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I CAN live without dividends (for now, at least). But am I the only one who feels short-changed at the lack of detail in the latest annual report from Reinet Investments [JSE:REI]?
I had a similar gripe at various times over the last year. But then I was merely bemoaning the lack of detail around Reinet's so-called othe" investments – the "rats and mice" inherited from luxury brands group Richemont Securities [JSE:RCH].
Yes, perhaps I was being pedantic. With Reinet's significant minority holding in British American Tobacco (BAT) representing R22bn of a R26bn portfolio, who really cares about other little things.
Rest assured, I have since come to accept that intimate details of Reinet's "other" portfolio – which tally up to less than €40m (I'm not being facetious here, please believe me) – may only come to the fore if one of the ventures turns out an absolute winner.
But I can't help feeling let down at the contents of Reinet's 62-page annual report, which was released last week. I suppose with no dividend due from Reinet, I was hoping for some declarative detail as due compensation.
The report, disappointingly, carries no additional detail of the two latest strategic investments into US land development and mortgages (based in North and South Carolina as well as Florida) or investment fund Vanterra.
What was disclosed in Reinet's year to end-March statements is merely repeated here. Come to think of it, there's still not a surfeit of detail on Trilantic Capital (the ex-Lehman Brothers investment banking business) either.
Dicy dabbling - or have they missed the bus?
Again I might stand accused of sweating the small stuff – although the fact that new investments with funding commitments of €312m were closed by Reinet during the year can't be deemed small change.
Still, Reinet's most recent quarterly update (to end-June) will show US land development and mortgage deals and Vanterra have only had the slightest effect on Reinet's portfolio composition, where BAT now represents 83% of the total value from more than 85% last year.
Even so, I think the commitments to both the land development and mortgage and Venterra investments are significant and in years to come will hopefully become significant portions of net asset value.
To me the land development and mortgage investment is most intriguing – especially because I have garnered such divergent responses from other market watchers.
Some believe Reinet is chancing its arm by dabbling in discounted subprime property, while others believe Reinet is too late to pick up real bargains in the real estate swamps.
In that regard I might have appreciated a little more explanation of the intricacies of these mortgages – instead of the rather vague admission that "the debts were acquired from local lenders at substantial discounts to nominal value".
However, I suppose one should take heart from Reinet reiterating that it is "working closely with its partners and co-investors in the US, who have considerable experience in managing such projects, recognising that this is an area where industry knowledge is critical to making the right investment decisions".
Let's hope so, because things seem to be moving quite rapidly in Florida and North and South Carolina.
When the year to end-March results were released (in early June) the amount committed to land development and mortgages was €74m, with Reinet having already invested €25m.
The annual report, roughly six weeks later, confirms the investment outlay. Strange then that Reinet's recent quarterly update shows that €32m has been pumped into in property-related investments in the US with a commitment to invest a further €50m.
So now we appear – according to my arithmetic - to be investing an additional €8m in property-related ventures in the US.
With some demanding investment commitments going forward it's a good thing then, I suppose, that BAT is still coughing up such strong dividends. Probably the most reassuring thing about the Reinet annual report is the disclosure that dividends of €84m were received from BAT in the financial year to end-March 2010, with another £60m already dropping in the new financial year.
That certainly takes the sting out of the very real possibility of upwards of €40m (over and above the normal management fees) being paid out in performance fees next March to the general partner which, like the fund manager and the investment adviser, is controlled by Rupert family interests.
- Fin24.com
I had a similar gripe at various times over the last year. But then I was merely bemoaning the lack of detail around Reinet's so-called othe" investments – the "rats and mice" inherited from luxury brands group Richemont Securities [JSE:RCH].
Yes, perhaps I was being pedantic. With Reinet's significant minority holding in British American Tobacco (BAT) representing R22bn of a R26bn portfolio, who really cares about other little things.
Rest assured, I have since come to accept that intimate details of Reinet's "other" portfolio – which tally up to less than €40m (I'm not being facetious here, please believe me) – may only come to the fore if one of the ventures turns out an absolute winner.
But I can't help feeling let down at the contents of Reinet's 62-page annual report, which was released last week. I suppose with no dividend due from Reinet, I was hoping for some declarative detail as due compensation.
The report, disappointingly, carries no additional detail of the two latest strategic investments into US land development and mortgages (based in North and South Carolina as well as Florida) or investment fund Vanterra.
What was disclosed in Reinet's year to end-March statements is merely repeated here. Come to think of it, there's still not a surfeit of detail on Trilantic Capital (the ex-Lehman Brothers investment banking business) either.
Dicy dabbling - or have they missed the bus?
Again I might stand accused of sweating the small stuff – although the fact that new investments with funding commitments of €312m were closed by Reinet during the year can't be deemed small change.
Still, Reinet's most recent quarterly update (to end-June) will show US land development and mortgage deals and Vanterra have only had the slightest effect on Reinet's portfolio composition, where BAT now represents 83% of the total value from more than 85% last year.
Even so, I think the commitments to both the land development and mortgage and Venterra investments are significant and in years to come will hopefully become significant portions of net asset value.
To me the land development and mortgage investment is most intriguing – especially because I have garnered such divergent responses from other market watchers.
Some believe Reinet is chancing its arm by dabbling in discounted subprime property, while others believe Reinet is too late to pick up real bargains in the real estate swamps.
In that regard I might have appreciated a little more explanation of the intricacies of these mortgages – instead of the rather vague admission that "the debts were acquired from local lenders at substantial discounts to nominal value".
However, I suppose one should take heart from Reinet reiterating that it is "working closely with its partners and co-investors in the US, who have considerable experience in managing such projects, recognising that this is an area where industry knowledge is critical to making the right investment decisions".
Let's hope so, because things seem to be moving quite rapidly in Florida and North and South Carolina.
When the year to end-March results were released (in early June) the amount committed to land development and mortgages was €74m, with Reinet having already invested €25m.
The annual report, roughly six weeks later, confirms the investment outlay. Strange then that Reinet's recent quarterly update shows that €32m has been pumped into in property-related investments in the US with a commitment to invest a further €50m.
So now we appear – according to my arithmetic - to be investing an additional €8m in property-related ventures in the US.
With some demanding investment commitments going forward it's a good thing then, I suppose, that BAT is still coughing up such strong dividends. Probably the most reassuring thing about the Reinet annual report is the disclosure that dividends of €84m were received from BAT in the financial year to end-March 2010, with another £60m already dropping in the new financial year.
That certainly takes the sting out of the very real possibility of upwards of €40m (over and above the normal management fees) being paid out in performance fees next March to the general partner which, like the fund manager and the investment adviser, is controlled by Rupert family interests.
- Fin24.com
