ARG - Argosy Property.

I'm more interested in ARG's result on 20th which I expect to be rock solid. On the other hand I am expecting that in FY19 for TRA we will see the old problematic MTF legacy loans take a sizeable bite out of earnings. How much they bring to account in the unaudited first half is anyone's guess but I expect reality to bite with the audited full year result. TRA also belatedly acknowledged recently that the first quarter had been tough and we know business and consumer confidence has been very low. I am worried about TRA's pending result. The market is trying to tell us it won't be good. I think many of TRA's business initiatives won't start to bear fruit till the second half and more clearly in FY20.

Yes TRA have work in progress.
1] Legacy MTF loans.
2] Clearing out old legacy Buy right cars stock.
3] Adjusting Autosure rates to suit vehicle insured.
4] Upskilling auction staff to sales staff.
I expect the result will confirm their strategy is on course.
Roscommon Road sale should add that little bit extra excitement to the result,as will the fact they will be working with ARG..
I only know of one analyst who has picked it up so far,and was kind enough to share with me.

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Originally Posted by percy

Yes TRA have work in progress.
1] Legacy MTF loans.
2] Clearing out old legacy Buy right cars stock.
3] Adjusting Autosure rates to suit vehicle insured.
4] Upskilling auction staff to sales staff.
I expect the result will confirm their strategy is on course.
Roscommon Road sale should add that little bit extra excitement to the result,as will the fact they will be working with ARG..
I only know of one analyst who has picked it up so far,and was kind enough to share with me.

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Rome wasn't built in a day was it :)

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Originally Posted by Beagle

Rome wasn't built in a day was it :)

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No but it will be destroyed in a day, Rev 18:8-19

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Originally Posted by Beagle

Rome wasn't built in a day was it :)

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Neither was any great NZ company,such as EBO,MFT, RYM or a great number of others.

I note that Milford Active Growth reduced their ARG holding in October. These guys know their stuff and do well.
I note that ACC invested at a similar time. These guys usually get it wrong.
Also ANZ reduced around that time

However NTA will certainly have been boosted following some property divestment at above book value.

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Originally Posted by peat

I note that Milford Active Growth reduced their ARG holding in October. These guys know their stuff and do well.
I note that ACC invested at a similar time. These guys usually get it wrong.
Also ANZ reduced around that time

However NTA will certainly have been boosted following some property divestment at above book value.

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FWIW I rate ACC peat, certainly over and above Milford but of course for some strange reason I prefer my own analysis :D

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Originally Posted by percy

Neither was any great NZ company,such as EBO,MFT, RYM or a great number of others.

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including HGH (HBL) :)

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Originally Posted by Fred_Rubble

including HGH (HBL) :)

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How on earth could I have missed them.?
Again well spotted..!...lol.

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Originally Posted by percy

Well team the fun continues..Roscommon Road ia a popular road for TRA to buy properties.
10th September 2015 announcement...TRA buy property in Roscommon Road for.................. ....$4 mil........................................[Must be No.133]
3rd August 2016 announcement....TRA buy property cnr Roscommon Road and Vogler Street for $4.8mil........................................[Must be No.160]
13th November 2018.ARG announce they have brought a property in Roscommon Road from TRA for $8.6mil...yes you guessed it.....[Must be No.133]
So TRA buy 133 Roscommon Road for 4mil, and three years later sell it with lease back for 15 years at $8.6mil. Win win situation for happy "partners."

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Originally Posted by percy

Bit more fun for you.
TRA buy property for $4 mil sell it for $8.6 mil,repay the $4mil they borrowed to buy the property,and use the profit [$4.6mil] to pay the rent for the next 15 years.
lol.

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No interest in ARG for me. But I have a tidy little holding in TRA, so am interested in this transaction from 'the other side of the fence'. A 5.0% rent yield on an $8.6m property equates to :

0.05 x $8.6m = $430,000 rent per year. Over 15 years the total rent paid would be:

15 x $0.430m = $6.45m

From the Turners side of the fence, rent is tax deductible. So the 'after tax' cost to Turners is:

(1-0.28) x $6.45m = $4.6m (isn't that spooky)

So it looks like the $4.6m profit banked on the land sale by Turners does cover the rent, exactly as Percy suggests. Also Turners get their money upfront but ARG must wait fifteen years to get their full share of the same. A 'time value for money' adjustment from the Turners side is there to counter any future incremental rent increases from ARG.

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Originally Posted by Fred_Rubble

In regards to Wiri - widely accepted market return on land is 5%. Rent of $430,000, pa ($27/sqm) - broadly reflective of industrial yard rents.

15 year lease with fixed rental growth. Strong tenant. Looks good to me.

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$8.6m does sound a lot for a couple of mud covered rugby fields in outer outer Auckland. Yet, I am sure the ARG result will be every bit as good as some here are predicting. The thing that would worry me, if I was an ARG shareholder, is that I am being set up for a substantial fall in asset values 'when' interest rates rise again. And while I wouldn't like to predict when this will happen, some time within the next fifteen years looks likely.

Conclusion: I am glad to be on the Turner's side of this deal!

SNOOPY