The Local Shopping REIT (LSR) has been on my watch list for some time now as the company has been pursuing an orderly liquidation. I never built a position because the potential upside was never enough to justify the uncertain timing of the returns or the final realisable value.
The situation changed last Wednesday when the largest shareholder, Thalassa Holdings (which I discussed here), announced they were preparing an offer for the remaining shares they do not currently own. Thalassa recently voted down the liquidation proposal at LSR’s AGM.
Why is this interesting?
As recently as October last year, the management team estimated that the net realisable value from an orderly liquidation to be in the range of £0.33-0.345 per share. Given the shares currently trade for ~£0.27, this represents a discount of ~18%
While it is unlikely that Thalassa will offer the full value (they want to make a buck…) I think they will have to offer some sort of premium in order to convince the board to recommend their offer. Therefore, we have another unfair coin flip where heads I win, tails I probably don’t lose much.
Thalassa has to release their offer by early Feb and I expect it to be >£0.30 indicating a potential return of >10% in hopefully less than a month. While not a home-run, I think it is an attractive opportunity in volatile markets where I’m still struggling to find new, long-term core investments.
As always, this is not investment advice and reflects my personal opinion. I hold a material investment in LSR.