Biting the Bullet on RCU

Property trust RCU has signed a term sheet with Saban for the sale of its three remaining assets of any value. If approved, RCU will return about $US0.60 to unitholders and wind itself up.

That’s a lot less than we were expecting when we first invested in this property trust but value dissipates every day RCU exists.

In February unitholders contributed $20m via a capital raising. After transaction costs, only $17m went into the coffers. Less than $4m was used to extend the lease on the RSA asset (since sold).  On 23 July the Trust said it had US$13.9m cash. On 16 August it corrected that and said it has US$10.3m. In its latest announcement, RCU estimates it will have US$7.4m by January. Remembering that it now owns two unencumbered, income-producing assets, it’s fair to suggest the trend is not your friend.

Which is why we’ve agreed to vote in favour of the sale to Saban in the absence of a better offer. It’s not full value. It’s not even fair value. But it’s more than we’re going to get under the status quo.

There is plenty of water to flow under the bridge yet. The balanced nature of the register (Woolley 33% versus other majors combined 35%) is a red rag to a hedge fund bull. But hopefully, by January, we’ll be able to spend our time on more productive investments.

*Note: We haven't been able to say much on RCU for the past few months for reasons that should now be obvious. That's likely to be the case for the next few months too so, if you're an RCU unitholder, you're on your own from here.

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