Are things going to get Sticky for Listed Commercial Property outfits ?

[ronaldson]

https://www.nzherald.co.nz/business/...FQN34J7D44CBQ/

Oyster fund $19.4m profit turns to $22.5m loss, Pastoral House payments stopped


So all it took to trigger this was Property Revaluations - all Unrealised suddenly turning negative - likely funneled through as part of Profit ?


Have to take care traversing delicate Oyster Shells it seems

And that was for year end 31 March 2023. A lot riding on valuations as at 31 March 2024 methinks.

[nztx]

And that was for year end 31 March 2023. A lot riding on valuations as at 31 March 2024 methinks.

Why would the Fund be so hastily scurrying around putting Stuff on the block for sale now - less than 2 weeks before 31 March 2024 - as reported in first article ?

[X-men]

I just nosy around Oyster fund...thier debt assets gearing is at 49.7% as on 31st Dec 2023.

No wonder they are in the sheet!!

Most syndicates or listed property funds are around 30-38% max

[LaserEyeKiwi]

“Are things going to get sticky for listed commercial property outfits?”

I mean, hasn’t that been the case for the last 2 years already? NTAs and share prices have already massively slumped, and assets have been sold off to maintain gearing ratios. None of the large listed names appear to be in any danger of breaching covenants, and there is no issue of investors pulling out money as “the money” is simply listed equites that can be bought & sold as needed with zero impact on the company operations.

Oyster is completely different style of company/investment, where people wanting their capital back impacts the entity directly.

[Toddy]

Usual cycle. Just a repeat of GFC. The property cycle always takes longer to feel the crunch.

The real issue I have with these funds is that the older generation is always sucked into these investments down at the golf club by snake oil 'financial accredited' advisors.

Then their money is stuck when they need it.

[Joshuatree]

I just nosy around Oyster fund...thier debt assets gearing is at 49.7% as on 31st Dec 2023.

No wonder they are in the sheet!!

Most syndicates or listed property funds are around 30-38% max

And that's when punters remember (but ignored) their mates warning them about the lack of liquidity!

[Panda-NZ-]

I have just listened to a podcast from Aust, the exact same thing is happening there with over 2,000 companies going to the wall in the lucky country, this is not restricted to N Z and all for the same reasons, high house hold fixed costs, power, food gas, power and very high interest rates.

This is not a govt issue as the same is happening over there but on a larger scale, we are in for 2-3 years of tough times imho.

The economy is like a piece of string, you can pull it in the direction that you want it to go but you cannot push it there.

They have higher productivity and a large population (more economies of scale and better negotiation vs competitors). Plus more competitive markets across industry in grocery, power even banking.

Sure they will be affected too but their unemployment has dropped today and interest rates are lower for longer.

[Valuegrowth]

Usual cycle. Just a repeat of GFC. The property cycle always takes longer to feel the crunch.

The real issue I have with these funds is that the older generation is always sucked into these investments down at the golf club by snake oil 'financial accredited' advisors.

Then their money is stuck when they need it.

Dear Toddy: Some say this time is different and they don't believe cycles. I’m well prepared for coming cycles in commodities, stocks, and other assets especially real estate.

[dibble]

Why would the Fund be so hastily scurrying around putting Stuff on the block for sale now - less than 2 weeks before 31 March 2024 - as reported in first article ?

Selling assets to reduce debt and/or gearing only helps if you sell them for more than their value. Its all relative.
In this climate it would be rare to realise more than book value (and dont ignore sales costs).
I guess we might thus surmise this class of property company (syndicators in particular) is cash strapped and perhaps close to insolvency (to meet interest payments). One late paying low quality tenant could be the trigger.

[troyvdh]

Risk and reward.
101,