Carpathian Analyst Meeting: Interims 2009

28th Sep '09 by marben100

5 comments 3333 reads

I attended today's meeting, following on from Carpathian's interim results, released today: http://fool.uk-wire.com/cgi-bin/articles/200909280700097287Z.html

I've divided this report into:

Impressions & notes
Q&A
Miscellaneous
Conclusions

Impressions & Notes

Carpathian was represented by Paul Rogers & Balazs Cspregi.

Due to various comments made during the meeting, I felt that CPT’s management were responding to the wishes of their major shareholders, including CPT’s relationship with CAM. The chief thrust is to minimse risk to cash/equity and to realise assets as and when market conditions make this sensible. I am sure that Laxey (amongst others) will be keeping a very beady eye on their investment, via their nominated director, Andrew Shepherd.

Worth noting that there have been NO open market retail property transactions in the CEE region in the period under review. CPT’s Varyada disposal was the last such transacton. That means that any so-called market valuations of properties are currently spurious, IMO.

Regarding the dividend, whilst an initial payment is planned to be made this year, CPT was unable to confirm that the final part of the anticipated 8p dividend should be paid by May 2010, though they expect to have declared it by then.

Q&A

Note that the answers I’ve recorded are according to my understanding and are not verbatim.

Q1. What do you envisage will happen with the non-core portfolio and what will the impact on equity be?

A1. Carpathian acknowledged that some SPVs could go into administration.

My impression is that there is a strong chance that the Interfruct properties will (as a minimum). However, any such decisions are subject to negotiation with CPT’s bankers and properties could be retained if sufficiently attractive terms can be negotiated. This makes the impact on equity hard to assess as it is not impossible (though unlikely) that CPT could inject some equity, if banks’ terms did allow some value to be realised.

CPT have been unable to make any progress on reletting the Interfruct properties (or putting them into a fit state for reletting), due to AIB’s intervention and procrastination.

Q2. What is the “amortisation” on the renegotiated Erste loan.

A2. This represents a repayment of principal on the loan

Q3. Why has the “property operating expenses” line of the P&L risen sharply and what will the situation be going forward.

A3. The increase is due to one-off factors including the…

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European commercial property rebounds

By Daniel Thomas, Property Correspondent

Published: January 17 2010 19:18 | Last updated: January 17 2010 19:18

Commercial real estate investment has risen by more than 40 per cent in Europe in the past three months to the highest level since the collapse of Lehman Brothers in 2008...

...The strongest growth occurred in central and eastern Europe, an area traditionally seen as higher risk than more established markets in western Europe, though the pick-up came from a lower base.

nigelpm

28th Sep '09

Great work Mark!

I particularly like Q4 ;-)

In all seriousness the release today and some of your comments look to have settled most if not all of my niggling doubts and worries.

Onwards and upwards I hope.

RBCRBC

12th Nov '09

The Antana loan with Barclays is due in Nov, so we might get news in the next three weeks, that'll be the last of the core portfolio to be sorted:

The Antana Logistic Park in Budapest has experienced a 50% fall in income following the main tenant not renewing the lease in February 2009. The whole lettable area is leased on short-term periods due to intended redevelopment which has now been suspended. Occupier enquires have increased over the recent period, particularly for larger unit sizes with longer term leases, or alternatively considerations for a purchase of part or whole of the estate. We are in positive discussions with the debt provider, Barclays to complete the restructuring the debt facility shortly.

The management company reorganisation seems to be at the point of dotting the i's and getting major shareholder approval:

2. Reducing operational costs
Following invitation from the Board of Carpathian, CAM’s management has made proposals to take 100% ownership of CAM and for the reduction of future direct management costs charged to the Company. This has been provisionally agreed and, once fully implemented, the cost reduction will contribute to the Company’s sustainability over the medium term.

3. Management alignment
The Board also invited CAM to propose a revised incentive scheme re-aligning the Property Adviser’s compensation with shareholders’ priorities. The Board is presently in discussions over the final details of the revised incentivisation scheme and would expect to announce the outcome of these discussions together with the cost reduction plan in the near future after consultation with certain major shareholders.

The promised 8p dividend looks set to be announced in December:
Dividends
As stated at the time of the preliminary announcement, the Board intends that the Company will make aggregate distributions of not less than 8 pence (€9.2 euro cents) per share in cash to shareholders prior to May 2010 with an expectation that the first part of this distribution will be announced prior to 31 December 2009

I see a nice Christmas for those with the courage to stay put or top-up.

http://www.carpathianplc.com/Attachments/000900/2009%2009%2029%20Interim%20Results.pdf

marben100

I have been in touch with the company to enquire whether there is any read-across from the issues affecting Treveria and am advised that:

they will look into the specifics of the issue affecting Treveria as and when they are made public/available, but they do not currently believe that there will be any implications for Carpathian.

Cheers,

Mark

StrollingMolby

26th Nov '09

Trouble brewing at Treveria following the potential tax liability issues mentioned above:

The Board of Treveria announces that it received notice on 25 November 2009 under section 113 of the Companies Act 1931 requesting that the Company convene an Extraordinary General Meeting ("EGM") of shareholders.

The request notice has been received from Vidacos Nominees Limited ("VNL"), acting as nominee and on the instructions of Deutsche Bank AG, acting on the instructions of its prime brokerage client QVT Fund LP, the beneficial owner of 52,540,080; Quintessence Fund LP, the beneficial owner of 5,704,109 shares and QVT Financal LP, the beneficial owner of 4,715,374 shares in the Company owned by VNL, and proposes the following resolutions:

1.    That Nicholas Cournoyer be removed from office as a director of the Company immediately.

2.    That Rolf Elgeti be removed from office as a director of the Company immediately.

3.    That Christopher Lovell be removed from office as a director of the Company immediately.

4.    That David Parnell be removed from office as a director of the Company immediately.

5.    That Richard Tice be appointed as a director of the Company immediately.

6.    That Philip Scales be appointed as a director of the Company immediately.

The Company will make a further announcement convening the EGM and make a recommendation to shareholders in due course.

18th Jan '10

Aye, Aye this is looking interesting: http://www.ft.com/cms/s/0/58cbe2ce-039b-11df-a601-00144feabdc0.html

European commercial property rebounds

By Daniel Thomas, Property Correspondent

Published: January 17 2010 19:18 | Last updated: January 17 2010 19:18

Commercial real estate investment has risen by more than 40 per cent in Europe in the past three months to the highest level since the collapse of Lehman Brothers in 2008...

...The strongest growth occurred in central and eastern Europe, an area traditionally seen as higher risk than more established markets in western Europe, though the pick-up came from a lower base.

Wonder whether CPT will get the chance to do some realisations at decent prices? If anything close to the end 2008 valuations can be achieved, then the current SP at around €0.22 will look rather a steal next to the latest NAV of €0.81/share (before the divvy payout).

Could be an interesting year for CPT shareholders. :0)

Regards,

PS even without realisations, improved market liquidity may make the end 2009 revaluation less dire than some might be expecting.

Carpathian Analyst Meeting: Interims 2009

Impressions & Notes

Q&A

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About the Author

Marben100

5 comments

European commercial property rebounds

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