NZL

[notmaurice]

any one a shareholder in this listing.
Just want to know how the raising of funds went as i am financially illiterate with their jargon.

[Hectorplains]

any one a shareholder in this listing.
Just want to know how the raising of funds went as i am financially illiterate with their jargon.

$24.0m total raised and $14.5m shortfall which they intend "to place." Maybe they're using 'place' like in poker?  That is, the last act in each round of...betting. 

Hmmm nearly a 40% shortfall.  I guess if 50% is a pass... It's hardly compelling, eh. Another new low today too.  Good luck to anyone dealing in on this hand.

[Plata]

If you aren't a dividend lover I cannot see how you would be better off buying this vs ALF who now owns the management contract. That being said I hold neither. ALF has its shortcomings too, only one way you get 100m+ in tax losses right 

[lorraina]

ALF is a very different business today.
In fact a clever small company.
Well worth researching.
Wife holds a modest amount.
NZL is the owner of rural land and forests.
The good point about NZL,is the land etc they own ,would otherwise most probably have been sold to overseas holders.
Do not hold NZL.

[notmaurice]

Is THE latest news from AFL also good news for NZL.
imo NZL didn't have many options as to how to reduce debt and continue to grow.

[Mos]

Is THE latest news from AFL also good news for NZL.
imo NZL didn't have many options as to how to reduce debt and continue to grow.

Yes, how they redeploy funds will be a good test of management and board's value creation ability.

[Mos]

Looks like a solid acquisition for NZL

https://www.nzx.com/announcements/426510

[winner (n)]

What does really mean

Engaging with shareholders ....should have just given Basil a buzz and saved a lot of effort  https://announcements.nzx.com/attachment/448764.pdf

[seaweed]

What does really mean

Engaging with shareholders ....should have just given Basil abbuzzcandcsavwdcaclotbof https://announcements.nzx.com/attachment/448764.pdf

Wow, that did the trick, up 5c this morning.

[Hectorplains]

What does really mean

Engaging with shareholders ....should have just given Basil abbuzzcandcsavwdcaclotbof https://announcements.nzx.com/attachment/448764.pdf

It sounds like they're wanting to shop for a buyer/s.

[Basil]

A few thoughts.

1. The mangers contract is very generous.  They get 10% of the NTA uplift every year with no hurdle rate at all.  This leads to general inflation giving performance fees which is absolutely absurd.  Additionally, the fees for buying and selling farms at 1.25% are at the generous end of the spectrum.

2. Its a relatively new company and the directors have not done themselves any favours at all with the investment community with breaking their IPO promise to pay out 90-95% of affo earnings.   Investors want income from listed REIT's but the directors expect to much latitude with how earnings will be dealt with.  Just do what you said you would do.  Paying dividends, then stopping them, then starting them again at a reduced level all within 5 years...the optics are awful and do not give income investors confidence.

3. Inflation since they listed is responsible for the vast majority of the NTA uplift, the directors probably have a slightly overly positive opinion of themselves in terms of their value add.

4. Its a rural land owning company at arguably the top of the agri cycle and the share price might simply be front running an expected drop in values.

5. Welcome to the real world where listed REIT's often trade at a substantial discount to NTA.

[Mos]

Basil,

Your point 1 is a key reason I bought into the Manager ALF rather than NZL. The strong market prices for dairy products do not seem to have flowed through to higher dairy land prices in a meaningful way yet - so see upside in that area for both NZL and ALF over the next year or two.

[Plata]

I also bought into ALF but later sold. I think the lack of dividend coupled with its terrible liquidity and small size makes it basically dead money in the NZ market. The correlation between EPS and ALF share price does not seem particularly strong. I agree the management contract is generous, however I don't believe the overall expense ratio is wildly different to the other listed property companies.

[Ferg]

Nice post Basil and 100% on the button.

One other thing I would add is why are the Directors worried about the share price when they should be focussed on running a business?  Let the market decide what your business is worth.  If you as a Director think it is underpriced or undervalued then don't try to jawbone it......instead put your money where your mouth is.  I recall a time when subsequent attempts at capital raises fell flat....wasn't that a signal from the market they weren't happy?

[Basil]

If you aren't a dividend lover I cannot see how you would be better off buying this vs ALF who now owns the management contract. That being said I hold neither. ALF has its shortcomings too, only one way you get 100m+ in tax losses right 

I don't normally quote people's messages from such a long time ago because its not really fair on people as opinions can change and so can companies but I think it could be worth discussing this in the context of NZL.

As you can see above I did have a look at the detail of the management contract and realised ALF has it. I know a modest amount about ALF's chequered past but then I looked at the appalling liquidity and decided, considering that, you'd really have to have 100% confidence in ALF, its management and board for the long run, (which requires me to take a very deep dive into ALF and is more intellectual bandwidth than I can apply at this point), before taking a meaningful position, if you could get one without materially affecting the share price.  So that's as far as I got with it but I did wonder the following which perhaps you could shed some light on ?

1. Do ALF have the irrevocable ownership of the management contract with NZL ? 
2. If so, who gave them this ownership ?
3. Can the terms of the contract be reviewed by NZL's board, especially the egregious 10% of all capital gains with no hurdle rate at all, even for general inflation ?
4. How does the overall cost of the contract compare with say ARG's internalized management which has an expense ratio of just over 8% of rental income ?