KITCHEN DINER, BATHROOM, REAR GARDEN
  • NEW WASHING MACHINE AND COOKER

  I

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https://www.bbc.co.uk/news/business-46142025

Which regions suffered most?

According to PwC, Greater London had the largest number of store closures of any UK region, with a fall of 716, while only 448 were opened.

Other cities that suffered included Leeds, which opened nine stores but closed 35, and Reading where there were 39 closures and only 18 openings.

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Its almost like being 'mentioned in dispatches' - the BBC even have a map of store closures in Reading featured in their main story about store closures across the UK.  I have mentioned it before on this thread but Reading is not feeling so great these days, dare I say it but its even feeling a bit like it did when it all went pear shaped at the end of the 1980's.

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These 2 are definitely recent investors about to take some losses!  The first one is a tiny terrace split into 2 flats...

2 bedroom property for sale 6 Valentia Road, Reading, Berkshire Guide Price* £200,000

Quote

Sales history

Sold prices provided by Land Registry

  • Aug 2018 Sold£225,000

 

3 bedroom property for sale 21 Hagley Road, Reading, Berkshire Guide Price* £200,000

Quote

Sales history

Sold prices provided by

  • May 2018 Listed for saleMarketed by WhiteKnights - Reading£275,000View listing

 

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