Chamoss: How Much Cash Is Actually Left After the Waterfall?
Chamoss reported £22.055 million of AFFO in 2025, but after restricted-cash movements, interest, principal, and dividends only about £38 thousand was left in unrestricted cash. That is not a liquidity failure. It is a reminder that in Chamoss, cash belongs to the indenture waterfall before it belongs to equity.
The main article already made the larger point: Chamoss looks stable at the lease, coverage, and covenant level, but 2028 is already sitting inside the valuation. This follow-up isolates only one layer of that story: not how much accounting profit or AFFO the company reports, but how much cash is actually left once the money runs through the hard-coded chain of restricted accounts, debt service, and owner distributions.
The easiest number to anchor on is AFFO of £22.055 million. It looks solid, stable, and slightly better than 2024. Right next to the FFO and AFFO presentation, the company warns that FFO does not represent cash held by the company and does not reflect distribution capacity. In Chamoss, that is not a footnote. It is the whole distinction between good contractual earnings and real equity-level cash flexibility.
In practice, 2025 generated £31.464 million of net cash from operating activities. After a net £1.969 million investing outflow, almost all of it tied to restricted cash and deposits, £9.961 million of interest, £16.047 million of bond principal, and a £3.45 million dividend, the increase in unrestricted cash was only about £38 thousand. Year-end unrestricted cash stood at £151 thousand.
Three Frames, Three Numbers
Chamoss has to be read through three different cash frames, because each answers a different question:
| Frame | 2025 | What it tells you | What it does not tell you |
|---|---|---|---|
| normalized / maintenance cash generation | £22.055 million | This is management's AFFO, after non-cash add-backs such as the smoothing-rent asset and deferred tax | It does not tell you how much open cash is left after the reserve accounts, principal, and dividends |
| Net cash from operating activities | £31.464 million | This is the cash the portfolio generated before financing and distributions | It is still not an equity-flexibility number, because interest, principal, and the waterfall come afterward |
| all-in cash flexibility | about £38 thousand | This is what actually added to unrestricted cash after the year's real cash uses | It does not measure collateral value or refinancing quality, only open cash left at the end |
The gap between AFFO and open cash is not a contradiction in the filing. It is the result of measuring different layers. AFFO starts from net profit, strips out valuation noise and unusual items, then adds back £3.182 million of movement in the smoothing-rent asset and £2.31 million of deferred-tax provision. That is useful for understanding the portfolio's recurring earning power. It is simply the wrong test for the question of how much cash remains for equity after all real claims have passed through the structure.
The 2025 Waterfall
To understand what was actually left, the right place to start is the cash-flow statement, not the AFFO bridge.
Net cash from operating activities was £31.464 million. That is a strong number, and it fits with rental income of £33.325 million and only £860 thousand of general and administrative expense. But once the cash comes in, it is no longer free.
The investing line looks modest at first glance, a net outflow of £1.969 million, but the composition matters. Direct investment in investment property was only £14 thousand, and the company also received £49 thousand of interest income. Almost the entire net investing outflow came from the £2.004 million increase in restricted cash and deposits. So even before interest or principal, part of the year's cash had already been trapped inside the structure.
Then the financing line makes the picture much sharper: £9.961 million of interest, £16.047 million of bond principal, and £3.45 million of dividends. Before the dividend, only about £3.5 million of open cash was left. After the dividend, almost all of that was gone.
That is the key point. Chamoss does not have a problem generating cash at the portfolio level. It has a structure in which almost every pound already has a destination before it can become discretionary cash.
What the Indenture Does to Cash
This is not only a matter of conservative financial policy. It is built into the legal and financing architecture. Under the bond note, all current receipts are deposited into a collection account. From there they move first to operating expenses, overhead, VAT, the next interest payment, and the next principal payment. The balance then moves to a transfer account, where the order is still fixed: taxes, replenishment of the debt-service reserve and expense cushion, and only then dividends or shareholder-loan repayment. Only what survives that sequence reaches the surplus account.
And even the surplus account is not truly open cash in the ordinary sense. The company may use it for bond buybacks, early redemption, or simply leave it there until the bonds are fully repaid. In other words, even the "surplus" remains inside the bond structure before it becomes something that genuinely looks like equity optionality.
That is also why unrestricted cash looks tiny while the balance sheet still shows £33.699 million of restricted cash and investments. At year-end 2025, Chamoss had only £151 thousand of unrestricted cash, against £14.731 million of short-term restricted cash and £18.968 million of restricted cash and investments for the bonds. So a reader who looks only at open cash and sees a very small number may jump to a liquidity-stress conclusion. That is not what the filing says. What it says is that the cash exists, but most of it is already earmarked.
The company even states explicitly that the transfer of debt-service reserve payments to the trustee is one reason for the working-capital deficit. So part of the short-term balance-sheet discomfort is a by-product of the collateral structure, not evidence of weak collections.
So How Much Is Actually Left?
If the question is what the portfolio's contractual earning power looks like, AFFO is still a useful number. If the question is how much flexibility remains for equity after the year's real cash uses, the 2025 answer is: almost none.
The right read on Chamoss therefore is not "AFFO is high, so distribution capacity is large." It is "the portfolio generates cash, but the structure pulls that cash first into debt service, reserve accounts, and distributions already made." That is exactly how the company can report both a 1.24 debt-service coverage ratio and roughly £32 million of covenant free cash for the four-quarter period, while ending the same year with only £151 thousand of unrestricted cash. Both numbers are true. They just sit on different floors of the structure.
That also leads to the practical conclusion heading toward 2028. As long as the lease keeps paying, the structure still serves bondholders well. But equity holders do not have a wide pool of open cash to maneuver with. That is why every additional dividend, every bond buyback, and every delay in lease-extension visibility has to be read through one question: is the system generating real surplus beyond the waterfall, or is it mainly proving that it can keep feeding the waterfall itself?
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