For those income investors who have been following Mapeley shares its been a traumatic ride over the last few months. Even when a share is good value by any common sense measure it is frustrating when the markets have a downer on it and there is nothing an individual investor can do but hang on for the ride.
Today just after 12 the market sentiment finally changed. If income investors want to study the intraday graph for the 27th november they can see that during the morning the share price after an initial recovery resumed its inexerable journey south. that was until it hit £12.20 just after mid day. At this point the share rocketed upwards to over £13 and then recouvered further to end just a couple of pence down on the day at £13.32. This to me signals a strong point of resistance. I cant see this income share going below £12 and income investors should look for this share to find a trading range between £12.75 and £13.50 before starting a slow recovery
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2 comments:
Income Monkey,
I am looking to build a retirement income portfolio and I have Mapeley on my watch list. Are you confident that the dividend can be maintained? I have read comments elsewhere that the loan to value ratio has not been revealed by the company and that this is making some institutional investers nervous. Care to comment?
I'm confident that mapeley has sufficient free cash to fully cover a annual dividend of £1.20. Have a look at the latest consolidated cashflow statement and my previous post.
I have also read about the concerns over the covenants and it is a worry that the company has not been that forthcoming with information about this. However, couple of points on this matter. Firstly, their tenants are rock solid - mainly public sector and the former abbey national now santender. The situation many property companies find themselves with respect to the credit crunch is unprecedented. The last think that a bank would want is to force a property company to make a firesale of assets into a falling market. I suspect that they will look at a company like Mapeley which is highly cash genearative in relation to many property companies and cut them a little bit of slack whilst the credit crunch unwinds over the next 6 months. The other unique factor with Mapeley is that the company is backed by several significant shareholders such as Fortress Investment Group and George Soros Soros Real Estate Investment Partners. Neither are these shareholders are going to stand idley by if their investment is threatened by a short term blip in the property investment market. I believe George Soros is quite keen on a contrarian investment play - he certainly did pretty well with currency speculation when he forced the pound out of the ERM.
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