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Post Lockdown Strategy


River Rat

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how dependent are your sharedolders on the dividend?

 

I'd hold off on paying (at least a portion) and use the cash to make up for the loss in cashflow in the coming months or settlement of creditors.

 

You be better off with having tenants paying reduced rental than an empty building (which won't attract any new tenants either)

Hold your horses you're solutioning way ahead of time. This is an option which is only in step 3.

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What is the budget for the refurbishment? 

What is the scope of the refurb? 

Usually 5% of the property value so R6.5 million.

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Hold your horses you're solutioning way ahead of time. This is an option which is only in step 3.

 

sorry  :blush: 

 

give your tenants a break, I'm sure you'll find a way to afford it down the line....  :whistling:

 

edit: this is step 1

Edited by fanievb
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Some questions for clarification.

 

What % of total monthly income is attributed to the professional services on the first floor?

 

While the 4 anchor clients represent 65% of the income, what is the floor space % taken up them? What is ABSA's monthly rent?

 

What % of management overhead is needed to keep them (the 4 anchors) on board?

 

What is the refurbishment budget? If this is much larger than the dividend allocation, one would need to consider the impact of withholding dividends. Edit: I see R6.5m

 

How would possible reallocation of the larger anchor spaces into smaller spaces affect the refurbishment budget?

 

Is there an estimated building valuation post renovation? 

 

Edit: Am correct in saying this a R130m asset that generates R200k pm in operating income?

Edited by Patchelicious
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Step 1: Rules of the Game in the New Paradigm

some suggestions for consideration

  1. greater attention to hygiene, physical distancing and stricter controls on human movement will be the new normal; tolerances may be relaxed going forwards, but not to pre-covid-19 levels; this will impact how we live, work & play
  2. humans are social creatures who by & large like to be together, and will be looking for ways to do so, safely
  3. all existing value-chains have been disrupted; some will adapt, some will die, new value-chains will emerge
  4. there will be a greater awareness that our individual well-being (health, welfare) depends on the well-being of the people we encounter i.e. our community.

that's a start...

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Some questions for clarification.

 

What % of total monthly income is attributed to the professional services on the first floor? +-R125k pm

 

While the 4 anchor clients represent 65% of the income, what is the floor space % taken up them? What is ABSA's monthly rent? About 60%

 

What % of management overhead is needed to keep them (the 4 anchors) on board? included in he R80k difficult to split.

 

What is refurbishment budget? If this is much larger than the dividend allocation, one would need to consider the impact of withholding dividends. R6.5 mil

 

How would possible reallocation of the larger anchor spaces into smaller spaces affect the refurbishment budget? Too early in the process for these options

 

Is there an estimated building valuation post renovation? Commercial property is usually valued using the income and a capitalization rate in this instance it's 11%

Easy tiger let's start with the rules of the game, trust the process. See you at 18h00 or 5 your time.

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Easy tiger let's start with the rules of the game, trust the process. See you at 18h00 or 5 your time.

I need to get my q's in now, I have another appointment at 18h00 ;)

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Given the advent of a new major shopping centre reduce rents in lieu of long term commits.

 

Lock in long term cash flow and buy tie to see what happens in the future.

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General game rules question . I assume we playing this specific to today’s world of reference ie, postlockdown, current world status applies ?

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Question:

 

Is the valuation of R130m a realistic price in terms of current markets; i.e. would that be an achievable price (if decide to sell)?

 

How does an upgrade work in terms of the tenants? Does the landlord shuffle tenants or rent alternative (temp) property for the tenants OR does one find new tenants after the upgrade?

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So to start the process we need to collectively define 1.the "rules" which are applicable to this situation which would appear to be a series of contractual obligations.

 

The landlord has an obligation to provide space for use of the tenant probably subject to certain constraints.

The tenant has an obligation to pay rent (and likely services and ops costs and rates and possibly rental on turnover) for the space made available by the landlord.

The landlord has an obligation to pay the bondholder a predetermined monthly payment..

The landlord has an obligation to pay  the Local Authority rates and services charges and consumption.

The landlord has an obligation to pay the building insurance.

The landlord has an obligation to pay either staff or contracted management, cleaning and security services.

 

There are probably a few caveats in the lease which would modify the relationship between the landlord and the tenant, these related to force majeur etc which may have govern the relationship between the parties.  

 

Is this the correct route to setting out the fixed and formal rules which exist in this scenario?

Edited by SteveFW
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General game rules question . I assume we playing this specific to today’s world of reference ie, postlockdown, current world status applies ?

As it is now or changes over time.

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Question:

 

Is the valuation of R130m a realistic price in terms of current markets; i.e. would that be an achievable price (if decide to sell)?

 

How does an upgrade work in terms of the tenants? Does the landlord shuffle tenants or rent alternative (temp) property for the tenants OR does one find new tenants after the upgrade?

The valuation is based on post lockdown dynamics and it is the annual rental divided by the capitalization rate of 11%. So it stands to reason that a lower future rental would mean a lower valuation if 11% remains the same.

 

Mostly upgrades are a function of both churn, leases ending, new tenants, upgrades to existing tenant facilities and communal property.

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So to start the process we need to collectively define 1.the "rules" which are applicable to this situation which would appear to be a series of contractual obligations.

 

The landlord has an obligation to provide space for use of the tenant probably subject to certain constraints.

The tenant has an obligation to pay rent (and likely services and ops costs and rates and possibly rental on turnover) for the space made available by the landlord.

The landlord has an obligation to pay the bondholder a predetermined monthly payment..

The landlord has an obligation to pay  the Local Authority rates and services charges and consumption.

The landlord has an obligation to pay the building insurance.

The landlord has an obligation to pay either staff or contracted management, cleaning and security services.

 

There are probably a few caveats in the lease which would modify the relationship between the landlord and the tenant, these related to force majeur etc which may have govern the relationship between the parties.  

 

Is this the correct route to setting out the fixed and formal rules which exist in this scenario?

The clue is that the tenants are effectively asking to renegotiate their leases by asking for rent relief.

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