Not for the faint-hearted...

30th Mar '09 by Stocktaculous

18 comments 6788 reads

Property investment company incorporated in 2005 to invest in the Russian real estate market with an initial focus on the Warehouse market in the Moscow and St Petersburg regions. The Company was admitted to AIM at that time and raised £153 million with a further £310 million in April 2006.
The Company's completed investment portfolio now comprises 390,500 sq.m. at different sites in Moscow and St Petersburg. The group has leased 88% of the 364,000 square metres of warehouse space it developed in 2008. Net rental income for the year was $51.9m, and the average lease length is just under six years. By the summer, Raven will have completed a further 100,000 square metres of warehouse space, and there is a further $24.9 million pre lease agreements in place.
The Company holds an additional 463.5ha of land in Kiev and regional cities of Russia that has longer term potential. At the current time, it does not envisage any speculative development on these sites.
Latest results - http://www.stockopedia.com/news/announcement/RUS/090326rus5045p.htm - reported a loss for full-year 2008, reflecting higher operating costs and impairment charge from property under construction, and reported a decline in net asset value. There was a $108m (£74m) writedown to the Russian warehouse portfolio, a currency hit as sterling and the rouble both weakened against the dollar and land and development projects were written down by a further $39m. Total loss before tax was $189.4 million compared to profit of $115.5 million in the prior year.
Looking ahead, in view of the difficult economic conditions, Raven Russia said that it aims on maintaining cash flow from its investment properties and development portfolio for the next 12 months.

The bull case is essentially one of limited supply and growing demand - "Compared to other European countries Russia still has a deficit of supply on a per capita basis. This and the difficulty in securing and developing large scale land plots in and around the major Russian cities is likely to limit supply in the future. Very little new development is planned to start this year improving the prospects for a stable market during the end of 2009 and into 2010".

But I am not sure that I am brave enough for this one!

http://www.ravenrussia.com/pdf/admission.pdf

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MrT

31st Mar '09

As a follow-on, Raven announced today - http://www.stockopedia.com/news/announcement/RUS/090331rus7758p.htm - that it had agreed terms to acquire property developer Raven Mount Group Plc, its original parent that is now effectively an Aim-listed shell with £21m of cash on its balance sheet, for 54.9 pence per share, or £60 million.

Commenting on the Offer, Richard Jewson, Chairman of Raven Russia, said: "The acquisition of Raven Mount will help to significantly strengthen Raven Russia's balance sheet and enable our two key executive directors, Anton Bilton and Glyn Hirsch - who are currently also directors of Raven Mount - to concentrate the whole of their time on the enlarged Raven Russia business."

Commenting on the Offer, Bim Sandhu, Chief Executive of Raven Mount, said: "The Offer represents the culmination of the reinvention strategy implemented by Raven Mount following the acquisition of Swan Hill Group plc and Raven Property Holdings plc businesses in 2003 and 2004. The disposal of the Swan Hill Pension Fund and the Audley Assisted Living businesses last year and the resulting cash-rich balance sheet has made Raven Mount an attractive vehicle. I am pleased that we have been able to reach agreement with Raven Russia, a company of which we have a detailed understanding, having set it up and acted as its property adviser until late last year, on the terms of the Offer, the terms of which I believe are attractive for both sets of shareholders."

Not really sure what to make of this!

SteMiS

25th Jun '09

Raven Russia effectively bought cash, in exchange for preference shares and warrants. It was a sort of funding raising on the side which tidied up the holdings of Anton Bilton and Bim Sandhu (both directors and shareholders of both).

Say what you like about Raven Russia but it seems to have a decent institutional share base.

The acquisition of Raven Mount presented a nice cheap way into Raven Russia and I now own some prefs (yielding 16%) and a free upside to Raven Russia through the warrants.

It looks undervalued on nav but might take a while to close the gap. In the meantime the pref dividend should be a nice source of income.

HamsterWheel

12% Prefs valued at less than a quid - good value as the normal shares have a reasonable value and the prefs rank ahead of them.

Gradders73

What on earth are you talking about?

Which bit are you confused about?

In reply to SteMiS (post #5)

I was replying to Hamsterwheel's post....

Gradders - check out RUSP.

12% prefs trading at less than a quid. As noted above, these are yielding about 16%. They should be trading much higher unless there are doubts about the ability of the company to continue to trade. If that were so, the ordinary shares (RUS) would be near to worthless. They're not.

In reply to HamsterWheel (post #7)

It doesn't work like that, you don't get an further potential upside than the 12% coupon, so more like a subordinated bond. In the event of default, you likely get back zero for both. The stock price is down 80%, so really now trades like an out of the money call option on the assets, i.e. it's all about (perpetual) time value.

26th Jun '09

Wow - you seem to know everything, I'm glad I tried to converse with you.

No, it works exactly like that. If you want a play on the time value, try the warrants, RUSW. Which are about 10p. Those are the effective options on Raven Russia.

It's quite entertaining this - it is wrong to say that just because the shares are not zero, the pref shares are undervalued. If you look at British Airways as an example, the bonds trade at 75 p, giving a 14% yield on 7.25% coupon, which indicates approx 50% cumulative default probability, suggesting strong doubts about the ability to continue, yet the shares are 130p, giving a market cap of £1.5 billion,so surely there is an arbitrage?

You could extend the argument and say any company's bonds not trading at the risk free yield should imply a share price of zero.

Yes, warrants are options, but any body investing in equities should understand buying any ordinary share is a play on time value.

BA is obviously a special case, as it's pension fund is many times the size of the market cap of the company.

By the way, how do you make a 7.25% coupon at 75p a 14% yield ? 9.67% is the figure you were searching for.

Apologies, the coupon on the bond has stepped up to 8.75% because of the rating downgrade, but you need to discount the coupons and the principal repayment (100 not 75), you can't just divide the coupon by the price... but I did not do this, I cheated and looked on Bloomberg..

The BA pension fund has nothing to do with this, we could use Citibank if you'd like...

5th Jul '09

Well I received my first dividend from RUSP2, which I understand are paid quarterly from now on. All the RUSP series have been consolidated into RUSP.

felixcatuk

13th Dec '09

So John Townley (AKA Hamsterwheel) you're a former Director/Secretary of Raven Russian (#05506390) ... and you're a former director of Raven Mount (#23112005) Limited too.

What's the relationship between Raven Russian (#05506390), Raven Mount (#23112005), you, and this operation?

>Raven announced today ... that it had agreed terms to acquire property developer Raven Mount Group Plc

fmichaella

14th Dec '09

This comment has been moderated

BTCustomer

15th Dec '09

Surely if a poster is connected to a company professionally he/she should not be posting about it here?
Wouldn't they need to declare that connection before promoting the shares of that company?
what are Stockopedia rules, and FSA rules on this?
Can Stockopedia check where these HamsterWheel posts are coming from and whether these allegations are true?

Murakami

In reply to BTCustomer (post #17)

For our rules, please refer to our Forum Guidelines: http://www.stockopedia.com/help/posting%20guidelines . If you would like to discuss this matter further, you can email us at admin @ stockopedia.co.uk

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Stocktaculous

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