PGW - PGG Wrightson

[Snoopy]

Was actually thinking about buying one of those PGW buildings .... 10.5% net yield fixed for 10yrs, 5x3 rights to renew lease.(PGW pay all outgoings)
If they move out after the 10yrs they have to re-paint etc .. 67% NBS rating

was very keen ...but yes what the outlook is 10yrs out is a concern... is a risk I guess you have to take on board in ten years after being paid 105% of your Capital paid you might well be left with an empty 400sqm+ 67% NBS building on the main street of a back water rural town surrounded by muti-million $$$ farms....would anyone have a use for a industry/retail mix building +large yard in the location

Despite not being a 'property investor' at heart, I too have been thinking about these juicy rural property yields. I had to look up some of the jargon. 67% NBS relates to the earthquake standards? Had dinner on Saturday night after a long road trip at Rangiora at a place called 'Joe's Garage'. The building is basically a barn that I am not sure even existed pre-earthquakes. There was some Rugby League on the TV. But I couldn't help my own gaze wandering to the ceiling and looking at those strong steel girders interconnected with steel tensioning rods. It struck me that an older equivalent building might not be too difficult to bring up to full earthquake strength. I felt pretty safe sitting in there. Perhaps the worst problem could be those 1960s to 1970s unreinforced brick walls. But maybe when it comes time to replace the roof, just hire a big crane and lift up the roof truss framing and stick some steel rods down the middle of the bricks. OK I am not a civil engineer and I might be simplifying things. But strengthening such buildings does look do-able. Particularly if you can get together with some other barn owners and amortise your engineering professional fees across more than one building.

And to pinch a page from Joshuatree. If PGW pulls out, you have an ideal location for a insect farm. Or with all those dairy farm workers from the pacific, maybe a Filipino church?

That’s if you sell .. I see a very low inflation cycle over the next few decades another GFC and rates will head lower ..some countries it now costs u to have money on the bank ...
Now the question for me is will PGW still want to rent in 10yrs if I had crystal ball and knew they would be there for full 25yr lease rights it’s a great buy

I respect Percy's lifetime of retail experience and his resulting 'insider knowledge'. But I can't see farmers ordering forage grain by mail order, with courier van man stacking them on the roadside by the rural delivery letterbox. Like Pizza stores and hairdressers, I think a 'rural retail presence ' will be less affected by the march of the internet than most. One trick I use with 'yield assets' to to evaluate them on the second best use of that asset. IOW, if PGW pulled out, what would the yield another store operator might pay for the same location? If PGW wanted to upgrade their market presence, they might want to up sticks and start with a brand new development down the road, for instance.

SNOOPY

[Out to lunch]

High feed grain prices are good for farmers who grow the grain but bad for farmers who have to buy it in! So overall, for a company exposed to all sectors of the agricultural economy (like PGW) probably a neutral effect. I think I heard on one of those early morning weekend farming radio shows that stock prices are coming back significantly in those areas where the grass stopped growing (Canterbury and Otago IIRC).

SNOOPY

PGW also sells the grain https://www.pggwrightsongrain.co.nz/Grain-Marketing
The seasonal decline will start occurring for lamb, beef might be a different story given Chinese demand.

[Snoopy]

PGW also sells the grain https://www.pggwrightsongrain.co.nz/Grain-Marketing

Yes I did know that PGW sells grain. My point was that if farmers buy grain that is money they could have put towards debt repayment, or building an irrigation system. The net result is that they have less money to spend on 'other stuff' which is bad for PGW. That is what I meant when I said selling grain feed was neutral for PGW. Sorry for ambiguity.

The seasonal decline will start occurring for lamb, beef might be a different story given Chinese demand.

I think that if you don't have the means to feed your animals then you will have to sell them at whatever price you can get. It doesn't matter what demand in China is doing. Again this will be good for PGW Livestock in the short term. But it would have been better for farmers and PGW Livestock if the farmers had been able to keep their animals, feed them up more and sell them through the saleyards later.

SNOOPY

[JBmurc]

Despite not being a 'property investor' at heart, I too have been thinking about these juicy rural property yields. I had to look up some of the jargon. 67% NBS relates to the earthquake standards? Had dinner on Saturday night after a long road trip at Rangiora at a place called 'Joe's Garage'. The building is basically a barn that I am not sure even existed pre-earthquakes. There was some Rugby League on the TV. But I couldn't help my own gaze wandering to the ceiling and looking at those strong steel girders interconnected with steel tensioning rods. It struck me that an older equivalent building might not be too difficult to bring up to full earthquake strength. I felt pretty safe sitting in there. Perhaps the worst problem could be those 1960s to 1970s unreinforced brick walls. But maybe when it comes time to replace the roof, just hire a big crane and lift up the roof truss framing and stick some steel rods down the middle of the bricks. OK I am not a civil engineer and I might be simplifying things. But strengthening such buildings does look do-able. Particularly if you can get together with some other barn owners and amortise your engineering professional fees across more than one building.

And to pinch a page from Joshuatree. If PGW pulls out, you have an ideal location for a insect farm. Or with all those dairy farm workers from the pacific, maybe a Filipino church?



I respect Percy's lifetime of retail experience and his resulting 'insider knowledge'. But I can't see farmers ordering forage grain by mail order, with courier van man stacking them on the roadside by the rural delivery letterbox. Like Pizza stores and hairdressers, I think a 'rural retail presence ' will be less affected by the march of the internet than most. One trick I use with 'yield assets' to to evaluate them on the second best use of that asset. IOW, if PGW pulled out, what would the yield another store operator might pay for the same location? If PGW wanted to upgrade their market presence, they might want to up sticks and start with a brand new development down the road, for instance.

SNOOPY

Yes NBS% at 67 basically means I can get earthquake cover as the 1960,s built retail building had major upgrade a few years ago ——strong steel girders interconnected with steel tensioning rods etc

Another shed out the back was built 2010 ... I’m talking with a mate that’s been building sheds housing for decades he stated you would be doing well to build for under $1200 per square in the current environment for a mix of retail /storage not including gravel yards and fences gates etc so to replace 500k+

As too upgraded can always Reno in 10yrs if PGG want nicer retail space etc ...

Putting the numbers into a Morg calc if I borrow the total amount with zero deposit the property would be paid back in 20yrs with 125,000 free cashflow (that’s using current res rates lease payment etc)

But if I can have another year like 2017 in the asx I plan to pay off a large chunk later next year and in turn pay off within 10yrs

[winner69]

Farmers not feeling as upbeat as before

http://www.sharechat.co.nz/article/e...obank-sayshtml

[Snoopy]

Agria is the 50.1% shareholder but plays no part in the day to day running of PGW. I wouldn't expect any affect on the PGW share price as a result of Agria shares being suspended.

Agria will not be able to sell any shares they own in PGW because if they do, they will no longer be able to consolidate the PGW accounts within Agria. Agria selling down their PGW stake at this stage would cause a multi-million dollar loss for Agria as any remaining PGW stake was 'marked to market'. Last time I looked Agria was still highly indebted. So writing down that PGW stake might cause Agria to collapse. Agria have no other investments of any meaningful size outside of their stake in PGW.

It looks grim for Agria in the headlines now. But Chariman Alan Lai is the master of dance. I wouldn't discount his ability to waltz out of trouble just yet. A 2:1 share consolidation at Agria is all that it would take to fix things with the NYSE listing requirments.

The dance ended and Agria was not so quietly delisted. But now it looks like Alan Lai will need to once again put on his dancing shoes, this time in New Zealand...

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The Overseas Investment Office (OIO) is investigating whether Agria Corporation, the Chinese company which half owns New Zealand produce company PGG Wrightson (PGW), is of "good character".

If it is declared not to be of good character, its 50.22 per cent stake in PGW could be under question.

Individuals or companies rarely fail the test. Last year United States investor Charles Banks, who headed the buyout of Hawke's Bay's Trinity Hill winery and was sentenced to four years in prison for fraud, was stripped of his rights as an investor. PGG Wrightson's activities are widespread, including its livestock agency business.

In a statement, the OIO confirmed Hands was the only person or company who had ever failed the test, although it was not able to comment on matters that were under either surveillance or investigation. US broadcaster Matt Lauer's good character is also being queried after he was fired from his job for allegations of sexual misconduct. He paid a rumoured $13 million for the lease of Hunter Valley Station near Hawea.

In late 2016 Agria was delisted from the New York Stock Exchange after the NYSE announced it allegedly uncovered evidence a "top executive and other intermediaries" artificially inflated the company's stock price. While Agria initially said it would fight the delisting, it later changed tack, with chief executive Alan Lai floating the possibility of it becoming a private company or relisting elsewhere.
In July last year, in an out-of-court settlement, it agreed to pay out US$1.3m to aggrieved shareholders who threatened a class action over the fall in value of their shares. The Campaign Against Foreign Control of Aotearoa (CAFCA) said it had asked the Overseas Investment Office (OIO) 13 months ago to investigate whether Agria was of "good character" - one of the requirements for foreigners or foreign companies investing in New Zealand.


This week the OIO confirmed it was investigating Agria's good character given: its delisting by the New York Stock Exchange; Agria's public statements that it had received subpoenas from the US Securities and Exchange Commission; and allegations made against Agria and some of its directors in related class action lawsuits.

A PGW spokeswoman said independent directors Bruce Irvine, John Nichol and Ronald Seah had considered the implications, if any, that the matters might have for PGW. They would update the market if there were any material developments that might require consideration by PGW shareholders, the spokeswoman said. An Agria spokesman said the company had always made full disclosure to the OIO and would assist it fully with any enquiries.

Agria was founded in 2004 by Alan Lai, the chairman of both Agria and PGW. There are four Agria directors on the PGW board.

It is registered in the Cayman Islands for tax purposes and its major asset is PGW which had an annual turnover last year of $1.13 billion and employed 2200 staff. PGW made an after-tax profit last year of $46.3m.

- Stuff

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PGW was the biggest loser on the NZx today, down 3.3%. I do note that no announcement has been made by PGW to the NZx as yet regarding the OIO investigation!

SNOOPY

[emveha]

Is this "good character" a requirement for having a majority share, or for having any share, do you know?

[Snoopy]

Is this "good character" a requirement for having a majority share, or for having any share, do you know?

I am guessing a 'majority share' is the sticking point because that gives the majority shareholder, if they have "bad character", control of the company. However selling down from 50.1% to 49.9% is not a solution as explained in my previous post. For the record, I don't expect Alan Lai to fail the "good character" test because of any failings of Agria. When an investment doesn't go to plan there are always disgruntled investors. That doesn't necessarily mean the original promoter of the investment was a crook. I think the record of Alan Lai supporting PGW in New Zealand over the last ten years has been good.

SNOOPY

[Sideshow Bob]

Is this "good character" a requirement for having a majority share, or for having any share, do you know?

That would rule out most here!!

[peat]

Roughly, The OIO must approve all significant investments in NZ
significant is 25% or more in a company , or $100 Mill

see this if you are really interested

https://www.simpsongrierson.com/atta...cember2017.pdf