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QuotedData’s morning briefing 23 March 2023

In QuotedData’s morning briefing 23 March 2023:

  • Gulf Investment Fund (GIF) has launched its latest 100% tender offer. Shares that are tendered will be put into a realisatin pool on 12 April, the pool liquidated and the proceeds (less about $100,000 of expected tender offer costs) returned to shareholders. There is a minimum size threshold for the ongoing fund of 38m shares. If the fund looks set to shrink below that, the directors will abandon the tender offer and put forward proposals for the liquidation of the fund instead. [Gulf Investment Fund is the best-performing fund in the global emerging markets sector over the past 12 months and its shares are trading quite close to NAV. We do not expect a large take-up for the tender. However, these annual 100% exit opportunities are a bit excessive we think – too much of a hair shirt – regular exit opportunities are a good thing, but not necessarily 100% tenders (25% seems more common) and not necessarily every year. There is a real risk of a unique fund with a great track record relative to its benchmark disappearing just because one of these tenders coincides with a panicky market – that would be wrong.]
  • BlackRock Greater Europe (BRGE) has decided not to implement a semi-annual tender offer in May 2023. Over the six months to 28 February 2023, the average discount to net asset value (cum income) was 5.5% and the discount to NAV on a cum income basis (diluted for treasury shares) as at close of business on 21 March 2023 was 7.2%. Against a background of volatile market conditions and with the company trading at the narrowest discount within its peer group, the board has concluded that it is not in the interests of shareholders as a whole to implement a semi-annual tender offer in May 2023.
  • CQS Natural Resources Growth and Income (CYN) outperformed its benchmark by 3.3% over the six months ended 31 December 2022. The portfolio managers Rob Crayfourd and Keith Watson commented: “The fund saw strong performance over the second half of 2022, gaining 17.2%, supported by mining, a rotation to energy and shipping. This momentum has so far continued into 2023 as China reopening from its zero covid policy provides a supportive back drop. We remain positive on the resource sector overall primarily due to the continued lack of investment in new supply, but also due to the commodity intensive nature of the energy transition. Supply remains constrained across energy, mining and shipping, in part due to an increased ESG focus, as shareholders pressure corporates to reduce emissions rather than add supply. In addition, previous boom and bust cycles have led to shareholder pressure for conservatism from corporate management teams, who are now focused on dividends and buybacks. In these times of uncertainty, investing in unencumbered real assets through the equities that hold them, we believe is good protection. The fund’s allocation and weighting is expected to benefit from an eventual global reopening of economies, and the longer-term energy transition.”
  • LondonMetric Property (LMP) has sold a portfolio of three multi-let industrial estates for £46.0m, which reflects a net initial yield of 5.8%. The disposal is slightly above book value as at 30 September 2022. The estates total 446,000 sq ft across 113 units and generate £2.9m a year of rental income, with a WAULT to first break of 2.7 years. Two of the estates are located in Birmingham (Coleshill and Stirchley) and the third is located in Dudley (Enterprise). The properties were acquired as part of the Mucklow acquisition in June 2019. Since the Mucklow transaction, over £140m of Mucklow assets have now been sold, reflecting a 24% uplift against allocated cost. The company says the sale (together with other recent sales) puts it in a strong position to take advantage of new opportunities that it expects to see across the urban and regional warehouse markets.
  • NAV at Schroder European REIT (SERE) fell by 3.4% to 136.0 euro cents per share in the quarter to 31 December 2022. The fall was driven primarily by a fall in the valuation of the group’s investment property portfolio f 3.3% to €211.5m. EPRA earnings increased to €1.9m or 1.4 euro cents per share (from €1.8m in the previous quarter), which the company says will grow further with the redeployment of the Paris Boulogne-Billancourt sale proceeds and rental indexation. Post period end, the company acquired an industrial warehouse in Alkmaar, the Netherlands, for €11m, reflecting a net initial yield of 5.6%. A first interim dividend of 1.85 euro cents per share is to be paid for the year ending 30 September 2023, in line with target. The company has maintained a low loan to value ratio of 18%, with an investable cash balance of €37m.

We also have annual results from Temple Bar and new investment opportunities for Foresight Solar.

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