Listed Property Trusts

[JayPe]

Yes, but arriving at a current market value for such thinly traded properties leaves a fair bit riding on the valuer's opinion. Put up to tender/auction they might fetch quite different prices.

So they're creating an entity to have a half share in an entity that they will own the rest of? That sounds like dodgy Macquarie engineering to me. There have to be strings somewhere, and the asset value is probably a good place to look first.

[Lizard]

Thanks Lizard-Yes, Ozzie property market is expensive and the currency is high. But they will be earning rentals in Australian $ and well shielded from the recent depreciation tax laws in NZ-that is a positive I would have thought. Management fee will come down to 0.60%(from 0.75%)-of course we all know how these managers of LPT's operate and their conflict of interest with shareholders.

Hi RRR, Well I wish I'd given more thought to this VHP cap raising a bit earlier now - perhaps I would have sold a few earlier to raise cash to exercise (which always seems a safer bet to me than trying to sell the rights). Now I am stuck between living with unacceptably costly dilution or ploughing in a large sum of cash when I have better uses for it... and if the market price is anything to go by, I am not the only person who doesn't want to double their holding.

That being the case, it seems likely at current rights price that Forbarr (as underwriter) could end up with a large overhang that could circulate the market for some time to come. If I take up my rights, I will probably own more VHP than I'd like for at least another 9 months before they reach a value worth selling.

Also, reading through the rights documents, although yield looks good, WALT's are marvellous and cap rates used seem undemanding, my reading of the notes seem to suggest that the valuations were based on some additional capital expenditure scenarios being completed. While I think they have allowed enough cash for this, it does create another area for things to go wrong. I also wasn't too sure about the lessee rights of purchase - as I read it, Healthe may still take up their rights and therefore preclude VHP buying about $30m worth of properties out off the mix. Plus there is the issue of the $5m unsecured loan being acquired, which is made to sound so risky as to be a giveaway. Australian tax status confused me too.

Have to say, this was all just quick read stuff. Overall, the geographical diversification is a good thing and I quite like the idea of holding Aussie property under NZ PIE structure (especially after Chch earthquake showed the risk in holding pure NZ based property).

Any other thoughts on rights issue?

[devito]

All I can say is "what a pain in the arze".

I only have 2,500 of these so selling the rights will net me next to nothing after brokerage.

They are trading at 2 cents more than what I can pick them up at if I take up the rights. Not much of a discount now!

I think I will just let the rights expire.

The whole exercise has been to the detriment of the existing shareholders.

[RRR]

Hi Liz. I will be taking up my rights in full and apply for a bit more. VHP is my smallest holding, so I don't have to dig too deep into my pocket.
The biggest risk to me seems to be the tenant's option to purchase the properties, esp Health Care. They occupy 56% of the properties being purchased by value and all properties occupied by Health Care are valued under A$30 million.

Here is a statement from the prospectus about the "option".

"However, the Trust understands that Health Care is considering exercising its option in respect of properties with a value not greater than A$30 million".

[RenHoek]

Wow.... ING (ARG) sp is falling off a cliff face!
Bad results released today?
Div due just before chirstmas too....?

[RRR]

VHP 1:1 rights issue must be hard for large shareholders and that is the obvious reason for the share price weakness in my opinion. The share price fell after the record date for the rights issue and that tells the story. The share price should recover over time if the risks mentioned in the prospectus doesn't eventuate.

[RRR]

Interesting to see the downtrend of LPT share prices before the tax changes in 2011. The earnings will go down further(and the Dividends) in 2011-12 before it can go higher. Late 2011-early 2012 will be a good time to buy-that is my guess any way.

[_Michael]

Interesting to see the downtrend of LPT share prices before the tax changes in 2011. The earnings will go down further(and the Dividends) in 2011-12 before it can go higher. Late 2011-early 2012 will be a good time to buy-that is my guess any way.

Hi RRR and Lizard

I am looking at buying some of these although did not own prior to rights issue.

Things that attract me here are WALT 11.5 years and 90% inflation proof due to CPI indexed rentals.

Couple of questions though that you may be able to help with:

Is the 8.2 CPS projected divined tax free despsite being partly generated offshore?

Does anyone know how the rentals in the newly acquired properties compare to market rental on a $/sqm basis and

Why were Orchard selling out of these properties if they had such long inflation indexed leases in place?

Thanks and regards,

M

[RRR]

Hi Michael

1. Yes, the dividends will be tax free as long as they remain PIE entity (I am not sure whether the status is going to change)
2. I don't know - but the yield is decent anyway
3. The orchard fund which owns EHCT is a closed end fund and that is why they are selling-I had the same question in my mind and found the answer in orchard website.

[Lizard]

Hi Michael,

I am sorry but I did not get time to look closely enough at this one, so took the advice of my broker and let the rights lapse. Given the broker record, this probably makes them a buy (I don't think he reads ST...[:fingers-crossed]). I have not looked at the register either, so am not sure of the likely success rate on this cap raising - hoping I am not indicative, as no doubt this process has cost a bit!

I have located the web-site for Orchard and it may be worth a download and a read before the Essential Healthcare Trust disappears off the map. Also, the overall accounts may provide some clues as to why the sale... I need to find the time for a read, so will post back if I do!